Welcome to edition 535 of Insider Weekends. Insider buying increased last week with insiders purchasing $138.44 million of stock compared to $108.3 million in the week prior. I was a little surprised to see this spike in insider buying right as we are approaching the end of the third quarter and companies begin to enter their earnings related quiet periods. Looking at the data it became evident that insider buying was indeed muted with the exception of two large purchases. Brad Gerstner, the founder and CIO of Altimeter Capital and a 10% owner of the hottest Silicon Valley company Snowflake (SNOW), picked up $50 million worth of shares at the IPO for $120/share.
A director of Broadcom also picked up a large number of shares as discussed below. In fact there were very few management purchases last week and most purchases were by directors of companies, which I usually find less interesting unless the director is also the Chairman of the Board or has had a long history with the company. Selling also increased with insiders selling $2.17 billion of stock last week compared to $2.07 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 15.69. In other words, insiders sold almost 16 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 19.1.
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. Broadcom Inc. (AVGO): $356.8
Director Henry Samueli acquired 101,740 shares of this semiconductor company, paying $361.45 per share for a total amount of $36.77 million. These shares were purchased indirectly by H&S Investments I L.P.