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Insider Weekends – October 08, 2010

  • October 10, 2010

Welcome to edition eighteen of Insider Weekends. Insider buying decreased significantly last week with insiders purchasing $5.27 million of their stock when compared to $24.51 million in the week prior. Selling also decreased with insiders selling $525.69 million worth of stock when compared to $676.71 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 in that week. The adjusted ratio for last week spiked sharply up to 99.84. In other words, insiders sold almost 100 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 28 and is the highest it has ever been since we started collecting this data in April.

As you might recollect, the ratio dropped last week because of insider buying that was related to stock offerings and open market purchases. The ratio spiked to 121 after removing those special events. 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.

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