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

Company

Closing Price 6/20/06

Total Value of Stock Purchased

52-Week Change

E*Trade Financial (NYSE: ET  )

$21.14

$1,672,268

64%

Fossil (Nasdaq: FOSL  )

$17.43

$3,589,763

(21%)

General Growth Properties (NYSE: GGP  )

$43.43

$855,049

7%

Restoration Hardware (Nasdaq: RSTO  )

$7.01

$200,689

(11%)

TASER (Nasdaq: TASR  )

$8.14

$761,999

(24%)

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

Time to e-trade E*Trade?
When it comes to insider buying, executive purchases are more significant than institutional purchases. And when lots of insiders buy, it's time to take a hard look at the stock. That's according to a 2003 study performed by Dirk Jenter of MIT's Sloan School of Management.

So, go ahead and color me intrigued by E*Trade. Last week, CEO Mitchell Caplan and chief operating officer R. Jarrett Lilien combined to purchase 85,000 shares. Then, on Thursday, E*Trade Bank chief administrative officer Arlen Gelbard exercised options to buy 13,950 shares at -- get this -- $2.12 a pop, good for a 10-bagger at today's prices. But he still hasn't sold.

My guess is these managers each believe the stock is still cheap at current prices. They could be right. Today, E*Trade sells for just 12.9 times forward earnings and less than 2.5 times book value. Check out how that compares with the brokerage's two primary rivals.

Company

Forward P/E

Price-to-Book

Charles Schwab
(Nasdaq: SCHW  )

17.05

4.29

TD Ameritrade
(Nasdaq: AMTD  )

13.33

6.36

Source: Yahoo! Finance

The recent malaise plaguing E*Trade shares might be due to a recent report that said the firm's trading activity slipped 3% from April. Total retail client assets were down 5% over the same period. But while investors panicked and sold on the news, insiders bought. Am I crazy, or is that a classic value strategy? On to the watch list you go, E*Trade.

An old relic resurfaces
I just can't seem to get rid of Fossil. Frankly, I wouldn't even report on the buying, except that it's not CEO Kosta Kartsotis who's doing it. Instead, it's his brother, Tom.

But he's using the same strategy. Beginning last Tuesday, Tom Kartsotis began buying under a 10b5-1 trading plan. And like his brother, he's acquiring close to 70,000 shares at a time. (At least, that's what he did last Tuesday, Thursday, and then again yesterday.)

Since February, Kosta has twice bought under the umbrella of a 10b5-1 trading plan, purchasing a total of 700,000 shares. I wonder whether Tom is willing to make the same commitment. I'll be, um, watching.

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.

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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. Charles Schwab is a Stock Advisor recommendation. TASER is a Rule Breakers selection. The Motley Fool has an ironcladdisclosure policy.


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