Welcome to edition forty four of Insider Weekends. Insider buying rebounded with insiders purchasing $84.92 million of their stock last week when compared to $21.65 million in the week prior. Selling also picked up with insiders selling $817.87 million worth of stock when compared to $742.56 million in the week prior.
While not reflected in the headline numbers, insider buying dwindled considerably in the last couple of weeks. The increase in insider buying this week is primarily on account of 10% owner, Kevin Douglas, purchasing a large amount of American Superconductor (AMSC) stock following a precipitous plunge in the stock last week.
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 dropped to 9.63. In other words, insiders sold almost 10 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 34.3. 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.