Happy New Year and welcome to edition thirty of Insider Weekends. Insider buying plunged in the last week of 2010 with insiders purchasing just $4.46 million of their stock when compared to $126.08 million in the week prior. As you might recollect, a big part of last week’s purchasing was on account of Michael Dell’s $100 million purchase of Dell (DELL). Selling also dropped significantly with insiders selling $263.45 million worth of stock when compared to $730.96 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 rebounded to 59.02. In other words, insiders sold more than 59 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 5.8. 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. Starwood Property Trust, Inc. (STWD): $21.48
Director Jeffrey G. Dishner acquired 30,000 shares of this mortgage real estate investment trust (REIT), paying $21.41 per share for a total amount of $642,399.