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Who's Buying Now?

It's a new week, which means it's time to check the most interesting insider purchases. After reading through numerous filings using insider tracking tool Form 4 Oracle, here are my top five from the past seven days:

The week's buying


Closing Price 6/13/06

Total Value of Stock Purchased

52-Week Change

Chesapeake Energy (NYSE: CHK  )




Dean Foods (NYSE: DF  )




Dendreon (Nasdaq: DNDN  )




NRG Energy (NYSE: NRG  )




Pegasus Wireless (Nasdaq: PGWC  )




Sources:, Yahoo! Finance, Form 4 Oracle, SEC filings

Faker or breaker?
Dendreon is a mystery. On the one hand, it's a potential Rule Breaker, developing what could be a promising treatment for late-stage prostate cancer. On the other hand, it's a serial cash burner that plans to burn through $100 million this year alone. So, which is it: breaker or faker?

Ask management, and they're likely to vote for the former. And they've got the empty wallets to prove it. On Thursday, chief scientific officer David Urdal, general counsel Richard Hamm, and board member Douglas Watson each bought 5,000 shares of the company.

Interestingly, the buying occurred the day after promising study results were published in the journal of the American Cancer Society. In a phase 2 trial, Dendreon's PROVENGE was combined with Genentech's (NYSE: DNA  ) Avastin drug in an attempt to hinder the advance of what's called androgen-dependent prostate cancer, which can occur in patients that relapse after previously successful surgical or radiological care. The study suggests that PROVENGE and Avastin, when combined, may stunt the growth of cancerous cells by as much as 85%.

It's way too early to conclude that PROVENGE is on its way to becoming a blockbuster. But to borrow from poker parlance, the study gives Dendreon more outs than it previously had. One could be an acquisition by Genentech. That would make sense; biotech buyouts have become all too common. Struggling Merck (NYSE: MRK  ) got in on the game in May, for example.

But even if an acquisition isn't forthcoming, the new study should prove useful. PROVENGE is, after all, the future of Dendreon. If management's buying is any indication, the future looks much brighter this week than it has in a while.

Don't forget Fossil
Watchmaker Fossil could be a study in the limited value of insider buying. When I first profiled the company in these digital pages, the shares were trading for 13% higher than they are today. Lousy earnings have hurt returns.

Certainly, that could change, but there's also no guarantee that Fossil CEO Kosta Kartsotis had it right when he purchased shares. He could be as wrong as an elephant in stretch pants. And so could Pegasus Wireless president Jasper Knabb. A week ago, he bought 40,000 more shares in the company. That makes nearly 750,000 stubs since the dawn of 2006, or roughly 1% of the total shares outstanding, according to Yahoo! Finance.

Normally, I'd consider that to be a pretty impressive endorsement, but there are serious problems with Pegasus, which fellow Fool Brendan Mathews recently covered in detail. The biggest issue, however, is valuation. As Brendan figures it -- and I agree with him -- Pegasus' real value tops out at maybe $69 million. Not exactly within spitting distance of the firm's $593 million market cap, is it?

My point is simple: Insiders may be buying for all the right reasons. They may also be buying on a wing and a prayer. There's no way to tell the difference without doing your own homework.

And that's all for this week. See you back here next Wednesday when we dig through more insider deals in search of the next home run stock.

Get the inside scoop on stocks of all sizes with this related Foolishness:

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Fool contributorTim Beyersusually favors two scoops of ice cream over the inside scoop. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.

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Related Tickers

10/24/2016 4:00 PM
CHK $6.36 Down -0.32 -4.79%
Chesapeake Energy CAPS Rating: ***
DF $16.73 Up +0.12 +0.72%
Dean Foods CAPS Rating: **
DNA $94.97 Down +0.00 +0.00%
Genentech CAPS Rating: ****
DNDNQ $0.00 Down +0.00 +0.00%
Dendreon Corp CAPS Rating: *
MRK $60.75 Down -0.45 -0.74%
Merck and Co. CAPS Rating: ****
NRG $11.11 Down -0.41 -3.56%
NRG Energy CAPS Rating: ***