Who's Buying Now?

It's time to check the most interesting insider purchases from the past week. 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 April 24

Total Value Purchased

52-Week Change

China Security & Surveillance (NYSE:CSR)

$19.06

$589,500

12.5%

Escalade (NASDAQ:ESCA)

$8.06

$45,962

(12.1%)

Schering-Plough (NYSE:SGP)

$18.12

$2,008,776

(41.6%)

Ulta Salon (NASDAQ:ULTA)

$13.40

$196,873

(55.1%)*

Vantage Energy Services (AMEX:VTG)

$8.15

$104,103

9.4%*

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings.
*Ulta began trading on Oct. 25, 2007; Vantage began trading on June 8, 2007.

Plowing into Schering-Plough
What's the biggest bet you've ever made on a stock: $10,000? $50,000? $100,000?

How about $2 million? That's what Schering-Plough CEO Fred Hassan just bet on his company, fulfilling a promise first made in January. Hassan said in a statement that the purchase reflects his "long-term confidence in the company."

He's not alone. Those who've rated Schering-Plough in our 99,000-strong Motley Fool CAPS community give the stock four stars:

Metric

Schering-Plough

CAPS stars (5 max)

****

Total ratings

936

Bullish ratings

885

Percent Bulls

94.5%

Bearish Ratings

51

Percent Bears

5.5%

Bullish Pitches

128

Bearish Pitches

7

Note: Data current as of April 25, 2008.

Still, our Fools have nothing on Hassan. He increased his direct stake in Schering by 18% with his purchase on Thursday.

And he's buying in a time of uncertainty. Remember how I said that his pledge was made in January? Days before, Schering-Plough and Merck (NYSE: MRK  ) had copped to poor results in clinical tests of cholesterol fighter Vytorin.

Turns out it didn't matter. Even with lower sales from its cholesterol drugs, Schering-Plough put up strong first-quarter results, as Foolish colleague Brian Orelli pointed out here. Quoting:

Schering's adjusted earnings, backing out acquisition costs, were $0.53 per share compared to $0.42 per share in the year-ago quarter. That's not too shabby, especially when you consider that the synergies with Organon and the cuts that the company recently announced haven't kicked in yet.

But is the stock cheap? Fool community member Mithrophon thinks "yes" in this old but excellent post at our Liquid Lounge discussion board. Specifically, our Fool wrote back then that Schering-Plough's existing businesses plus available cash were worth north of $20 a share. Mix in research and development and the stock's value jumped to $29 a share, or a 60% premium from Thursday's close.

Anyone else wondering if Hassan is thinking similarly? Schering-Plough joins my CAPS portfolio today.

Where's the advantage for Vantage investors?
I'm far less confident in Vantage Energy for the same reasons Foolish colleague Toby Shute provided here. Quoting:

[T]hese guys must be hoping investors aren't squinting and reading the fine print. Check out this presentation slide, demonstrating how cheap Vantage is on a relative cash flow basis. Why pay 7 or 12 times discretionary cash flow for rival drillers when you could pay a mere multiple of 2?

The problem is that, despite the "2008" heading, Vantage's cash flow numbers are based on a fully deployed fleet in 2012. Of course this looks like a rock-bottom multiple compared to other companies' forward year cash flows!

To be fair, Chief Financial Officer Doug Smith and Chief Operating Officer Doug Halkett have spent more than $130,000 to acquire 16,400 shares of Vantage so far in April.

But here's why that shouldn't matter to you. Insiders as a group were issued some 3.3 million warrants, exercisable at $6.00 each, at the company's IPO. What's more, according to a recent proxy, CEO Paul Bragg owned 2.2 million shares of Vantage as of March 28. His cost basis: $0.38 each.

Most of the company's top executives have similar sweetheart setups. All that's required to unlock this treasure chest is a "business combination" wherein Vantage's principal operations -- such as they may be -- are subsumed or for the business to exist beyond May 24, 2008. With management recommending that the company be purchased in a preliminary proxy statement released recently ... well, you get the picture.

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

9/16/2011 7:59 AM
CSR.DL2 $0.00 Down +0.00 +0.00%
China Security & S… CAPS Rating: ***
ESCA $13.30 Down -0.10 -0.75%
Escalade, Inc. CAPS Rating: *
SGP.DL2 $28.15 Down +0.00 +0.00%
Schering-Plough Co… CAPS Rating: ****
MRK $59.56 Up +0.22 +0.37%
Merck & Co., Inc. CAPS Rating: ****

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