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Tickers in this Article: C, AXP, DFS, MA, BAC
Despite the comeback seen by the financial sector in recent weeks, the tremendous beating it endured over the last year still has many investors (understandably) nervous. Still, some insiders seem bullish, which may be a sign of brighter things to come.

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Why the Optimsim?
What are financial insiders seeing that perhaps others are not? Some of these companies have taken such a beating; there is a general sense that, in a break up, they could be worth more than the current market price dictates. Also, the government has shown that it's willing to get involved and backstop some financial institutions. I think this is giving insiders confidence that their companies will weather this storm.

Where the Buyers Are:
There are a few companies that made the (financials) screen that stand out. At one point, Citigroup (NYSE:C) seemed almost indestructible. In fact, it was considered by many to be "too big to fail." Of course, it hasn't failed. However, the economy and the markets did take a huge toll on the New York-based bank, driving the stock at one point below one dollar.

While many remain skeptical of whether the economic recovery is for real or the rebound in financials will stick, there has been some notable insider buying at the investment bank. In fact, in early March four insiders purchased more than 7.5 million shares, which is a big vote of confidence. (Insider tracking can inform your investment strategy, but it requires research and a level head, read When Insiders Buy, Should Investors Join Them?)

Late last week, the company released its first quarter earnings. A Reuters article points out that, "according to Reuters Estimates, the loss was 12 cents per share before one-time items. On that basis, analysts had expected a loss of 30 cents per share."

Coming in better than expectations may help rebuild some goodwill and ultimately lure investors. If the company can get a following and continue to report better-than-expected earnings, and can get its stock north of the five dollar level, it could be off to the races (many institutions are reluctant to purchase shares under that level). (Learn how to gather all the pieces before you start to put together your puzzle, read The Flow Of Company Information.)

Note that Bank of America (NYSE:BAC) had traded under three dollars in the latter part of February, 2009. Yet, it was able to punch through that five dollar level with vigor in the early part of March. It then powered up to double digits by mid April before settling to its current $8.42.

However, the company is not out of the woods just yet. With the economy and the markets still struggling, it's unlikely that the company will generate meaningful annual profits anytime soon. At present, the firm is expected to lose 51 cents a share this year, and to be in the red next year, according to Thomson Financial Networks.

American Express (NYSE:AXP) is more than 60% off its 52-week high. And with the economy on the wane, it's unclear what the future may hold. However, this hasn't stopped some insiders. A quick look at the data reveals that, since late January, three different directors bought more than 74,000 shares (in total).

AXP doesn't seem to have visibility issues at $20 and change. Also, in spite of the sluggish economy, it's expected to be well in the black both this year and the next. The fact that the company is expected to be profitable may lead some investors to warm a bit faster to the story than they might to, say, Discover Financial Services (NYSE:DFS), which is expected to be in the red this year and next. In Discover's defense, there was some insider buying back in the October 2008 time frame.

MasterCard (NYSE:MA) is worth a look right now. It's expected to be well in the black this year and trades at about 16-times the current-year estimate. However, it's interesting to note that insiders have not been making open market purchases as of late.

The Bottom Line
Insider buying among the financials is intriguing. It suggests that better days may lie ahead at some point. It's interesting to note that there has been large buying at one-time stalwarts Citigroup and American Express. Regardless, it could pay to keep an eye on financial institutions' stocks over the next year, in the hopes of an economic turnaround. (Keeping tabs on company executives can provide clues about where a stock is headed, see Delving Into Insider Investments.)

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