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Welcome to edition 144 of Insider Weekends. Insider buying more than quadrupled with insiders purchasing $107.58 million of their stock last week compared to $25.02 million in the week prior. However most of this increase was driven by Carl Icahn’s $82.75 million purchase of Herbalife as discussed below. Selling also increased with insiders selling $1.99 billion of stock last week compared to $1.64 billion in the week prior. A large part of this increase was related to Blackstone’s $356.4 million sale of General Growth Properties (GGP) and Vornado’s $160.3 million sale of J.C. Penney (JCP).
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 down to 18.53. In other words, insiders sold more than 18 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 65.7. 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. Herbalife Ltd. (HLF): $41.5
10% Owner Carl C. Icahn acquired 2,017,264 shares, paying $41.02 per share for a total amount of $82.75 million. These shares were acquired by various Icahn related entities.