Subscribe Today

Get our free articles delivered directly to your email!

Continue reading

Insider Weekends – September 24, 2010

  • September 26, 2010

Welcome to edition sixteen of Insider Weekends. Insider buying decreased significantly last week with insiders purchasing $9.15 million of their stock when compared to $16.7 million in the week prior. Selling also decreased with insiders selling $605.14 million worth of stock when compared to $889.33 million in the week prior.

Sell/Buy Ratio:

The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider buying that week. The adjusted ratio for last week went up to 66.12. In other words, insiders sold more than 66 times as much stock as they purchased. The ratio would have been even higher (93.33) had I removed the biggest insider purchase last week by a director of Ulta Salon (ULTA) Dennis Eck, which was not an open market insider purchase but a purchase from his son’s and daughter’s accounts for financial planning purposes. Even without this adjustment, the Sell/Buy ratio is the highest it has been since the end of April when it stood at 68.69. As some of you might recall, the S&P 500 index lost 13.83% from the end of April through July 2nd.

The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 53.26. We are calculating an adjusted ratio by removing transactions by funds and companies and trying as best as possible only to retain information about insiders and 10% owners who are not funds or companies.

Note: As mentioned in the first post in this series Introduction to Insider Weekends, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.

Only plus or premium subscribers can access this post. Subscribe today.