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Insider Weekends – July 29, 2016

  • July 30, 2016

Welcome to edition 319 of Insider Weekends. Insider buying increased significantly last week with insiders buying $118.43 million of stock compared to $29.17 million in the week prior. Selling also increased with insiders selling $2.12 billion of stock last week compared to $757.96 million in the week prior. Almost half the insider selling this week was related to ValueAct liquidating nearly a third of their position in Microsoft as discussed below.

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 decreased to 17.88. In other words, insiders sold  almost 18 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 25.98. 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. Netflix, Inc. (NFLX): $91.25

Director Jay C. Hoag acquired 600,000 shares of Netflix, paying $86.43 per share for a total amount of $51.86 million. These shares were purchased indirectly through various Technology Crossover Ventures (TCV) funds.

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