Who's Buying Now?

It's time to check the most interesting insider purchases for the week.

After reading through numerous filings using insider tracking tool Form 4 Oracle, here are my top five.

The week's buying

The Britney Spears of stocks?
Once again, dear Fool, we wade into waters polluted by the subprime crisis. Our latest subject? Maguire Properties, a real estate investment trust whose primary holdings can be found near my old Southern California stomping grounds.

Those who weigh in on the stock in our Motley Fool CAPS community -- now 65,000 strong -- remain unimpressed:

Note: Data current as of Oct. 10.

How unsurprising. I mean, look at this. I'd swear I was studying a chart of Britney's free-falling reputation if I didn't already know better. Where are the paparazzi?

At the bar, probably. Don't be surprised if you find a few Maguire investors there, too. In May, Maguire reported a GAAP loss on the bottom line and a 25% decline in funds from operations. Then, in July, Maguire reported a further 34% decline in per-share FFO after accounting for one-time charges.

No wonder investors are headed for the exits.

But are they leaving too early? Insiders appear to think so. Four different executives and board members have bought shares since late August, when the stock dropped to less than $30 a share for the first time since late 2005. CEO Robert Maguire III joined the party last Monday, spending more than $5 million to pad his position.

I sense that he'll profit handsomely when the real estate market finally turns. Maguire Properties, you see, doesn't invest in residential property. Office and parking space is more to its liking. That's why, in February, Maguire paid the Blackstone Group (NYSE:BX) $2.875 billion to buy property Blackstone had recently bought in its takeover of Equity Office Properties.

And much progress has been made in financing that deal. Maguire in September signed a five-year, $400 million mortgage refinancing of Los Angeles' KPMG Tower. Quoting the related 8-K:

On and after six months from the closing date ... we may prepay this loan in whole or in part at our option after giving Eurohypo notice of at least ten business days. Our net proceeds from the KPMG Tower refinancing, after repayment of the existing $210.0 million mortgage loan and payment of closing costs and loan reserves, were approximately $130 million. We used approximately $110 million of these proceeds to fully repay our $400.0 million term loan incurred in connection with the April 2007 acquisition of the Southern California Equity Office Properties portfolio ... [Emphasis added.]

An accompanying press release goes on to say that 88% of Maguire's total debt portfolio is now fixed at about 5.6% annually.

In other words, even though Maguire faces plenty of risk as a REIT, investors may be overstating the bear case. Accordingly, I've added Maguire to my CAPS watch list.

Another buy that isn't really a buy
Finally, a brief reminder that not all insider buys are worth paying attention to. Witness filtration specialist Flanders.

Last week, CEO Robert Amerson and Chief Operating Officer Harry Smith Jr. combined to spend more than $7 million to acquire stock. Trouble is, on the same day, ousted CEO Steven Clark sold nearly as much in liquidating his portfolio.

To be fair to Flanders, the board removed Clark last month after the company reported a 68% drop in second-quarter earnings. Amerson and Smith assumed their posts immediately afterward. That each is buying now could signal faith in a turnaround.

But Clark's selling could also indicate that Flanders has further to go than anyone realizes. Keep clear of this business till signs of progress are apparent.

And that's your update. 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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