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 12/3/08

Total Value Purchased

52-Week Change

Bruker (Nasdaq: BRKR  )

$4.45

$2,091,360

(59.6%)

Ashland (NYSE: ASH  )

$8.97

$193,229

(81.2%)

Visa (NYSE: V  )

$52.44

$192,000

(6.9%)*

Citigroup (NYSE: C  )

$7.82

$103,35

(75.0%)

Chico's FAS (NYSE: CHS  )

$2.43

$37,579

(78.6%)

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle. *Visa went public on March 19, 2008.

Life takes Visa, but will your portfolio?
The knock on growth stocks is that, often, they carry the burden of high expectations. Witness salesforce.com (NYSE: CRM  ) at $75 a share, or Google (Nasdaq: GOOG  ) at $700 per share. Uninterrupted growth was priced into both stocks. Not good when you're thrust into a recession -- both stocks have taken a beating since.

Which brings us to credit card issuer Visa. Analysts and executives still see years of 20% earnings growth ahead. They'd better be right, my Foolish colleague Morgan Housel argued in October:

If growth assumptions of 22% hold true, shareholders will be rewarded handsomely in the coming years. But if you're under the impression that the health of consumers is all but certain to take a turn for the worse, as I am, Visa's returns are likely to be very meager at best.

His opinion hasn't changed much since. "It may very well meet those growth expectations, but it's all pegged on the confidence of the global consumer, which obviously is a stretch right now. I'd love to buy Visa at $30 -- $50 still seems optimistic to me," Morgan wrote to me in a chat session earlier today.

Even so, our 120,000-strong Motley Fool CAPS community likes Visa at current levels:

Metric

Visa

CAPS stars (5 max)

****

Total ratings

4,147

Bullish ratings

3,937

Percent Bulls

94.9%

Bearish ratings

210

Percent Bears

5.1%

Bullish pitches

789

Bearish pitches

55

Note: Data current as of December 4, 2008.

CAPS investor Guardian21 summarized well the bullish view in this pitch from the first of this month, I think:

Visa will profit from the long term trend of increasing consumer use of credit and debit cards. It is the dominant competitor in its industry. Along with Mastercard, its business model contains less risk than some of its other competitors since it does not lend. Stong balance sheet, with over 5 billion in cash and about 100 million in debt.

As a growth investor myself, I prefer fast movers that are grossly misunderstood and, thereby, mispriced. With Visa, all I see is optimism and a premium price tag.

But not Visa Chief Financial Officer Byron Pollitt Jr. He spent close to $200,000 for 4,000 new Visa shares earlier this week. Keep your fingers crossed, optimists.

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.

Get the inside scoop on stocks of all sizes with related Foolishness:

Get all the inside information you need in our collection of investing newsletters. From wallflowerish small caps to swashbuckling Rule Breakers we've got something for every investor. Get in on the action today; all of our newsletters offer a 30-day risk-free trial. All you have to lose is the prospect of better returns.

Fool contributor Tim Beyers is getting torched in CAPS currently. Thankfully, he's doing better than that as an analyst for Rule Breakers, which counts Google as one of its core recommendations. Get access to all of Tim's Foolish writings here.

Tim had stock and options positions in Google at the time of publication. The Motley Fool's disclosure policy knew a rich executive once. She never bought anything.


Read/Post Comments (0) | Recommend This Article (12)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 788197, ~/Articles/ArticleHandler.aspx, 11/23/2014 5:11:57 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement