Insider Weekends - Edition 312

Insider buying declined last week with insiders buying $136.88 million of stock compared to $150.44 million in the week prior. Selling increased with insiders selling $1.28 billion of stock last week compared to $1.15 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 9.35. In other words, insiders sold more than 9 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at 7.67. We are calculating an adjusted ratio by removing transactions by funds and companies and trying as best as possible only to retain information about insiders and 10% owners who are not funds or companies.

Insider Sell Buy Ratio June 10, 2016

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. Advance Auto Parts Inc. (AAP): $153.02

Shares of this auto parts retailer were acquired by 2 insiders:

  • Director Jeffrey C. Smith acquired 397,624 shares, paying $154.84 per share for a total amount of $61.57 million. These shares were purchased indirectly through variousStarboard Value funds.
  • CEO Thomas Greco acquired 6,700 shares, paying $150.82 per share for a total amount of $1.01 million. Mr. Greco increased his stake by 22.94% to 35,904 shares with this purchase.

If you haven’t followed the activism of Jeff Smith, this 2014 profile of him in Fortune aptly titled Starboard Value’s Jeff Smith: The Investor CEOs Fear Most makes for an interesting read.

Trading at 10 times EBITDA and nearly 30 times FCF, this auto parts retailer with over 5,100 stores and declining sales isn’t exactly a deep value company. The stock is off nearly 24% from its 52 week high set back in November and it hasn’t participated in the recent market rally.

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Disclosure: Clients of Signal Partners, LLC  and I may have positions in ...

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