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 6/25/08

Total Value Purchased

52-Week Change

UTI Worldwide (Nasdaq: UTIW  )

$21.39

$10,000,009

(21.4%)

Resource America (Nasdaq: REXI  )

$9.78

$1,500,003

(54.1%)

White Mountains Insurance (NYSE: WTM  )

$440.00

$975,235

(25.4%)

Luby's (NYSE: LUB  )

$6.27

$648,467

(36.2%)

KeyCorp (NYSE: KEY  )

$11.33

$734,400

(65.5%)

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

Don't be too quick to label Luby's
Restaurants, a tough business to begin with, have it harder than most in a depressed economy. Ask Luby's. You'll find few fans of this Texas-based cafeteria chain in our 110,000-strong Motley Fool CAPS community:

Metric

Luby's

CAPS stars (5 max)

**

Total ratings

51

Bullish ratings

40

Percent Bulls

78.4%

Bearish ratings

11

Percent Bears

21.6%

Bullish pitches

9

Bearish pitches

0

Data current as of June 26, 2008.

The pessimists could be right. Luby's reported a 3.3% decline in same-store sales during its fiscal third quarter completed in May. Total revenue declined 2.1% over the same period.

And the future looks murky. Food prices are rising as a result of worldwide corn, soybean, and rice shortages. Costly ingredients mean either (a) higher prices or (b) thinner margins. Neither choice is desirable.

Luby's owners believe they can beat the downturn. As CEO Chris Pappas stated in the Q3 press release, "While our restaurant sales declined during the third quarter, our team managed food and labor costs well in a difficult environment."

Well enough, it seems, that Chris and his brother, Harris, purchased more than $600,000 worth of Luby's shares through an investing partnership called Pappas Restaurants.

CAPS investor grecipient suggests that they're buying at the right time. "This company [owns] enough land on which 94 of their restaurants are built on to more than justify $7.20 [per] share," our Fool wrote in April. "No debt, small cap, good management," the player continued, sourcing a blog that dug into Luby's financials.

I can't confirm grecipient's numbers. Yet Capital IQ says Luby's tangible book value -- otherwise known as "what's left over after all debts and obligations are paid" -- sits at $6.83 per share, a 9% premium to yesterday's close.

A screaming bargain? No. But it's enough to make me want to take a closer look. I've added Luby's to my CAPS watch list.

Another buy that isn't really a buy
Now for another lesson in how Form 4 filings can deceive you.

Start here. Looks impressive, right? UTI Worldwide CEO Roger MacFarlane purchased $10 million worth of shares from "PTR Holdings," according to the footnotes.

There's just one problem: MacFarlane is one of the controlling partners of PTR. He's selling to himself. From a recent SEC filing:

PTR Holdings' business address is 9 Columbus Centre, Pelican Drive, Road Town, Tortola, British Virgin Islands. PTR Holdings is indirectly owned by holding companies indirectly controlled by Mr. Wessels, Mr. MacFarlane and Mr. Thorrington and by the Anubis Trust, a Guernsey Islands trust. Under a 2000 voting arrangement, the trust has the power to vote a majority of the outstanding shares of PTR Holdings although it disclaims beneficial ownership of the shares held by PTR Holdings. [Emphasis added.]

Ignore this "buy." It means nothing. Less than nothing, actually. At best, it's a head fake.

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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Fool contributor Tim Beyers, who is ranked 20,110 out of more than 110,000 participants in CAPS, also writes for Rule Breakers. See Tim's portfolio and his latest blog commentaty. The Motley Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (4)

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  • Report this Comment On June 26, 2008, at 5:27 PM, Lance912 wrote:

    Luby's book value is deceiving. They (as well as all restaurants) report their land value at cost. However, most of Luby's restaurants were bought 20 years ago or so. So their land is WAYYYY undervalued on their balance sheet. Also, remember the Texas land market has actually done well, especially in the Houston area (where many of Luby's locations are).

    If you've ever been to a Luby's and were told that the land + building were only valued at about $1.4 million by the market, I think most people would laugh. Those cafeterias are the size of elementary schools.

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