Selling by Fleet Insiders Hints at Wide Price Plateau
Record stock sales by officers and directors of Fleet/Norstar Financial Group Inc. could signal a flattening out of the long rally in banking stocks.
Shares of the New England superregional company, based in Providence, R.I., have been among the year's best-performing equities.
Fleet/Norstar stock has soared 135% since January, partly on the strength of the company's winning bid in the government's auction for the failed Bank of the New England. But recently the shares have backed off from their peak along with other bank issues.
Sales Total Is High
In August, four insiders at Fleet/Norstar sold nearly 50,000 shares for about $1.2 million, according to reports filed with Securities and Exchange Commission. That set a new one-year high for such sales after adjusting for stock splits.
The shares were sold at an average price of $25, according to Robert J. Gabele, president of Invest/Net Group Inc., a Fort Lauderdale, Fla., firm tracking such investments. He noted that they were sold "on the rebound from the dip to $21.50 that the shares took in July."
Fleet's shares were trading at $22.25 Wednesday afternoon, off 37.5 cents on the session. The stock began the year at $11.
Such selling by insiders is a strong signal that the rally in a particular stock is nearing an end. And if a stock has been a leader in its industry, as Fleet/Norstar has been, it can mean a group of equities has likely reached a plateau.
"You can read this as saying something on the banking industry," said John D. Rooney Jr., a bank analyst in New Haven, Conn., for Legg Mason, Wood Walker & Co.
A Questionable Indicator
But Mr. Rooney and others also cautioned that bank insiders are not always the best guide for action by other investors. A number of insiders at banks in Texas during the 1980s, for instance, wound up with huge losses after falling energy prices crippled the state's economy.
The insider selling at Fleet may reflect the continued poor business climate throughout New England more than the banking industry overall, said Nancy A. Bush, regional bank analyst at Brown Brothers Harriman & Co.
She said market expectations after the Bank of England transaction may have been too high. "This is still New England, business conditions are poor, and the stock was probably ahead of itself when it was in the $25 range," she noted.
The largest seller during August was Fleet/Norstar vice chairman Robert L. Mushkin, who cut his holding in half by selling 22,041 shares.
H. Jay Sarles, executive vice president, and Peter L. Hood, a vice president, each sold 15,000 shares. Treasurer Richard R. Pannone parted with 11,500.
A Fleet spokesman said none of the officers were immediately available for comment.
So far this year, insiders at Fleet/Norstar "have unloaded 71,155 shares, beating out the next biggest year, 1985," said Mr. Gabele.
In 1985, insider sales at the company totaled 41,141 shares. But that was before a two-for-one split of Fleet/Norstar's shares in March 1987.
Major banking stocks surrendered most of their gains from Tuesday, when the Bush administration unveiled a plan to spur business lending.
The banking group fell with the rest of the market as investors continued to worry about lackluster third-quarter earnings and an uncertain economic outlook.
New York's J.P. Morgan & Co., a big gainer on Tuesday, declined $1.125 to $60.25 in afternoon trading. Significant slippage also occurred at Manufacturers Hanover Corp., New York, which was down $1.25 to $25.25, and Norwest Corp., Minneapolis, which was off $1.125 to $31.125.
Only two banks among the top 25 managed to edge higher. Chase Manhattan Corp., New York, was up 50 cents to $18.125, and PNC Financial Corp., Pittsburgh, rose 12.5 cents to $40.