Charter One Financial [Cf] – Brief Article

We highlighted insider accumulation at Charter One Financial in November last year. Not long after, the stock slipped nearly 30%, largely in sympathy with an ailing banking sector. Not to be deterred, CF insiders have been persistent in their accumulation, and with a little help from the resurgent interest in financials, the acquisitions have begun to look a bit better timed. Even more encouraging, insiders persisted through the hard times, accumulating even as the stock floundered. Most recently, from January 4 through march 22, seven insiders acquired a combined 129,262 shares through option exercises and open market purchases at $16.44 to $19.75 per shares.

Among the recent buyers, CFO Richard Neu acquired 30,000 shares through the exercise of options not set to expire until November ’00. Notably, the options exercised were nonqualified stock options. By exercising the options and not selling the underlying shares, Neu incurred a tax obligation on the difference between the exercise price and the current market price without realizing any of the gain. Needless to say, such activity is generally viewed as among the more positive insider signals. Likewise, Vice Chairman Leonard Simon acquired 49,458 shares through a nonqualified option exercise, while Chairman, President & CEO Charles Koch acquired 20,000 shares through the exercise of a combination of nonqualified stock options and incentive stock options. Other buyers included Directors John Tierney, Charles Heidel, and Melvin Rachel buying 3,000 shares, 1,000 shares, and 100 shares on the open market. Interestingly, Simon, Koch, and Rachal all purchased shares in August and September ’99 with the stock trading at higher levels.

Despite a recent rally, the stock still trades below the level that insiders were buying during the fourth quarter ’99, which should be encouraging for investors hoping to get in at the same or better prices than the insiders. Charter One Financial, Inc. is a savings institution that conducts business through Charter One Bank and its subsidiaries.

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