Multiple executives buy stocks, and traders aggressively buy options, New York Community Bancorp surges 16% in the crisis
Regulatory documents show that several executives from New York community banks have entered the market to buy stocks. Although they only purchased a total of 200,000 shares, it still stimulated a 16% surge in the bank's stock price on Friday, marking the largest single-day increase in four months. In addition, there were also traders making significant purchases of call options.
Since New York Community Bancorp announced last week that it would cut dividends and increase bad debt provisions, its stock price has been cut in half. After the CEO and other senior executives of the bank announced on Friday that they had purchased over 200,000 shares, the stock price rebounded by as much as 16% on the same day.
Regulatory filings show that several insiders of New York Community Bancorp purchased stocks on Friday, although the total of 200,000 shares is relatively small. Among them, Alessandro DiNello, who was appointed as the Chairman of the bank this week, purchased 50,000 shares, and CEO Thomas Cangemi purchased approximately 11,000 shares. Several other insiders, including board members, also purchased stocks. According to media calculations, the total amount of these purchases is approximately $860,000.
As a result, the stock price of New York Community Bancorp rose by as much as 16% on Friday, reaching a high of $4.87, the largest intraday gain since April.
Analysts believe that although the amount of purchases is not large, insider buying is a very positive development and exactly what investors want to see.
Since announcing the dividend cut and significantly higher-than-expected bad debt provisions on January 31, the bank's market value has dropped by about $4 billion. Due to the acquisition of part of Signature Bank's assets last year, the bank's asset size has increased, leading to stricter regulation and concerns about its commercial real estate loans. This unexpected announcement has had a widespread impact on regional bank stocks, but the situation has now stabilized.
Shortly after the disclosure of the internal purchase document on Friday, a trader or group of traders bought call options with a strike price of $4.50, equivalent to over 550,000 shares. One of the options expired at the end of Friday's trading session, while the other expired in one week. These call options became in-the-money shortly after 11 a.m. Eastern Time.
An analyst report stated that for bank stocks in the Russell 1000 Index, if executives buy stocks, the stock tends to outperform the market in the following week and month.