Welcome to edition 503 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $177.87 million of stock compared to $31.09 million in the week prior. Selling also increased significantly with insiders selling $5.4 billion of stock last week compared to $614.24 million in the week prior.
When I first looked at that $5.4 billion sale number, I was not sure if it was a mistake and I double checked our data. In the ten years that we have been writing about insider transactions, I have never seen this level of insider selling in a week. To be fair a disproportionate amount of the sales were related to Jeff Bezos’ $4.06 billion sale of Amazon.com (AMZN). Taking those sales out of the equation, the selling was on par with what we normally see, excluding earnings related quiet periods.
With the novel coronavirus risk continuing to unfold, I am surprised insider were not selling even more. Beyond the direct impact to the second largest economy in the world, we are now starting to see second order effects due to the impact on the global supply-chain. It was not surprising to hear that a large number of car manufacturers had extended factory closures in China but the second order effects became evident when Hyundai suspended car production in South Korea due to a shortage of parts.
For those that were invested during the SARS pandemic and the Ebola epidemic, it may seem like we will get through this one relative unscathed just like we did the last ones but it is probably a good idea to take risk down a notch or buy some protection in case the infection continues to spread across the globe.
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 30.37. In other words, insiders sold almost more than 30 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 19.75.