Welcome to edition 171 of Insider Weekends. Insider buying increased with insiders purchasing $69.72 million of their stock last week compared to $10.86 million in the week prior. Selling also increased with insiders selling $1.32 billion of stock last week compared to $1.12 billion in the week prior. While the headline insider purchasing total has jumped up since last week’s anemic $10.86 million number, a majority of it was driven by a single large $59.46 million purchase of Synageva BioPharma (GEVA) by its director Felix Baker of the $4.4 billion biotech fund Baker Brothers. This purchase was related to a secondary offering by Synageva. It was interesting to see that four out of the five top purchases were by insiders in the oil & gas industry.
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 to 18.99. In other words, insiders sold about 19 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 102.75. 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. Weatherford International Ltd. (WFT): $15.26
Director William E. Macaulay acquired 78,000 shares of this oil & gas drilling services company, paying $15.26 per share for a total amount of $1.19 million. Mr. Macaulay increased his stake by 8.32% to 1,015,314 shares with this purchase.