Lew Jacobs, a director at Citigroup (C), recently added 10,000 shares. The buy came to just over $440,000, and increased the director’s stake by 77 percent. He now owns over 22,900 shares.
The trade marks the first move by insiders since August 2019. Insiders have mostly been sellers in the past two years, but have been inactive for a prolonged time. The last sales were at prices 30-37 percent higher than where shares currently trade.
The big banks have had to contend with a financial crisis, and now low-interest rates, which may impact the bank’s profitability for years. Shares of the firm have dropped nearly 40 percent in the past year.
Action to take: Insiders own just 0.25 percent of shares, not a huge amount. However, the recent buy is a solid indication that the worst is likely over for shares. With big banks prevented from increasing dividends of buying back shares right now, a recovery is likely to take time.
Investors can buy shares at less than 9 times earnings and with a 4.7 percent dividend yield here.
Traders may do well with the March 2021 $50 calls. Trading for around $1.55 per contract, they could offer high-double to low-triple digit returns on a bounce higher in shares. Traders should look for a quick profit though, as shares look most likely to trade sideways.