Buying bank stocks might not be the worst investment ever. At least that is the case if you bought today when the market was down. Late in the day came SEC filings showing that the controversial CEOs of Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co (NYSE: JPM) bought shares of stock on the open market.
This is frequently viewed as a move to show a vote of confidence on thepart of management with the commitment of hard capital in a "puttingtheir money where their mouths are" view. Bank stocks surged today, but keep in mind that this is on the heels of one of the largest percentage moves down yesterday.
Ken Lewis of Bank of America Corp. (NYSE: BAC) bought some 200,000shares yesterday, and other directors and insiders took the totalinsider buying to more than 500,000 shares of common stock.
Jamie Dimon bought 500,000 shares of JPMorgan at an average price of $22.93 last Friday, making his purchaseprice around $11 million. JPMorgan shares closed up 25% at $22.63today and its shares rose over 5% to $23.81 in the after-hours session.
What is interesting here is that these purchases were not announcedimmediately. Considering how bad these banks tanked yesterday, you mightthink that the insiders might have at least considered getting the wordout That does not always work, but committing hardassets into common stock by CEOs is about as good as it gets.
Jon C. Ogg
January 21, 2009
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