Who's Buying Now?

It's time 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 8/6/08

Total Value Purchased

1-Year Change

Coach (NYSE: COH  )

$27.66

$1,237,000

(40.8%)

Hercules Offshore (Nasdaq: HERO  )

$22.74

$1,751,787

(14.2%)

Interactive Intelligence (Nasdaq: ININ  )

$10.15

$1,344,160

(47.5%)

Sirius XM Radio (Nasdaq: SIRI  )

$1.45

$2,746,400

(50.2%)

XL Capital (NYSE: XL  )

$19.25

$3,016,874

(74.1%)

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

A serious bid for Sirius XM
Will Sirius XM CEO Mel Karmazin ever learn? After years of bad bets on his company, this week he spent another $2.7 million to acquire shares of the satellite-radio rebel.

"Karmazin may be a brilliant radio guy, but he's no Wall Street Nostradamus," Foolish colleague Rick Munarriz wrote in covering the story. True, but that's a little like calling King Kong just another big monkey; Karmazin's paper losses are spectacular. From the lowlights reel:

Date

Purchase Price

Current Price

Total Return

Paper Loss

11/19/2004

$5.36

$1.45

(72.9%)

($5,863,350)

1/12/2006

$6.21

$1.45

(76.7%)

($4,758,500)

5/30/2006

$4.47

$1.45

(67.6%)

($3,018,000)

Sources: Form 4 Oracle, author's calculation.

Three and a half years and more than $13.6 million in paper losses later, we're now supposed to believe that it's different this time? That Karmazin has finally caught the falling knife? Much as I'm rooting for that to be the case, I can't see betting even a penny of my precious portfolio capital on Karmazin.

Sirius XM is the sort of business I badly want to love: great content, pioneering spirit, excellent management in Karmazin -- a great radio guy, as Rick says. But I can't, because, unlike other capital-light content businesses -- Marvel Entertainment (NYSE: MVL  ) and Viacom (NYSE: VIA  ) come to mind -- Sirius XM has a rocket on its back.

Actually, make that a few rockets. Capital expenditures for Sirius alone doubled to $73.6 million through the first six months of 2008, according to this morning's earnings report. Operating cash flow losses declined over the same period but at a much slower pace -- not a great sign.  

The investors in our 110,000-plus-strong Motley Fool CAPS community appear to agree. They're significantly bearish on the prospects for Sirius XM:

Metric

Sirius XM

CAPS stars (5 max)

**

Total ratings

4,877

Bullish ratings

3,915

Percent bulls

80.3%

Bearish ratings

962

Percent bears

19.7%

Bullish pitches

1,055

Bearish pitches

214

Data current as of Aug. 7, 2008.

I want to be wrong. I want Mel and other satellite-radio investors to get their paper losses back. I just don't think it'll happen soon -- at least not before capital spending normalizes from drunken-sailor-on-a-Shanghai-bender levels.

Coach: blue-light stock?
One of the truly wonderful features of a range-bound market -- as my friend Vitaliy Katsenelson calls the insufferable purgatory we're in now -- is that premium brands go on sale for no apparent reason. Take luxury retailer Coach, for example: Revenue rose 20% in the most recent quarter, but management is taking steps to provide more value to consumers who are cutting back on spending.

Investors, apparently, would prefer that executives throw caution to the wind. Shares of the retailer are down roughly 10% year to date. "You'd think nobody was ever going to buy a Coach bag ever again," Foolish colleague Alyce Lomax wrote recently.

Executives -- and CEO Lew Frankfort, in particular -- know better. He bought 50,000 more shares of his company on Monday, and he's already seen a double-digit return. With the stock trading at a historically low multiple to earnings, I expect that much bigger returns are still to come.

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:

Coach and Marvel are Stock Advisor selections. Interactive Intelligence is a Rule Breakers recommendation. Hercules Offshore is a Motley Fool Hidden Gems pick. Try any of these market-beating services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers, who is ranked 20,344 out of more than 114,000 participants in CAPS, also writes for Rule Breakers. Get access to all of his writings, or enjoy a daily dose of his Foolishness via this feed for your RSS reader. Tim had a position in Marvel's common shares and LEAP options at the time of publication. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 10, 2008, at 10:23 AM, conwayguy2001x wrote:

    Seems to me that this article mistates bullish/bearish on Sirius. Looks like community is bullish, not bearish on Sirius. Does the writer have an issue with Sirius since it appears he's trying to make it look bad?

  • Report this Comment On August 10, 2008, at 7:12 PM, TMFMileHigh wrote:

    Hello conwayguy2001x. A two-star stock, as Sirius is, is one that the community as a whole believes will underperform the market. Thanks for posting.

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