Welcome to edition 177 of Insider Weekends. Insider buying more than doubled with insiders purchasing $266.66 million of their stock last week compared to $114.05 million in the week prior. Selling tripled with insiders selling $4.55 billion of stock last week compared to $1.51 billion in the week prior. The last time insiders sold so aggressively was towards the end of 2010 when insiders were expecting an increase in the capital gains tax rate the following year.
A majority of the insider buying last week was driven by a $202 million purchase of kidney dialysis centers operator DaVita HealthCare Partners (DVA) by a subsidiary of Berkshire Hathaway (BRK-A). A third of the insider selling was driven by sales of hospital operator HCA Holdings (HCA) by several private equity firms including Bain Capital and Kohlberg Kravis Roberts.
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 17.04. In other words, insiders sold more than 17 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 13.22. 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. AGCO Corporation (AGCO): $58.03
Director Mallika Srinivasan acquired 581,766 shares of this farm & construction machinery company, paying $57.70 per share for a total amount of $33.57 million. These shares were purchased indirectly by TAFE Motors and Tractors Limited.