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Welcome to edition 333 of Insider Weekends. Insider buying increased significantly last week with insiders buying $393.57 million of stock compared to $30.51 million in the week prior. Selling also increased with insiders selling $1.23 billion of stock last week compared to $965.22 million in the week prior.
Insider enthusiasm increased last week even as the S&P 500 lost ground for nine continuous sessions, the longest losing streak in over 35 years. The losses were small and amounted to a total loss of 2% for the week. One of the reasons for the thirteen fold increase in insider buying was the post-earnings bump in insider buying we usually see each quarter. The majority of the insider buying was however driven by a large purchase of $162.82 million by the CEO of Walgreens (WBA) and by Carl Icahn adding to his position in Herbalife (HLF) to the tune of $100 million as discussed below. Beyond these large purchase, other interesting purchases that did not make the top 5 list this week include purchases by the CEO and by the President of Newell Brands (NWL) and a $717,000 purchase by the CEO of New Media Investment Group (NEWM).
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 to 3.13. In other words, insiders sold more than 3 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 31.64. 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. Walgreens Boots Alliance, Inc. (WBA): $80.35
Executive Vice Chairman, CEO Stefano Pessina acquired 2,000,000 shares of this pharmacy-led health and wellbeing company, paying $81.41 per share for a total amount of $162.82 million. These shares were purchased indirectly by Alliance Sante Participations S.A, which is 100% owned by another corporation, which in turn is controlled 100% by Mr. Pessina.