Welcome to edition 184 of Insider Weekends. It has been an interesting year tracking insider purchases in a market that is setting new record highs and the S&P 500 posting a gain of over 31% in the fifth year of a bull market. I will have to do some analysis once the year is over to see if insiders as a group outperformed the market in 2013.
As expected, insider buying declined sharply in the short holiday week with insiders purchasing $4.87 million of their stock last week compared to $137.24 million in the week prior. A big surprise awaited us on the selling side with insiders selling $2.81 billion of stock last week compared to $1.06 billion in the week prior. Much of this was driven by a $2.28 billion sale of Facebook (FB) by founder and CEO Mark Zuckerberg as you can see here. This sale was part of a pre-announced offering of 70 million shares, with Facebook selling 27 million shares, Zuckerberg selling 41.35 million shares and venture capitalist and director Marc Andreessen selling 1.64 million shares.
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 increased to 576.9 on account of the large Facebook sale in a week where insider buying was muted. In other words, insiders sold almost 577 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 7.74. 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. EOG Resources, Inc. (EOG): $169.16
Director Donald F. Textor acquired 6,000 shares of this independent oil & gas company, paying $168.61 per share for a total amount of $1.01 million. These shares were purchased indirectly through a trust.