Stocks the Rich Executives Are Buying

Put five Fools in a room, ask them how they invest, and you'll likely get five different answers. Some like growth, others value, or small caps, or dividends, or, well, you get the picture.

Yet, while our styles differ, we all want excellent, engaged managers running the companies we own. We like it even more when these managers are also owners -- investors like you and me who, in trying times like these, are willing to buy as others sell. That's why I write this column weekly.

The week's buying
So which rich executives are buying now? Have a look, courtesy of our friends at Form 4 Oracle:

Company

Closing Price 1/27/09

Total Value Purchased

52-Week Change

Bank of America (NYSE: BAC  )

$6.50

$4,123,465

(82.9%)

BlackRock (NYSE: BLK  )

$108.39

$1,049,720

(47.6%)

General Maritime (NYSE: GMR  )

$10.59

$94,755

(51.4%)

PacWest Bancorp (Nasdaq: PACW  )

$18.30

$162,649

(45.4%)

Popular Inc. (Nasdaq: BPOP  )

$3.02

$136,700

(75.4%)

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

Can America bank on this stock?
Raise your hand if John Thain's $1.22 million collection of office decor disgusted you. Me, too. That B of A bet on this guy doesn't say much about the company, or the stock.

But there are plenty of reasons not to like Bank of America, argues CAPS investor crescentrv. "So it might go up or down, but -- like GM -- this is completely dependent on the good will of the Fed Govt." Continuing:

There is a decent chance that the Govt's hand will be forced, due to the massive injections that would be needed -- and they will take the equity holders to zero.

Our Fool has a point. Bank of America has twice dangled its feet in the bailout pool, the second time to cover huge losses from its acquisition of megabroker Merrill Lynch. That deal made B of A the largest bank in the country, with $2.7 trillion in assets.

But shareholders paid dearly. Bank of America at first agreed to a $50 billion acquisition for Merrill, but according to reporting by The Wall Street Journal, CEO Ken Lewis miscalculated what it would take to consummate the deal and begged regulators for help. Thain has since resigned. Lewis probably should.

And shareholders? They're left wondering just how bad it will get. You'll find plenty of skeptics in our 125,000-strong Motley Fool CAPS community:

Metric

Bank of America

CAPS stars (out of 5)

***

Total ratings

7,466

Percent bulls

87.7%

Percent bears

12.3%

Bullish pitches

1,181

Data current as of Jan. 28, 2009.

Interestingly, you'll find the loudest-snorting bulls inside B of A: Ten executives and board members bought shares between Jan. 20 and 22, including Thain and Lewis. Combined, they committed more than $4 million to new holdings.

And they aren't the only bank insiders buying. At JPMorgan Chase (NYSE: JPM  ) , Jamie Dimon bet nearly $11.5 million on shares of his bank, while CEO Heidi Miller also made a small purchase.

Should you be bullish, too? I'm not so sure. Foolish colleague Morgan Housel raises a good, if cynical, point about these and other bank buys: They increase confidence, which makes it easier to raise capital. Tread carefully, Fool.

There's your update. See you back here next week when we dig through more insider filings in search of the next home run stock.

Get the inside scoop on stocks of all sizes:

Fool contributor Tim Beyers is slowly improving his CAPS score. Thankfully, he's doing better as an analyst for Rule Breakers. JPMorgan Chase is an Income Investor pick. Bank of America is a former Income Investor selection. Try either of these Foolish services free for 30 days.

Tim didn't own shares in any of the stocks mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy knew a rich executive once. She never bought anything.


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