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Welcome to edition 334 of Insider Weekends. Insider buying increased last week with insiders buying $565.51 million of stock compared to $393.57 million in the week prior. Selling on the other hand declined with insiders selling $991.8 million of stock last week compared to $1.23 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 to 1.75. In other words, insiders sold almost 2 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 3.13. 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.
Insider enthusiasm appears to have increased yet again based on the total insider buying last week but once you dig deeper and exclude the two huge purchases by Carl Icahn discussed below, insider buying was actually muted. The S&P 500 on the other hand had its best week since 2011 with a gain of 3.8%, which more than erased the previous week’s 1.94% loss. The market rose on Monday when it looked like Hillary Clinton was going to win the Presidential Election and then to everyone’s surprise rose sharply again on Tuesday when Donal Trump won the election.
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. Hertz Global Holdings, Inc. (HTZ): $28
10% Owner Carl C. Icahn acquired 16,325,273 shares of this equipment rental supplier, paying $24.16 per share for a total amount of $394.35 million. These shares were purchased indirectly through a fund.