Stocks the Rich Executives Are Buying

Put five Fools in a room, ask them how they invest, and you'll likely get five different answers. Some like growth, others value, or small caps, or dividends, or, well, you get the picture.

Yet, while our styles differ, we all want excellent, engaged managers running the companies we own. We like it even more when these managers are also owners -- investors like you and me who, in trying times like these, are willing to buy as others sell. That's why I write this column weekly.

The week's buying
So, which rich executives are buying now? Have a look, courtesy of our friends at Form 4 Oracle:

Company

Closing Price 11/18/08

Total Value Purchased

52-Week Change

Citigroup (NYSE: C  )

$8.36

$17,189,481

(74.1%)

EnergySolutions (NYSE: ES  )

$3.69

$3,953,035

(83.9%)

Invitrogen (Nasdaq: IVGN  )

$25.02

$2,002,548

(44.7%)

Juniper Networks (Nasdaq: JNPR  )

$14.66

$960,806

(52.0%)

Sprint Nextel (NYSE: S  )

$2.15

$117,900

(86.1%)

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

Regrouping at Citigroup
Can anything save the big financials? We won't know for years. Not until long after the Feds and others have unwound billions (trillions?) in collateralized mortgage debt that helped consumers buy houses they couldn't afford.

No one knows for sure who will thrive and who won't, although Warren Buffett's bets on Wells Fargo (NYSE: WFC  ) and Goldman Sachs (NYSE: GS  ) convey confidence in those institutions. Citigroup, on the other hand, is one scary stock.

"In an industry already drowning with uncertainty, Citigroup adds an extra element of surprise: It has its hands in so many businesses and contains such a disorderly array of assets that an investment in Citigroup today qualifies as nothing more than a gamble," wrote Foolish colleague Morgan Housel.

Our 120,000-strong Motley Fool CAPS community mostly agrees:

Metric

Citigroup

CAPS stars (out of 5)

**

Total ratings

6,760

Bullish ratings

5,271

Percent bulls

78%

Bearish ratings

1,489

Percent bears

22%

Bullish pitches

894

Bearish pitches

221

Data current as of Nov. 18, 2008.

"After hearing Vikram's 'plan' this morning and reading the conspiracy theorist ramblings that sound more and more believable every passing day ... I think it's becoming increasingly likely that Citigroup will either have to be bailed or split into Citi groups," wrote CAPS All-Star Tastylunch on Monday.

We've yet to reach that point. Roughly 53,000 more employees have to be let go first. (Citi cut 22,000 jobs in October.) But our Fools are correct; none of us knows the precise worth of the (ahem) hundreds of billions in assets that Citigroup lays claim to. It's an asset pile that grew bigger -- maybe -- this morning when Citigroup acquired $17.4 billion worth of assets in structured investment vehicles (SIVs) that it supports.

SIVs are a "borrow low, lend high" investment where the bank profits from the spread between the rate at which it borrows and that at which it lends. They haven't worked well recently; Citi's SIVs have lost $1.1 billion in market value as of the end of the third quarter.

Therein lies the problem. Citi has billions of assets up for sale -- including these newly acquired SIVs -- but who wants to buy assets that are rapidly losing value?

Executives obviously believe that someone will. Otherwise, they wouldn't be buying Citigroup shares. And yet they are. Six different insiders, including CEO Vikram Pandit and chief risk officer Brian Leach, have spent more than $17 million to pad their positions over the past week. That's hardly pocket change.

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 is currently getting torched in CAPS. Thankfully, he's doing better as an analyst for Motley Fool Rule Breakers. Get access to all of Tim's Foolish writings here.

Tim didn't own shares in any of the stocks mentioned in this article at the time of publication. Sprint Nextel is an Inside Value recommendation. The Motley Fool's disclosure policy knew a rich executive once. She never bought anything.


Read/Post Comments (1) | Recommend This Article (9)

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 November 19, 2008, at 9:13 PM, Tastylunch wrote:

    I have to admit I don't think that's probably why they are buying stock in Citigroup, Tim. I think the insiders are buying to try to demonstrate confidence to the street in the hopes it stops the fall of the stock, not because of any real confidence they have themselves...If they did why make it so obvious to the press,? They went to great lengths to leak this the Wall street Journal. It's an all or nothing gambit and it may in this case actually show how desperate they really are.

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Related Tickers

12/19/2014 4:03 PM
C $54.01 Down -0.09 -0.17%
Citigroup Inc CAPS Rating: ***
ES.DL $0.00 Down +0.00 +0.00%
EnergySolutions CAPS Rating: *****
GS $193.28 Up +1.67 +0.87%
Goldman Sachs CAPS Rating: ****
IVGN $22.23 Down +0.00 +0.00%
Invitrogen Corp CAPS Rating: ****
JNPR $22.48 Up +0.58 +2.65%
Juniper Networks,… CAPS Rating: **
S $4.16 Up +0.08 +1.96%
Sprint CAPS Rating: **
WFC $54.45 Down -0.76 -1.38%
Wells Fargo CAPS Rating: ****

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