Welcome to edition 542 of Insider Weekends. Insider buying declined last week with insiders purchasing $102.19 million of stock compared to $133.12 million in the week prior. Selling also declined with insiders selling $3.13 billion of stock last week compared to $5.61 billion in the week prior.
When we first computed the weekly insider buys numbers it showed that insiders had purchased more than half a billion dollars worth of stock, which is highly unusual in this kind of market environment. The market appears to be looking past rising COVID-19 cases and election uncertainty and is instead focused on the positive results from Pfizer’s vaccine and the potential of a large stimulus early next year. Diving deeper into the purchases, I realized that the big spike was mostly because of a $421 million “purchase” of Kraft Heinz (KHC) that turned out to a transfer of shares from one private entity to another as you can see from the footnotes of the form 4 filing.
Beyond this “non-purchase” that skewed the numbers, there were several others that were interesting including Camping World (CWH) discussed below and ones that did not make the top 5 list like a $1.66 million purchase of Lions Gate Entertainment (LGF) by one of its directors and a purchase of SuRo Capital (SSSS) I tweeted about last week.
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 30.62. In other words, insiders sold almost 31 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 42.12.
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.