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 6/27/06

Total value of stock purchased

52-week change

Build-A-Bear Workshop (NYSE: BBW  )

$21.78

$6,465,850

(6%)

Fossil (Nasdaq: FOSL  )

$17.04

$3,603,453

(20%)

Kite Realty Group Trust (NYSE: KRG  )

$14.69

$248,986

(5%)

Six Flags (NYSE: SIX  )

$5.21

$3,159,511

13%

Visteon (NYSE: VC  )

$6.94

$3,429,150

14%

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

Time to plant a flag in your portfolio?
I've rarely seen more than three insiders buy shares at the same time, let alone six. But that's exactly what happened at Six Flags last week. Call it irony if you like, or maybe a cheap stunt (six for six!), but I think the amusement park operator has suddenly become an intriguing value.

Last Thursday, the shares were pummeled when management announced that Six Flags would be faced with higher operating expenses, which in turn would make it "extremely difficult" to meet prior guidance. Worse, management says the company may find itself out of compliance with its bank credit agreement, which Six Flags needs in order to implement a turnaround. Investors haven't returned, and the stock is down nearly 30% from when the news broke.

But as the shares began to hit bottom on Friday, management started buying. So did Washington Redskins owner Dan Synder. His Red Zone partnership snapped up 500,000 shares for $5.92 a stub.

Why the purchases? I think the clues lie in the statements of CEO Mark Shapiro in Thursday's press release. In explaining the higher operating expenses, Shapiro said that management was willing to risk guidance to fix operational problems. The bottom line, he said, is that management views its cash expenditures as a "long-term investment." That's Foolish, and it jibes with what fellow Fool Rick Munarriz saw on his recent tour of Six Flags' popular East Coast attractions.

I've learned from observing great investors like David Gardner that poor management rarely provides big returns. Conversely, excellent management often leads to market-crushing returns. Six Flags certainly looks ugly right now, but Shapiro strikes me as the right guy, in the right place, at the right time. As of Friday, he and his compadres have a few hundred thousand more reasons to succeed. Time to add this stock to my watch list.

A beary attractive investment
Build-A-Bear Workshop is one of my favorite stores for our three kids. Its investment thesis has always struck me as reasonable: It's a growing retailer with a popular product, room for both geographic and product line expansion, and an engaged management team.

So, why haven't I bought? The risks. Build-A-Bear is such a simple concept that another retailer could easily create a substitute. And what if the cuddly animals prove faddish? What if another fad displaces it? Is the stock priced low enough to account for these and other unforeseen possibilities? Apparently, one of the retailer's biggest investors thinks so.

Philip Timon, head of hedge fund Endowment Capital, purchased 242,500 shares last week, boosting his ownership interest in Build-A-Bear by more than 10%. That's interesting to me because, in December, Timon told the Associated Press that his intent was to hold the shares for the next five to 10 years. With the shares trading at a forward P/E of 11 as of this writing, I think I understand why.

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.

Further inside 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 is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.


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