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Insider Weekends – June 8, 2012

  • June 9, 2012

Welcome to the two year anniversary edition of Insider Weekends. Insider buying decreased with insiders purchasing $250.5 million of their stock last week compared to $346.3 million in the week prior. Selling inched up a little with insiders selling $385.5 million worth of stock last week compared to $373.3 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 went up to 1.54. In other words, insiders sold less than 2 times the amount of stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the week prior when the ratio stood at 1.1. 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. Scientific Games Corporation (SGMS): $8.88

Director Ronald O. Perelman acquired 805,000 shares of this casino and lottery equipment provider, paying $8.14 per share for a total amount of $6.6 million. These shares were purchased indirectly through various entities that are controlled by Mr. Perelman.

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