Welcome to edition 523 of Insider Weekends. Insider buying more than doubled last week with insiders purchasing $286.95 million of stock compared to $123.37 million in the week prior even as the S&P 500 declined nearly 3% for the week. The large spike in COVID-19 cases in both Texas and Florida caught the attention of investors and weakened investor appetite for stocks. With volatility high, the premium on options is elevated and I decided not to buy put options on the S&P 500 as I have done in the past but decided to scale back on some investments on the long side.
Selling also increased with insiders selling $2.21 billion of stock last week compared to $1.28 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 dropped to 7.69. In other words, insiders sold almost 8 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 10.39.
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. Continental Resources, Inc. (CLR): $15.1
Executive Chairman Harold Hamm acquired 3,436,264 shares of this oil and natural gas exploration and production company, paying $16.62 per share for a total amount of $57.12 million. Mr. Hamm increased his stake by 197.24% to 5,178,395 shares with this purchase.