Welcome to edition 176 of Insider Weekends. Insider buying increased sharply with insiders purchasing $114.05 million of their stock last week compared to $14.71 million in the week prior. Selling also increased with insiders selling $1.51 billion of stock last week compared to $1.09 billion in the week prior.
One of the more interesting insider transactions on the sell side that did not make the cut because it was an indirect sale through a fund was the $122.73 million sale of Netflix (NFLX) by top technology VC and founder of Technology Crossover Ventures (TCV) Jay Hoag. TCV has invested in Netflix over the years including the purchase of a $200 million convertible note from Netflix in 2011. Mr. Hoag has been a director of the company since 1999. We highlighted his purchases of Netflix on two consecutive weeks in May 2012 when the stock was trading in the low $70s. He sold just shy of $100 million worth of stock when it hit $215.92 in April of this year and sold $122.73 million worth of stock this week. You can find all his insider transactions here. His sale follows Carl Icahn’s disposition of half his stake in Netflix last week.
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 13.22. In other words, insiders sold more than 13 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 74.57. 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. Freeport-McMoRan Copper & Gold Inc. (FCX): $36.78
Vice Chairman of the Board James C. Flores acquired 1,500,000 shares of this mining company, paying $37.45 per share for a total amount of $56.17 million. These shares were purchased indirectly by a family limited partnership and Sable Management, L.P.