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Insider Weekends – July 12, 2013

  • July 14, 2013

Welcome to edition 160 of Insider Weekends. Insider buying decreased sharply with insiders purchasing $16.8 million of their stock last week compared to $105.15 million in the week prior. Selling on the other hand increased slightly with insiders selling $441.82 million of stock last week compared to $434.02 million in the week prior. The insider buying included an additional $12.59 million purchase of DaVita HealthCare Partners (DVA) by a subsidiary of Berkshire Hathaway (BRK-A), which follows a $73.52 million purchase last week. Some of the weakness in insider buying could be attributed to the start of the second quarter earnings season.

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 26.3. In other words, insiders sold more than 26 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 4.1. 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. VeriFone Systems, Inc. (PAY): $17.76

Director Jeffrey E. Stiefler acquired 27,900 shares of this payment systems provider, paying $17.89 per share for a total amount of $499,131. These shares were purchased indirectly through a trust.

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