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.

The week's buying

Company

Closing price 5/1/07

Total Value of Stock Purchased

52-Week Change

Capitol Bancorp (NYSE:CBC)

$30.35

$947,550

(26%)

Pentair (NYSE:PNR)

$31.92

$177,332

(15%)

Popular (NASDAQ:BPOP)

$16.79

$268,529

19%

Parker-Hannifin (NYSE:PH)

$93.36

$758,639

12%

Security Bank Corp. (NASDAQ:SBKC)

$20.04

$2,316,148

(13%)

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings

A bank worth buying?
Investing isn't a popularity contest. Sadly, no one knows this more than Richard Carrion, chairman and CEO of Puerto Rico's Banco Popular.

Two weeks ago, the bank reported earnings that were described as disappointing. As fellow Fool Nate Parmelee wrote at the time, "Things at Popular have not gone well, and the company's management is aware of it, but that hasn't made all the pain go away yet."

Or at all. Investors have suffered staggering losses over the past year.

Management, too. Director Maria Luisa Ferre owns 2.3% of the business, while Carrion's claim equals 1.2% of Popular. All told, insiders hold nearly 6% of the outstanding shares.

And that ratio appears to be growing. Director Michael Masin, a corporate governance specialist, bought 10,000 shares last Monday. Executive vice president Amilcar Jordan, who, importantly, oversees the bank's risk management, added 6,000 shares two days later.

Should you follow? Only if you believe that Amilcar's buying indicates that Popular's exit from the subprime mortgage business is going better than expected. Trouble is, the numbers don't support that assertion: Popular has suffered restructuring charges for two straight quarters and, in the most recent reporting period, was forced to write down the value of the subprime loans it still holds.

But that doesn't seem to bother the Fools rating Popular (an Income Investor pick) in our Motley Fool CAPS investor intelligence database:

Metric

Popular

CAPS Stars (5 Max)

****

Total Ratings

214

Bullish Ratings

199

Bull Ratio

93.0%

Bearish Ratings

15

Bear Ratio

7.0%

Bullish Pitches

41

Bearish Pitches

7

Data current as of May 2, 2007

Bulls refer to Popular's dominance in its home market of Puerto Rico, suggesting that a stable customer base will aid a turnaround. Quoting from Nate's top-rated pitch in CAPS:

Fairly conservative bank with a stranglehold on the Puerto Rico market for deposits and a pretty sound mainland U.S. strategy. I think it is 30% to 50% undervalued and with a 3.7% yield is a pretty good package in this environment.

I'm not smart enough about banking to tell you whether Nate is right or wrong. What I can tell you is that he's proven to be a superior stock picker who's also a member of the Global Gains team. If he's wrong, it's not because he's ill-informed.

But I suspect he's right, though it could take years for his thesis to play out. Still, that shouldn't be a problem for long-term investors. A quick check of Popular's dividend record shows consistent and growing payouts since at least 1994.

The other Parker
Though it's Peter Parker -- a.k.a. Marvel Entertainment's Spider-Man -- that is making his way to the big screen this week, it's 89-year-old components marker Parker-Hannifin that has my attention today.

Last Wednesday, director Linda Harty opened a 5,000-share position for her spouse. CEO Donald Washkewicz added 3,400 shares to his already-sizable stake two days later.

That should be a very bullish sign. Trouble is, selling also took place last week. On Thursday, Chief Information Officer William Eline dumped 1,254 shares, and John Greco, president of the firm's instrumentation group, sold 1,282 stubs.

Hardly a ringing endorsement, eh? Don't be too sure. Both Eline and Greco obtained shares via options. Typically, executives sell all the shares they acquire in this manner. Not Eline and Greco; each pocketed a few hundred shares to sell at higher prices. With the stock trading for just 14 times trailing earnings, well below the S&P 500 average, I think they'll be pleased with the results.

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

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Fool contributor Tim Beyers, who is ranked 4,098 out of more than 28,500 in CAPS, usually favors two scoops of ice cream over the inside scoop. Tim didn't own stock in any of the companies mentioned in this story at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on insider buying, Foolishness, and investing in general may be found in his blog. Popular is an Income Investor pick. Marvel is a Stock Advisor selection. The Motley Fool's disclosure policy is a strong buy.


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