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 today.

The week's buying

Company

Closing Price 1/23/08

Total Value Purchased

52-Week Return

Dress Barn (NASDAQ:DBRN)

$11.96

$417,606

(46.9%)

Mesa Air (NASDAQ:MESA)

$3.40

$73,905

(56.5%)

Xilinx (NASDAQ:XLNX)

$21.50

$147,020

(6.4%)

NaviSite (NASDAQ:NAVI)

$4.00

$141,801

(24.2%)

Chesapeake Energy (NYSE:CHK)

$36.00

$1,358,838

  21.4%

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

A lesson for legacy carriers?
Airlines bother me. Between bad business models, combative unions, and inept management, there's little value in owning carriers that almost can't make a buck in the best of times. It's for these reasons and more that I nominated United Airlines parent UAL (Nasdaq: UAUA  ) as the worst stock for 2008.

But even a critic like me has to admit there's something interesting happening at regional carrier Mesa Air. For example, instead of taking the knife to its headcount, as legacy peers United and Northwest (NYSE: NWA  ) have done, Mesa is moving to cut costly routes in Arkansas, Kansas, Missouri, and Nebraska.

And instead of cashing out huge stock awards, as UAL's top brass has, Mesa's insiders are buying. Five separate insiders since last Friday, to be precise. And that doesn't include CEO Jonathan Ornstein, who added 39,000 shares for himself and his family last Tuesday. Ornstein told The Wall Street Journal that he and his team were buying because Mesa stock is "a very good long-term value."

Those rating the stock in our 82,000-strong Motley Fool CAPS community don't appear to agree:

Metric

Mesa Air

CAPS stars (5 max)

*

Total ratings

79

Bullish ratings

44

Bull ratio

55.6%

Bearish ratings

35

Bear ratio

44.4%

Bullish pitches

9

Bearish pitches

5

Data current as of Jan. 24.

I understand why. Airlines not named Southwest haven't provided much in outsized returns over the past decade. And with oil still hovering near $90 a barrel, there's little reason to believe it will get easier for Mesa to do business.

Worse, Mesa is a micro-cap stock that's more vulnerable to Mr. Market's wild mood swings. Careless investors could find themselves suddenly on the losing side of this stock.

And yet, if Mesa remains ruthless about flying routes only where it has an advantage, a rebound could follow. CAPS All-Star Chemistryguy explains in this pitch from a month ago:

The stock has a current Price/Book ratio of .49, which will become .82 due to the $90 million (or $3.13 per share) losing the lawsuit has cost them. Given their 5 year annualized return on equity of 19.1% and higher demand in the form of an annualized sales growth of 20.64% over the last 5 years, this stock appears to be a screaming deal assuming the company does not try any more stupidity with Hawaiian.

I agree, which is why I'll be adding Mesa to my CAPS watch list as soon as the company regains the minimum required $100 million market cap.

The E.F. Hutton of insider buying
Insider buying is anything but a perfect indicator. But some insiders get it right so often they're like all-star fund managers. Chesapeake Energy's Aubrey McClendon could fit that description.

Of the 12 buys he made during 2007, 10 are currently in the money. And that's before accounting for Chesapeake's modest dividend. 

McClendon is at it again. He started by buying 26,500 shares last Thursday and added 10,000 more on Friday. Total spent? $1.36 million. But here's the thing: If McClendon's form 4 reporting is correct about the total number of shares owned, he earns -- you ready? -- $7.9 million a year in dividends.

That he's willing to put at least a portion of that money back into his company is, to me, a impressive testimonial to his faith in the underlying business.

There's your update. See you back here next week when we dig through more insider filings in search of the next home run stock.

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Related Tickers

8/22/2014 4:01 PM
CHK $26.02 Down -0.44 -1.66%
Chesapeake Energy CAPS Rating: ****
MESA $0.04 Down +0.00 +0.00%
MESA AIR GROUP, IN… CAPS Rating: No stars
DBRN.DL $0.00 Down +0.00 +0.00%
The Dress Barn, In… CAPS Rating: ***
UAUA.DL $0.00 Down +0.00 +0.00%
UAL Corp CAPS Rating: *
XLNX $42.39 Down -0.28 -0.66%
Xilinx, Inc. CAPS Rating: ****

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