Welcome to edition twenty of Insider Weekends. Insider buying increased slightly last week with insiders purchasing $3.05 million of their stock when compared to $2.53 million in the week prior. Selling on the other hand decreased with insiders selling $567.34 million worth of stock when compared to $664.15 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 went down to 186.1. In other words, insiders sold almost 186 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 262.22. I removed a $5 million indirect purchase by Alfred Mann, the CEO of MannKind (MNKD), which looked like a insider purchase but was a debt for stock swap between MannKind and another company called The Mann Group. Retaining this purchase would have pushed the Sell/Buy Ratio all the way down to 70. 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.
Notable Insider Buys:
1. Monsanto Co. (MON): $57.15
Chairman, President & CEO Hugh Grant acquired 18,000 shares of this agricultural products company, paying $56.36 per share for a total amount of $1.01 million. The previous purchase by the CEO and CFO in mid-July for $52 per share triggered a nice rally in the shares but given the current market conditions, I think the reaction to this purchase might be muted this time.