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Welcome to edition ninety nine of Insider Weekends. Insider buying decreased with insiders purchasing $7.9 million of their stock last week compared to $19.9 million in the week prior. Selling more than doubled with insiders selling $1.38 billion worth of stock last week compared to $499.55 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 shot up to 174.2. In other words, insiders sold more than 174 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 25.1. Part of this big jump has to do with Bill Gates selling $385.4 million worth of Microsoft stock to most likely fund his foundation buy even excluding that sale, the ratio would have been 125.5.
Interestingly the last time the ratio was this high was almost a year ago on April 29, 2011 when the ratio spiked to 186.8. The S&P 500 dropped for six consecutive weeks from 1363.61 to 1270.98 following that spike. 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, 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. Opko Health, Inc. (OPK): $4.81
CEO & Chairman Phillip Frost M.D. acquired 200,000 shares of this medical devices and drug development company, paying $4.85 per share for a total amount of $970,271. These shares were purchased indirectly by Frost Gamma Investments Trust.