Welcome to edition 106 of Insider Weekends. Insider buying decreased with insiders purchasing $35.9 million of their stock last week compared to $250.5 million in the week prior. Selling increased with insiders selling $1.8 billion worth of stock last week compared to $385.5 million in the week prior. A large part of the insider selling was related to a $1.16 billion sale of Kinder Morgan (KMI) by Goldman Sachs (GS).
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 went up to 49.5. In other words, insiders sold nearly 50 times the amount of stock as they purchased. Excluding the large Goldman sale, the insider sell/buy ratio would have dropped to 17.1. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 1.54. 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. Tempur-Pedic International Inc. (TPX): $24.18
Director Andrews P. McLane acquired 112,000 shares of this mattress manufacturer, paying $25.02 per share for a total amount of $2.8 million. Mr. McLane increased his stake by 107.55% to 216,136 shares with this purchase. 12,000 of these shares were purchased indirectly by Mr. McLane’s spouse.