Insider Trading Report Edition 260: Notable Buys And Sales

Welcome to the five year anniversary edition of Insider Weekends. Following this strategy over the last five years has been a very interesting experience. While the S&P 500 has enjoyed gains of nearly 88% over the last five years, insiders as a group (excluding directors and 10% owners) have continued to outperform the broader market as seen in numerous academic studies as well as a back-testing project we have undertaken over the last two years.

Beyond the headline numbers, any follower of this strategy would have also realized that insiders are often wrong about the future prospects of their stock and sometimes disastrously so. Attempting to pick the right companies or insiders to follow makes this strategy both interesting and challenging. The key benefit I have found from using this strategy for my personal portfolio is that it often lets me discover companies that I would not have discovered otherwise. This strategy becomes my first filter for further qualitative research. Without further ado, given below is edition 260 of Insider Weekends.

Insider buying more than doubled last week with insiders buying $106.45 million of stock compared to $45.8 million in the week prior. Selling also increased with insiders selling $2.37 billion of stock last week compared to $1.08 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 22.26. In other words, insiders sold more than 22 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 23.59. 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 12, 2015

 Insider Sell Buy Ratio June 12, 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:

Beyond the top 5 insider purchases below, there were other interesting purchases that did not make the list either because they were purchases by 10% owners or were smaller purchases. Some of them include director and 10% owner Mark Rachesky adding to his position in diesel engine and truck manufacturer Navistar International (NAV), 10% owner Bruce Berkowitz of Fairholme Capital adding to his stake in Sears Holdings (SHLD), a $1 million purchase by the President of teen retailer Abercrombie & Fitch (ANF), the CEO of heavy construction services company Tutor Perini (TPC) buying shares for a second week in a row and a cluster of purchases by the insiders of Sears Hometown and Outlet Stores (SHOS).

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Disclosure: None.

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