Who's Buying Now?

It's time once again to check out the most interesting insider purchases of the week.

But before we get to that, I should clarify something from last week's column. Genomic Health's (Nasdaq: GHDX  ) chief scientific officer, Joffre Baker, sold shares according to a previously filed 10b5-1 trading plan. Since these plans give officers no say over when or at what price their stock is sold, Baker's selling should be construed as neither bullish nor bearish. I apologize for the oversight, sir.

Now, after reading through numerous filings using insider tracking tool Form 4 Oracle, here are my top five this week.

The week's buying

Company

Closing Price 6/13/07

Total Value Purchased

52-Week Change

Celgene (NASDAQ:CELG)

$59.00

$5,851,939

41%

Chesapeake Energy (NYSE:CHK)

$36.28

$3,605,270

31%

Einstein Noah Restaurant Group (NASDAQ:BAGL)

$18.00

$14,134,500

(1%)*

Kinder Morgan Management (NYSE:KMR)

$51.00

$2,784,404

20%

Osiris Therapeutics (NASDAQ:OSIR)

$13.10

$17,000,013

21%*

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings.
*Einstein Noah began trading on June 8, 2007. Osiris Therapeutics began trading on Aug. 6, 2006.

Is Celgene still unstoppable?
As one of the 10 best stocks of the past decade, biotech Celgene has long enjoyed the spotlight. Its first-quarter results did nothing to dampen that enthusiasm. Revenue rose 61% in the first quarter, thanks to demand for Revlimid, its compound for treating multiple myeloma.

For Foolish colleague and biotech specialist Brian Lawler, these results augur well for investors, whom he believes will be rewarded when Revlimid produces massive sales growth here and overseas. Legions of professional and amateur stock pickers in our Motley Fool CAPS investor-intelligence database appear to agree:

Metric

Celgene

CAPS stars (out of 5)

****

Total ratings

463

Bullish ratings

438

Bull ratio

94.6%

Bearish ratings

25

Bear ratio

5.4%

Bullish pitches

71

Bearish pitches

10

Data current as of June 13, 2007.

Yet skeptics remain. One hails from Netscribes, a Fool partner that covers varying sectors in CAPS. Here's some of what the biotech scribe had to say about Celgene recently:

Management expects to do EPS of $1 in fiscal 2007. Thus the stock is trading at more than 60 times its forward earnings. Although the stock deserves [a] premium given its superior growth curve ... the gulf between the valuations of Celgene and its peers is too wide.

Don't tell that to insiders. Two are buying shares, and one is buying big. On Friday, Celgene's president of international operations, Aart Brouwer, spent more than $5.7 million to acquire stock. I consider this an extremely bullish buy for two reasons.

First, 350,000 of Brouwer's 353,750 stock options are exercisable right now, at prices ranging from $28.85 to $35.67 a share. Yet none of the 100,000 shares Brouwer bought can be traced to options exercises. Everything was purchased on the open market, according to this Form 4 filed with the SEC.

Second, Brouwer assumed his current post in November 2005 and earned $837,247 in salary and bonus during 2006. No question that's a ton of cash, but it's a fraction of what he just spent.

What does he see that others don't? Allow me to you refer back to Brian's take on the Q1 report. Quoting:

The Revlimid sales growth party isn't going to stop anytime soon. Celgene received a positive opinion on the drug from the European Union's drug regulatory body in March, with final approval of the compound expected later this year. It will take months before Celgene can complete reimbursement negotiations for Revlimid in the twenty-odd EU nations, but sales should begin to pick up in the second half of 2008.

Brouwer is based in Switzerland.

As much as Celgene's valuation makes me queasy, there's at least a reasonable thesis for continued outrageous growth, especially overseas. My guess is that Brouwer, from his comfy perch along the Alps, is buying into that thesis. Here's to hoping he gets paid off.

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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Chesapeake Energy is a Motley Fool Inside Value pick.

Fool contributor Tim Beyers, who is ranked 6,389 out of more than 30,200 rated investors 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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