Shortly after the melt-up in US bank stocks began following Trump's election victory, we noted heavy insider-selling (and options expiration) among Goldman Sachs executives. Well the selling never stopped, as WSJ reports executives at the biggest Wall Street banks have sold nearly $100 million worth of stock since the presidential election, more than in that same period in any year over the past decade.
As we detailed in mid-November, while the mainstream media proclaims the surge in bank stocks as heralding a new dawn in everything-is-awesome-ness for America, we note that insiders at Goldman Sachs sold $205 million of stock since Nov. 8, company filings show.
That’s three times more than the group has sold in any month for at least five years, data compiled by Bloomberg show.
Not a bad week for Cohn, Blankfein, and Viniar...
And since then, as the bank's stock prices have soared, despite lackluster earnings expectations and a yield curve that did not steepen (pumping up NIM)...
The Wall Street Journal reports, bankers sold nearly $100 million worth of stock since the presidential election, more than in that same period in any year over the past decade...
The share sales occurred as financial stocks soared since Nov. 9 on expectations of lighter regulation, lower taxes and pro-growth economic policies. The KBW Nasdaq Bank index is up nearly 20% since Donald Trump’s victory, about triple the gains notched by the broader market.
In addition to the share sales, bank executives have sold another $350 million worth of stock to cover the cost of exercising options, filings show. That is twice the amount sold for that purpose at big banks in the year leading up to the election.
An added bonus: The post-election run-up in share prices gave value to some options that were likely to expire worthless. At Goldman Sachs Group Inc., for instance, the postelection bounce turned half a billion dollars worth of stock options into winners—some just days before they were set to expire.
They are all doing it...
Further selling may be in store, and not all big banks have filed reports on selling by all their top executives.
What’s more, bank employees typically can’t sell shares or exercise options in the run-up to earnings reports. The big banks finished posting their latest round of earnings last week, meaning employees will now in most cases be free to sell.
Those sales won’t be as apparent, though. Banks only have to disclose trades for a handful of top executives, although some rank-and-file employees are paid largely in stock and options.
So who is the sucker at this table?
Dick Bove gets it... "banks won't be able to hold on to the earnings boost they get from higher interest rates. The hole in the bottom of the piggy bank, as he described it, would be that higher rates would also hurt the value of financial assets held by the bank, thus leaking out any benefits from increasing borrowing costs."