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Insider Weekends: A Rather Morbid Insider Purchase

  • December 13, 2020

Welcome to edition 546 of Insider Weekends. Insider buying decreased last week with insiders purchasing $66.85 million of stock compared to $82.04 million in the week prior. Selling increased with insiders selling $2.97 billion of stock last week compared to $2.81 billion in the week prior.

Insider enthusiasm for their stocks appeared to have waned last week even as the S&P 500 and Nasdaq hit all time highs before giving back some of those gains. CNN’s Fear & Greed Index, which is a good gauge of market sentiment, remains in Extreme Greed territory and was even higher the week prior. With the exception of an insider purchase at a rather morbid company as discussed below, most of the others in the top 5 insider purchases did not pique my interest.

A couple of insider purchases that did not make the list but that stood out included yet another insider purchase at cosmetics company Coty (COTY) and a $200K purchase by the CFO of ShotSpotter (SSTI), a company that helps police and first responders determined the location of a gunshot when a gun is fired.

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 44.36. In other words, insiders sold more than 44 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 34.2.

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.

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