Welcome to edition 511 of Insider Weekends. The S&P 500 gave back some of the gains from the optimism surrounding the $2 trillion stimulus package and ended last week down a little over 2%. I wrote about a COVID-19 playbook for premium subscribers discussing four scenarios and my perceived probabilities of those scenarios playing out. I wrote the following in that post,
In conversations I have had with entrepreneurs, scientists and folks in private equity since writing that post, I was surprised to hear just how many of them think this is not a one quarter event and that the pain is likely to extend to two quarters or into next year if there is a second wave on infections. The mood has become significantly darker with the bleak news of rising deaths coming out of New York and unemployment claims over a two week period hitting nearly 10 million. The St. Louis Fed expects 47 million Americans will lose their jobs, which translates to a 32.1% unemployment rate, eclipsing the 24.9% unemployment rate we saw during the peak of the Great Depression.
There are also silver linings with New York’s Governor speculating that the state may be at the apex for new infections and some models showing California peaking in late April. There is no denying that lock downs are likely to remain in place for several weeks or even several months after we hit the apex of new infections. Companies, consumers and families are likely to behave differently in the future as they adjust to this new normal. However if you take the long view and look out a few years or several decades like Benjamin Franklin did when setting up trusts for the cities of Boston and Philadelphia, this could be a generational buying opportunity once the dust settles. As I wrote a couple of weeks ago, I have started unwinding some of the hedges I put in place in early February and have started nibbling slowly on the long side by starting both new positions as well as adding to a select few existing positions.
Insider buying decreased last week with insiders purchasing $92.24 million of stock compared to $117.91 million in the week prior. Selling decreased with insiders selling $387.38 million of stock last week compared to $442.67 million 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 went up to 4.19. In other words, insiders sold more than 4 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 3.75.