NEWT

NewtekOne ($NEWT) Chairman Buys $1M+ in Stock Over 18 Months, Betting on Turnaround Amid Credit Concerns

01/15/2026 21:35

NewtekOne ($NEWT) management has been aggressively buying shares over the past 18 months, with Chairman Barry Sloane accumulating approximately $1 million worth of stock through 12 separate purchases between June 2024 and June 2025. The most striking transaction occurred in September 2024 when Sloane purchased 40,134 shares for $472,000 in a single day as the stock traded near $11.75. This insider activity signals strong management confidence despite market concerns about the company's near-term challenges. NewtekOne is a Boca Raton, Florida-based financial holding company providing comprehensive financial solutions to small and medium-sized businesses. The company operates Newtek Bank for banking services, offers SBA-guaranteed loans, commercial lending, electronic payment processing, insurance brokerage, payroll management, and cloud-based technology solutions. With a market capitalization of $420 million, NEWT occupies a unique niche combining traditional banking with fintech services. While competing with regional business lenders, NewtekOne differentiates itself through its integrated service platform targeting underserved small business owners across all 50 states. Investors should pay attention now for several compelling reasons. First, the insider trading pattern is exceptionally bullish. Beyond Chairman Sloane's purchases, at least five other executives including directors Richard Salute, Gregory Zink, President Peter Downs, and others have executed 32 buy transactions since June 2024 with only 2 sales recorded before August 2024. Notably, on December 23, 2024, five insiders simultaneously purchased shares at $12.75-$12.95, demonstrating coordinated confidence in near-term value realization. Such cluster buying by informed insiders typically precedes positive developments. Second, valuation appears attractive with a P/E ratio of just 6.51x and a dividend yield of 5.36%, providing downside cushion while management executes their turnaround strategy. However, several warning signs require careful monitoring. Credit quality metrics have deteriorated sharply, with provision for credit losses surging from $0 in 2022 to $26.22 million in 2024. This indicates potential loan portfolio deterioration that could pressure future profitability. More concerning was the Q2 2025 earnings disaster—the company reported a loss of $0.70 per share versus consensus expectations of $0.52 profit, while revenue of $70.20 million missed the $73.88 million estimate. Although Q3 showed recovery with $0.67 EPS (beating $0.63 estimate), the Q2 loss raises questions about earnings quality and sustainability. Additionally, interest income has plummeted 76% from $58.45 million in 2021 to $14.09 million in 2024, suggesting structural business model changes or margin compression. Positive indicators worth monitoring include robust revenue growth trajectory—from $105.17 million in 2022 to $237.74 million in 2024, representing 126% growth over two years. Trailing twelve-month revenue now stands at $380.36 million. Profitability metrics remain healthy with net profit margin of 15.59% and ROE of 17.74%, both above industry averages. Management provided 2026 EPS guidance of $2.15-$2.55, consistent with consensus of $2.31, which implies upside from current levels. The upcoming Q4 2025 earnings announcement on January 29, 2026 will be critical in validating this guidance and restoring investor confidence after the Q2 disappointment. Share price action reveals interesting patterns. After declining from $13.60 in June 2024 to $11 in September 2024, the stock surged to $15.46 in November before correcting. In 2025, NEWT dropped from $12.53 in September to $9.61 in November (a 23% decline), then recovered to $12.08 by December. Most recently, the stock traded at $14.59 on January 15, 2026, up 28.55% year-to-date. This volatility reflects market uncertainty about whether management's optimism or credit concerns will prove correct. Significantly, Chairman Sloane purchased shares at multiple price points ($11.75, $12.95, $14.75), suggesting strategic accumulation based on long-term value rather than short-term trading. The small business lending sector offers structural growth opportunities. Many small businesses struggle to obtain adequate financing from large banks, creating a persistent market for specialized lenders like NewtekOne. The SBA loan market is particularly attractive, combining government guarantees (reducing credit risk) with attractive yields. Recent initiatives include digital banking expansion (opening 21,000+ new accounts), planned fourth securitization of Alternative Loan Program loans in Q4 2025, and securing a $95 million financing solution from Goldman Sachs to strengthen liquidity. In a bull scenario, if Q4 results exceed expectations and credit metrics stabilize, shares could reach analyst price targets of $16 and potentially break out to $20+ as the heavily discounted valuation (P/E 6.51x) normalizes. This requires provision for loan losses to moderate and interest income to recover. The base scenario assumes guidance-range performance and manageable credit risk, with shares trading in the $13-15 range. The bear scenario involves another earnings disappointment or accelerating credit deterioration, potentially driving shares back below $10 despite insider support. The key trigger for scenario transition is the January 29 earnings release and management commentary. Near-term (1-6 months), cautious optimism appears warranted. The January 29 Q4 earnings release is the critical event. Markets expect return to profitability and credit stabilization signals. A positive surprise could drive shares to $15-17 near-term. However, another Q2-style shock would trigger immediate correction. Trading volume has elevated to 400k shares (versus 240k average), suggesting increased volatility ahead. Short-term traders might consider waiting for earnings clarity, or entering small positions ahead of the announcement. Long-term (6+ months), the investment thesis hinges on whether management's confidence is justified. Chairman Sloane's $1 million+ investment demonstrates significant conviction. The company's 2026 EPS guidance implies 10-20% upside from current levels. If digital banking expansion, ALP securitizations, and low-cost deposit growth strategies succeed, profitability should improve and drive valuation re-rating. However, if credit cycle deterioration continues, rising provisions will pressure margins. Long-term investors might consider dollar-cost averaging at current levels, maintaining position size below 5% of portfolio given elevated risks. In conclusion, NewtekOne's insider trading pattern is unambiguously positive—such sustained, large-scale buying by multiple executives is rare and meaningful. Attractive valuation and strong revenue growth add to the investment appeal. However, deteriorating credit quality and the Q2 loss cannot be ignored. "Cautious interest" seems appropriate at this juncture. The January 29 earnings announcement will be decisive. If results are solid and management articulates a clear credit risk management plan, current prices may represent an attractive entry point. Conversely, another disappointment could trigger further downside. For risk-tolerant value investors, NEWT warrants consideration, but conservative investors should wait for earnings confirmation. The 5.36% dividend yield provides some downside support regardless of near-term volatility.