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Who's Buying Now?

Editor's note: A previous version of this article incorrectly reported Montpelier Re's book value. We regret the error.

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


Closing Price 2/26/08

Total Value Purchased

52-Week Change

American Express (NYSE:AXP)








Medtronic (NYSE:MDT)








Montpelier Re Holdings (NYSE:MRH)




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

Another run at Montpelier Re
For long-term investors like me, few things are more vexing than a stock that sells off on decent, if disappointing, results. That seems to be what we have with reinsurer Montpelier Re.

Earnings were down 25%, and policy renewal prices fell 10%. And yet, on the whole, this appears to be a very healthy business. Montpelier's combined ratio, which measures the amount of premium income paid out in claims and expenses, reached 61.3%, down from 70% last summer.

What that means, simply, is that Montpelier Re is writing more profitable policies. Good management and good weather can share the credit for that.

But Mother Nature has no claim on Montpelier's improved sales. For the fourth quarter, net premiums were up 40%. Numbers like that are what make this reinsurer attractive to our 84,000-strong Motley Fool CAPS community:


Montpelier Re

CAPS stars (out of 5)


Total ratings


Bullish ratings


Percent Bulls


Bearish ratings


Percent Bears


Bullish pitches


Bearish pitches


Note: data current as of Feb. 26, 2008.

CAPS All-Star Cheekybloke best summarized the thesis last week, I think. Quoting:

Uncertainty is creating a stock that is priced so low it either is severely undervalued or has issues potential losses which I and other investors are not privy to. I would hazard the downside risk is much less than upside potential at this price.

Certainly, the stock looks cheap. Montpelier trades at an 8% discount to its reported book value of $17.88 per share. I can't see how that's fair.

Nor, apparently, can company insiders. Just as they did after the stock collapsed in 2006, Montpelier's top executives and board members are buying in bulk. Four purchased shares last week, including CEO Anthony Taylor, who put nearly $200,000 in personal wealth on the line.

That's too bold to ignore, and so Montpelier Re joins my CAPS portfolio today.

Good medicine for Medtronic
With a good quarter finally in the books, Fools have reason to believe there's a turnaround under way at Medtronic.

What we don't know is whether the stock is fairly valued at today's prices. A 1.43 PEG ratio isn't encouraging, but it's not discouraging, either. It suggests only that the stock trades at or near fair value.

But that's only if we believe analysts are correct about Medtronic's prospects. They may not be. New stents for pain relief could reignite earnings growth beyond Wall Street's 13%-a-year consensus. CAPS investor poinkie explains in this pitch, posted two weeks ago:

New leadership driving lean business (limited hiring freeze). Intense internal sales/growth focus. Recent approvals for neuro-modulation trials in treatment of depression/severe pain. Spinal biologics not a passing fad. Poised for solid steady growth.

These "leaders" are also buying shares. Three separate insiders, including CEO William Hawkins and chief information officer James Dallas, spent more than $14 million on Medtronic stock last week.

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.

Get the inside scoop on stocks of all sizes with related Foolishness:

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