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 5/29/07

Total Value of Stock Purchased

52-Week Change

Brookdale Senior Living (NYSE:BKD)

$44.59

$36,762,779

(8%)

First Charter Corp. (NASDAQ:FCTR)

$21.15

$282,426

(10%)

RAIT Financial Trust (NYSE:RAS)

$29.25

$635,396

17%

Sharper Image (NASDAQ:SHRP)

$10.95

$38,689,401

(20%)

Spectra Energy (NYSE:SE)

$26.40

$783,776

(6%)*

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings
*Spectra Energy began trading on Jan. 3, 2007.

Is RAIT right for you?
Once again, real estate investors are buying. Can you blame them? For all the problems with the real estate market, the best REITs have plenty of capital, enjoy modest and somewhat predictable growth, and, best of all, offer mouthwatering dividend yields.

And I do mean mouthwatering. RAIT Investment Trust, a commercial real estate lender here and in Europe, offers an 11.20% yield as I write. It's enough to make those following RAIT in our Motley Fool CAPS investor-intelligence database look like Pavlov's dog:

Metric

RAIT Financial

CAPS stars (5 max)

***

Total ratings

64

Bullish ratings

60

Bull ratio

93.8%

Bearish ratings

4

Bear ratio

6.2%

Bullish pitches

11

Bearish pitches

0

Data current as of May 29, 2007

Insiders too. Officers and directors have spent more than $900,000 to acquire new shares over the past month. CEO Daniel Cohen started buying a week ago, adding 20,000 shares for himself and his wife. CFO Jack Salmon is also buying, as is board member Frank Farnesi.

Buying in bunches like that is bound to attract attention, especially from Fools. And not just yours truly. Nick Kapur, a colleague of mine from the Rule Breakers team, singled out RAIT as a potential dividend winner two weeks ago.

Is he right? I'm no expert on valuing REITs, but I'm very impressed with RAIT's history of improving fundamentals. Revenue, for example, has grown by an average of 21.9% annually over the last five years. Dividends, meanwhile, are up 5.1% over the same period.

And management has once again hiked the payout. After reporting a 32% year-over-year increase in per-share adjusted first-quarter earnings, RAIT raised its dividend to $0.80 a stub, up 6.7% from the December quarter. RAIT has paid dividends consistently since at least March of 1998.

With that much history, I, like my CAPS compadres, am tempted to make a move. But I can't. There's too much I don't know about how RAIT will be affected by the subprime crisis. Ignorance has destroyed my portfolio before; I'll not let it happen again. Even if all that's at risk is my CAPS rating.

The watch list will have to do, for now.

Hoping for a sharper image at Sharper Image
Then there's ailing retailer Sharper Image, which I've recently concluded is destined for the scrap heap. Insiders think I'm nuts. Over the past week, a group that includes interim CEO Jerry Levin invested more than $37 million to boost its stake to 21.1% of the outstanding shares.

They may have a point. This morning, Sharper Image filed an 8-K in which it revealed a revised financing deal with Wells Fargo (NYSE: WFC  ) that would allow it to increase its borrowing power from $85 million to $120 million. Interest accumulates at no more than 8.5% annually by my math. Not bad for a company struggling as much as S.I. has.

Moreover, Sharper Image has a commitment letter from Wells Fargo to borrow up to $20 million against its intellectual property. Pretty sweet deal for a retail store, eh?

With tens of millions in fresh capital available, it's possible that Levin and his team will organize a turnaround at Sharper Image. It's also possible that I'll someday play right field for the New York Yankees. I wouldn't bet on that occurring, of course. And I won't be betting on Sharper Image, either.

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 4,280 out of more than 29,400 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. Tim's portfolio holdings can be found at his Fool profile. His thoughts on insider buying, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy only stays inside when it has to.


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