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Welcome to edition 397 of Insider Weekends. Insider buying increased last week with insiders purchasing $24.96 million of stock compared to $20.21 million in the week prior. Selling decreased with insiders selling $916.91 million of stock last week compared to $1.16 billion in the week prior.
With earnings season kicking into high gear over the next two weeks we are likely to see more interesting insider purchases in the next few weeks unless elevated market levels dampen the enthusiasm of company insiders. The S&P 500 has gained 7.45% since the start of this year after gaining over 21% in 2017. According to Preston Pysh, “the S&P500 is priced at 3 Standard Deviations above the 200 DMA. Last time we saw that it was 24 March 2000.”.
It feels like a large part of the global growth story and a lower corporate tax rate is already baked into the markets. This does not mean a correction is imminent as this “melt up” phase of the market can continue for several months. For well articulated big picture views on the markets, I highly recommend Howard Mark’s latest memo and Barry Ritholtz’s interview with Felix Zulauf. If you feel macro is a distraction and would rather focus on equity ETFs or individual companies, check out my latest article on Seeking Alpha titled A Tale of Two Insider ETFs.
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 36.73. In other words, insiders sold almost 37 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 57.49.
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.