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 Feb. 11, 2009

Total Value Purchased

52-Week Return

Bank of America (NYSE: BAC  )

$6.07

$1,924,964

(84.4%)

General Mills (NYSE: GIS  )

$57.32

$163,976

7.3%

Motorola (NYSE: MOT  )

$3.90

$2,747,855

(65.3%)

Verizon (NYSE: VZ  )

$29.98

$62,160

(13.6%)

Western Union (NYSE: WU  )

$12.53

$342,190

(42.8%)

Sources: Yahoo! Finance, Form 4 Oracle.

Too early to hang up on Motorola?
Would you buy a business that's cutting stuff and bleeding cash? Motorola Co-CEOs Greg Brown and Sanjay Jha would. Last Thursday and Friday, they combined to purchase 725,000 shares. Brown, in particular, upped his direct stake by more than 30%.

It's a refreshing story. EMC's (NYSE: EMC  ) insiders last week were selling -- in very large chunks -- shortly after the company announced a round of layoffs. And they're still dumping: Mark Lewis, president of the content management and archiving division, sold 100,000 shares, or 15% of his direct stake, on Tuesday.

You could argue that Brown and Jha have better reasons to sell. Motorola reported negative free cash flow for 2008 -- its first year of bleeding cash since 2000. Returns on invested capital also turned negative. Competition, meanwhile, is fiercer than ever. Apple's (Nasdaq: AAPL  ) iPhone is eating everything, including the BlackBerry's once-precious fruit.

"They are done like dinner. RAZR is no longer popular. They need to establish another product that is popular or else the iPhone and Blackberry are going to drive them into the ground. I wouldn't say they have a good chance of going out of business but they are going to suffer in the next couple of months," according to Motley Fool CAPS investor WakeJKirk.

What's a Motorola investor to do? Proceed with caution, based on the opinions in our CAPS community of 125,000 investors:

Metric

Motorola

CAPS stars (5 max)

**

Total ratings

2,279

Percent Bulls

79.4%

Percent Bears

20.6%

Bullish pitches

303 of 417

Note: Data current as of Feb. 12, 2009.

How do the bulls respond? Snorting, as you'd expect. CAPS investor inastrangeland explains in this pitch from November:

This is an easy one, with over $7B in cash, a business that without handsets is earning 10% pretax profit on $15B in revenue would b e worth well over $4 right now, not just in the future. This stock is getting hammered because the analysts treat [Motorola] like a one trick pony and don't give any value to the other businesses that make up over 2/3s of the revenue and are very profitable.

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.

For related Foolishness:

Fool contributor Tim Beyers is slowly improving his CAPS score. Thankfully, he's doing better as an analyst for Rule Breakers. Western Union is an Inside Value pick. Apple is a Stock Advisor selection. Bank of America is a former Income Investor choice. Try any of these Foolish services free for 30 days.

Tim didn't own shares in any of the stocks mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy knew a rich executive once. She never bought anything.


Read/Post Comments (2) | Recommend This Article (6)

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 February 12, 2009, at 1:33 PM, molotov1221 wrote:

    MF is still peddling Bank of America?

    Rule number 1: Don't catch falling knives

    Now is not the time to buy BAC. It could still be nationalized and even then I wouldn't buy it for at least a year. Basically everyone who owns BAC is trying to dump it as soon as they feel they can cut their losses.

    Also don't invest in Motorola unless they come out with something new. If they don't, they have a long painful death ahead of them.

  • Report this Comment On February 12, 2009, at 5:19 PM, TMFMileHigh wrote:

    Hello molotov1221,

    No, I'm *not* peddling BAC -- only pointing out that insiders are buying in bulk. Could very well be stupid money.

    MOT is a tougher call. Bulls make a fair point; this isn't just a phone business and what remains has merit. I'm not buying but I find interesting that insiders are.

    FWIW and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

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