Menu
Welcome to edition 104 of Insider Weekends. Insider buying increased with insiders purchasing $346.3 million of their stock last week compared to $68.2 million in the week prior. Selling decreased significantly with insiders selling $373.3 million worth of stock last week compared to $2.2 billion in the week prior. A majority of the buying was led by a $295.43 million purchase of Hewlett-Packard (HPQ) by one of its directors Ralph Whitworth of behalf of the activist fund Relational Investors he founded and other accounts managed by him. You can read a very brief “spotlight” on Mr. Whitworth by The Independent here.
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 sharply to 1.1. In other words, insiders sold almost the same amount of stock as they purchased. The Sell/Buy ratio this week compares favorably with the week prior when the ratio stood at 32.7. This is the lowest ratio we have seen since late last August when it hit a low of just 1.01. Removing the Hewlett-Packard purchase by Mr. Whitworth would bump the ratio up to 7.34. 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. CVR Energy, Inc. (CVI): $24.7
Director Carl C. Icahn acquired 1 million shares of this petroleum refiner, paying $26.62 per share for a total amount of $26.6 million. These shares were purchased indirectly by Mr. Icahn through subsidiaries.