One of the things that excites me about reviewing insider transactions each weekend is the discovery of a new company that I might not have been aware of or that I did not pay enough attention to in the past. The transaction is often a catalyst that triggers further research and provides a framework for idea discovery. For companies that look interesting, we review insider purchases during the prior decade to see if any patterns emerge and also keep track of purchases by insiders across companies in case they serve on the boards of multiple companies. To improve the signal from these transactions, we exclude any option exercises, participation in secondary offerings and private party transactions. Once in a while, we make an exception to this rule and the purchase of Rafael Holdings by its CEO Howard Jonas is one of those exceptions as discussed below.
Welcome to edition 582 of Insider Weekends. Insider buying increased last week with insiders purchasing $93.99 million of stock purchased compared to $84.25 million in the week prior. Selling also increased to $3.32 billion compared to $2.78 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 went up to 35.37 In other words, insiders sold more than 33 times as much stock as they purchased. The Sell/Buy ratio this week was unfavorable compared to the prior week when the ratio stood at 32.99.
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. Rafael Holdings, Inc. (RFL): $47.6
Chief Executive Officer Howard S. Jonas acquired 112,561 shares of this pharmaceutical and real estate company, paying $44.92 per share for a total amount of $5.06 million. These shares were purchased indirectly through a trust.