Welcome to edition 578 of Insider Weekends. Insider buying increased last week with insiders purchasing $73.76 million of stock purchased compared to $31.92 million in the week prior. Selling increased significantly to $3.58 billion compared to $1.56 billion in the week prior.
A trend we have noticed in recent weeks is buying by insiders of retail focused companies and it is not surprising that insider buying by a board member of Bed, Bath & Beyond (BBBY) made the top of our list this week. Massive direct stimulus in the first half of 2021 that saw most qualified households receive stimulus checks of $600 and $1,400 per individual and an additional $1,400 per dependent left many consumers flush with cash. This influx combined with lower costs for certain segments of the population that continue to work from home and rising asset prices has resulted in the M2 money supply steadily increasing through the pandemic. This translated into a big uptick in sales for retailers who are benefiting from optimized online operations and the reopening of stores. With child care credit checks going out to many families through the rest of 2021, it is not surprising the previous CEO of Macy’s, Terry Lundgren, sees the strongest back to school season ever. Retail is likely to remain a bright spot for at least the next two quarters unless the Delta variant of COVID-19 gains tractions and triggers lockdowns.
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 a little to 48.57. In other words, insiders sold almost 49 times as much stock as they purchased. The Sell/Buy ratio this week was flat compared to the prior week when the ratio stood at 48.89.
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. Bed Bath & Beyond Inc. (BBBY): $28.72
Director Harriet Edelman acquired 11,000 shares of this retail chain, paying $27.47 per share for a total amount of $302,153. Mr. Edelman increased his stake by 29.84% to 47,869 shares with this purchase.