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Welcome to edition 156 of Insider Weekends. Insider buying dropped sharply with insiders purchasing $22.81 million of their stock last week compared to $152.67 million in the week prior. Selling declined modestly with insiders selling $1.27 billion of stock last week compared to $1.31 billion 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 55.6. In other words, insiders sold more than 55 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 8.6. 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:
Some of the insider purchases that did not make the top 5 list but are worth exploring include purchases by both the CEO and COO of Linn Energy (LINE), additional purchases by the CEO of Calamos Asset Management (CLMS), a 20,000 share purchase by the CEO of Tronox (TROX) following a very sharp decline in the stock over the last 12 months and a purchase by a director of troubled for-profit education company Strayer Education (STRA). A word of caution about Linn Energy. Barron’s has been bearish on the name over the last few months as you can read here and here.