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Insider Weekends – December 24, 2010

  • December 26, 2010

Welcome to edition twenty nine of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $126.08 million of their stock when compared to $46.75 million in the week prior. A big part of this increase was on account of Michael Dell’s $100 million purchase of Dell (DELL). Selling dropped significantly with insiders selling $730.96 million worth of stock when compared to $2.48 billion 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 plunged to 5.8. In other words, insiders sold almost 6 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 53.03. 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. Dell Inc. (DELL): $13.79

Chairman & CEO Michael Dell acquired 7.37 million shares of this personal computers company, paying $13.57 per share for a total amount of $100 million. Mr. Dell increased his stake by 3.27% to 232.9 million shares.

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