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A nearly 6% drop in the S&P 500 index last week spurred insider buying with insiders purchasing more than 4 times as much stock as they did the prior week, reversing three weeks of declining purchases. While we did not reach the levels of insider buying we saw in March 2020, where insider buying exceeded insider selling for two weeks in a row, insider selling was only 2 times the level of insider buying last week. The norm is often between 15 to 25 times. To be specific, the average Sell/Ratio over the last year was 22.53 and over the last 10 years was 27.43.
With companies like Amazon (AMZN) down 39% over the last year, some of the bubble stocks have suffered even worse fates. One of these companies, Carvana (CVNA), was down nearly 95% peak-to-trough earlier last week from a peak of $376.83 on August 10, 2021 to a trough of $19.83 on June 13, 2022. This precipitous drop triggered a cluster of insider buying by four different insiders at the company as outlined below.
Among the survivors of this rubble will be generational buying opportunities. I wrote in early May that the market action at that time did not seem to indicate capitulation and my opinion has not changed. There were several things wrong at Carvana and we wrote the following about insider purchases at the company at the end of April,
In a month where we experienced the worst monthly drop in the Nasdaq since 2008 and where the big tech companies that were holding up the indexes also dropped, insiders stepped up as we expected to buy a significant amount of stock last week. Insiders purchased 11 times more stock last week than they purchased in the week prior. The $463 million of purchases were also significantly above the $6 million of purchases we saw during the same week in April 2021 and $15 million of purchases during the last week of April 2020.