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Insider Weekends – April 29, 2011

  • April 30, 2011

Welcome to edition forty seven of Insider Weekends. Insider buying dropped with insiders purchasing just $4.14 million of their stock last week when compared to $23.45 million in the week prior. Selling also decreased with insiders selling $774.04 million worth of stock compared to $843.34 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 purchases that week. The adjusted ratio for last week jumped up to 186.75. In other words, insiders sold more nearly 187 times as much stock as they purchased. This is the highest the ratio has been since last October. The big jump last October was attributed to insiders selling ahead of potentially higher capital gains tax in 2011 if the Bush tax cuts were allowed to expire by the end of 2010.

The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 35.96. 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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