Key points
- Hawthorne Bancshares is a small, high-yield bank that insiders are buying.
- Shore Bancshares is deeply undervalued compared to analyst sentiment.
- Byline Bancorp could rise 35% and substantially increase its dividend this year.
Small and regional banks have been prominent on the buying list, and the trend is unlikely to change. Many bank stocks trade near long-term lows as activity is stable or stabilizing and capital returns flow. The bottom line is that three new names have appeared on the radar; the question is which is the best to buy.
Undervalued Hawthorn Bancshares Inc. increases its dividend
Hawthorn Bancshares (NASDAQ: HWBK) is a small-cap bank in Missouri that pays dividends and increases its distribution every year. The company has grown in eight years and is on track for a ninth in 2024. The payout ratio is reliable and safe at 17% of earnings, but there is some risk to this 3.5% yield. The latest earnings report included a significant loss which affected annual results and put pressure on the bank’s ability to pay. However, the reduction of underperforming loans helped clean up the balance sheet, free up future cash flows and improve credit quality, limiting their impact.
Insiders have only been buying these shares for over three years, and their activity hit a new high in the first quarter. The buyers include three directors and a senior vice president; their purchases bring preferred holdings to nearly 13%. However, insider activity is offset by institutional sales, which also increased in the quarter. However, institutional interest is low at 20%, so it is unlikely to have a significant impact on price action without an additional catalyst. No analysts are tracking this stock.
HWBK stock shows a downtrend after the fourth quarter release and may move lower. The market is trapped in a volatile range, with a possible move down to $16. As the company is at an inflection point, movement below critical resistance targets is not expected, but not ruled out. The bank must continue its moves and return to profitable growth.
An unusual way to invest in gold
From Edge On The Street | A.D
Most financial experts recommend including gold in your investment mix to protect yourself from rising prices and keep your wealth safe. Investors are discovering a little-known way to profit from gold, which offers the chance to profit from rising gold prices and mining successes while avoiding the costs of running mines.
Find out why this overlooked gold game
High-Yield Shore Bank Stocks Bought by Insiders
Based in Maryland Shore Bank Stocks (NASDAQ:SHBI) It yields more than 4.0% and insiders are buying it. Four directors each made one purchase in the last quarter, but they didn’t put too much stock in it. A proposal in 2023 calls for increasing the number of directors by six, which is related. Regardless, insiders have only been buying these shares for years, and their activity surged in the first quarter. The holdings represent 11.25% of the stock, representing a significant aspect in the game.
Institutional holdings are also robust. Institutions own about 65% of the company and have ramped up their activity in recent quarters. Institutional trading was net buying in all four quarters of 2022 and 2023, continuing into the first quarter of 2024. Activity peaked in the fourth quarter and is strong in the first two months of 2024. Analysts , who rate the stock at Buy, see it as undervalued. They see it up 40% at the consensus midpoint and over 30% at the low end.
Highlights from the fourth-quarter report include underperformance versus analyst forecasts, but a solid 50% gain and net profit versus loss. Deposits and loans have grown, cash flow is solid and the balance sheet is healthy.
Byline Bancorp, lower yield, safer payment
Underwritten by Bancorp (NYSE: BY) is based in Chicago. It pays a lower than average yield for this group, but has the safest payout of 12% of earnings. Among the suggestions in the latest report is that the payout could grow substantially over time. The bank trades below book value, up more than 1000 basis points year over year. Insiders buying the shares include several directors, a chairman and a large shareholder who collectively own 35% of the shares. Institutions are also well represented, owning about 45%, and analysts see a silver lining. The only target tracked by Insidertrades.com is Piper Sandler. It was issued on January 30 this year and is expected to rise by 35%.
Companies in this article:
| Agency | Current price | Price change | Dividend yield | P/E ratio | Consensus assessment | Consensus price target |
|---|---|---|---|---|---|---|
| Shore Bank Stocks (SHBI) | $11.23 | Dish | 4.27% | 5.28pm | Moderate purchase | $16.00 |
| Hawthorn Banking Shares (HWBK) | $19.46 | -3.7% | 3.49% | 147.94 | N/A | |
| Author Bancorp (BY) | $20.76 | -0.6% | 1.73% | 7.78 | Acquire | $28.00 |
Experience
Thomas Hughes has been working with InsiderTrades.com since 2019.
Areas of expertise
Technical Analysis, S&P 500; retail, consumer goods, consumer staples, dividends, high yield, small cap, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past experience
Market observer, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.