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Insider Weekends – May 9, 2014

  • May 11, 2014

Welcome to edition 203 of Insider Weekends. Insider buying bounced back last week with insiders purchasing $65.72 million of their stock compared to $16.74 million in the week prior. Selling also increased with insiders selling $2.03 billion of stock last week compared to $1.38 billion in the week prior.

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 down to 30.94. In other words, insiders sold almost 31 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 102.36. 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:

Some of the insider purchases that did not make the top 5 list but are worth exploring include $1.56 million in additional purchases of regional bank Middleburg Financial (MBRG) by 10% owner David Sokol of Berkshire Hathaway fame, a cluster purchase by insiders of networking equipment company Emulex  (ELX) following a big decline in the stock this month and a cluster purchase by insiders of Natural Grocers by Vitamin Cottage (NGVC).

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