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Welcome to edition 375 of Insider Weekends. Insider buying declined with insiders purchasing $58.05 million of stock compared to $169.18 million in the week prior. Selling also declined with insiders selling $1.44 billion of stock last week compared to $2.69 billion in the week prior.
We saw several retailers post better than expected results last week and many of them posted double digit gains following those results. These “better than expected results” were obviously coming off very depressed levels after years of same store sales declines and store closings as seen from the image below. This image was posted by @PlanMaestro on Twitter this morning with the comment “Retail Store Closings … worst than in recession”. Against this backdrop, it is ironic that Amazon’s acquisition of Whole Foods is scheduled to close on Monday.
It was interesting to note active insider buying in several retailers this week including cluster purchases by the insiders of J. C. Penny (JCP) and Fossil (FOSL). Other retailers with insider buying include a director of Dick’s Sporting Goods (DKS) acquiring 20,000 shares for nearly half a million dollars, purchases by the CEO and a director of Sally Beauty Holdings (SBH) and purchases by two directors of Macy’s (M).
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 went up to 24.89. In other words, insiders sold almost 25 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 15.88.
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.