Insider Trading Report Edition 259: Notable Buys And Sales

Welcome to edition 259 of Insider Weekends. Insider buying increased last week with insiders buying $45.8 million of stock compared to $43.19 million in the week prior. Selling decreased with insiders selling $1.08 billion of stock last week compared to $2.08 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 23.59. In other words, insiders sold almost 24 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 48.14. 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 5, 2015

Insider Sell Buy Ratio June 5, 2015

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. American Homes 4 Rent (AMH): $16.48

Director B. Wayne Hughes acquired 1 million shares of this single-family home rental REIT, paying $16.80 per share for a total amount of $16.8 million. These shares were purchased indirectly through a trust.

This is the third purchase a million shares by Mr. Hughes we have reported on over the last six months. Following his purchase in December we mentioned,

“Mr. Hughes is the billionaire founder of Public Storage (PSA) and retired as the CEO of PSA in 2012. He founded the former manager of American Homes 4 Rent in 2011.”

For a REIT, the company has an unusually low yield of just 1.2%, when compared to the average yield of 3.27% of all residential equity REITs (PDF). The value most likely lies in the single family homes that company holds on its balance sheet as their timing in buying single family homes after the great recession was impeccable. The company trades at 1.05 times tangible book value.

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