Who's Buying Now?

It's time once again to check out the most interesting insider purchases of 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 7/29/08

Total Value Purchased

1-Year Return

Albermarle (NYSE: ALB  )

$37.59

$404,290

(4.7%)

Allegheny Technologies (NYSE: ATI  )

$48.15

$2,793,087

(52.6%)

eBay (Nasdaq: EBAY  )

$25.52

$250,299

(21.6%)

Flagstar Bancorp (NYSE: FBC  )

$4.48

$166,831

(59.4%)

Regions Financial (NYSE: RF  )

$9.52

$667,211

(66.1%)

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

Should you bid on eBay?
eBay reminds me of when Bruce Springsteen sang about how the glory days will pass you by, in the wink of a young girl's eye. With subscriber growth in its core business stalled and its once-massive moat -- built with its dominant brand name -- now eroded by competition from Craigslist and Overstock.com (Nasdaq: OSTK  ) , among others, eBay isn't the bid bully it used to be. As CAPS investor rjhubs wrote earlier this month:

[T]heir recent agreement to allow retailers to post listings sans-fees will create a large backlash among already disgruntled sellers. This may be the last straw. … The only plus side is PayPal's huge dominance over the online payment market. But even that is challenged by Google Checkout. All it will take is for another company to offer a competitive auction system and eBay will be history. Google Auctions anyone?

That's probably too dire a prediction for our 110,000-strong Motley Fool CAPS community. They have mixed feelings about the stock:

Metric

eBay

CAPS rating (5 max)

***

Total ratings

3414

Bullish ratings

2962

Percent Bulls

86.8%

Bearish ratings

452

Percent Bears

13.2%

Bullish pitches

738

Bearish pitches

123

Data current as of July 30, 2008.

But you'll find no such conflict for Bob Swan, eBay's chief financial officer. He just spent $250,000 -- equal to roughly 15% of his 2007 cash compensation -- to add eBay shares to his portfolio. I badly want to believe that he's buying smart. But with its reduced pricing power and single-digit returns on equity, I can't escape the feeling that eBay's glory days have indeed passed it by.

Look at the whole board
There's an axiom in chess -- or at least in the chess I've seen played on The West Wing, one of my favorite older TV shows. "Look at the whole board," goes the saying. It means that you need to see several moves ahead and consider all of your opponent's options. I'm not much of a chess player, so, on balance, this axiom is worthless to me -- except when I invest.

What I mean is that, when it comes to evaluating insider buys, circumstances matter. So do the records of those buying. When Aubrey McClendon spends millions to buy shares of Chesapeake Energy (NYSE: CHK  ) , that's more meaningful than Joe Millions spending a few bucks on Giant-Sized Cell Phone Company (Ticker: CUHMN).

I offer this as colorful background for why the buying at Allegheny Technologies  -- already in the running to be America's next top value stock -- is so intriguing. CEO Patrick Hassey and chief financial officer Richard Harshman on Monday committed nearly $2.8 million to buy stock in their company.

Why this matters: Insiders at Allegheny have been astoundingly accurate. Many were selling last summer at more than$100 per share, or what would be a double from today's prices. Better still: The last time Hassey purchased shares on the open market -- 8,000 back in March 2004 -- it was at an average price of $12.86. That position has since tripled.

So is Allegheny cheap? Look at the whole board. And 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:

Fool contributor Tim Beyers, who is ranked 18,551 out of more than 110,000 participants in CAPS, also writes for Rule Breakers. Get a daily dose of his Foolish musings. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. eBay is a Stock Advisor selection. Chesapeake Energy is an Inside Value pick. The Motley Fool has a disclosure policy.


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