At a time when insider sales are the norm, insiders at Meridian Bancorp have been accumulating the company's stock.
In the second half of October, insiders at the Reading, Pa., bank bought 13,400 shares while they sold none, according to CDA/Investnet, of Fort Lauderdale, Fla., which tracks insider training.
Experts regard such purchasing patterns as a harbinger of a rise in share price, but analysts were hard pressed to justify such an expectation.
One possibility is that the planned acquisition of United Counties Bancorp may fall through, resulting in an increase in Meridian's price.
Samuel McCollough, the bank's chief executive, expects the succesful completion of the merger. He wouldn't comment specifically on why individuals are purchasing stock, although he said he considered it a vote of confidence in the bank.
One Meridian insider, director Lawrence Karlson, increased a stake he held since 1991 tenfold, to 10,000 shares.
"We like the way he clustered his buys," said Bob Gabele, the president of CDA/Investnet. "This type of buying activity definitely has flavor we look for" in trying to predict price movements.
Certainly, with the stock trading close to its 52-week low of $26.625, the bank may just seem like a solid value buy to management.
Analyst, however, are not encouraging their investors to pursue the same strategy. Several analysts rate the stock "neutral" or "hold" and have not changed their ratings throughout the year.
The bank recently had to extend its letter of intent with United Counties - often a sign that the parties are having trouble coming to terms.
Theoretically, the fear of merger dilution might be combining with the generally weak market to drive down the price of Meridian's stock. If the merger fails, the stock price might rise.
Most of the insider buying occurred prior to the letter's being extended to Dec. 12.
Analysts would not speculate on the fate of the deal, but they offered their assessments of the merger's value.
"It would be in Meridian shareholder's best interest for the [deal] to fall through," said Denis Laplante, a bank analyst at Fox-Pitt Kelton.
Others have suggested that management's earlier activities have diluted the price of the stock beyond shareholder's comfort.
Mary Quinn, a vice president at Keefe, Bruyette & Woods, says that a United deal would dilute earnings from a projected $3.40 a share next year to $3.30. Ms. Quinn, however, thinks the acquisition is a strategic deal that would help Meridian extend its franchise.
Some analysts think Meridian itself might be the subject of a takeover at some point, although management hasn't indicated an eagerness to sell.
Analysts also discounted the significance of purchases of thousands of shares of stock by insiders when there are millions of shares outstanding.
Mr. Gabele, however, said a major purchase in a short period of time by an insider can reflect management's view of the company's prospects.Recent TransactionsMeridian Bancorp SharesDate Name/Title purchased Oct. Robert Cardy, 40014 directorOct. Lawrence 4,00014 Karlson, directorOct William Fenimore, 2,00017 vice presidentOct George Grosz, 2,00026 affiliatedOct Lawrence 2,00028 Karlson, directorOct Lawrence 1,50031 Karlson, directorNov Lawrence 1,5001 Karlson, director
