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 2/17/09

Total Value Purchased

52-Week Change

Seagate Technology (NYSE: STX  )

$4.29

$2,225,750

(80.9%)

Prospect Capital (Nasdaq: PSEC  )

$8.51

$242,525

(37.1%)

Interactive Intelligence (Nasdaq: ININ  )

$7.94

$121,875

(48%)

Sequenom (Nasdaq: SQNM  )

$16.38

$173,442

101.9%

99 Cents Only Stores (NYSE: NDN  )

$7.76

$234,694

(17.4%)

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

Sequenom: No longer a secret
You already know how bad 2008 was. You've seen what happened to Bank of America (NYSE: BAC  ) and Citigroup (NYSE: C  ) . You know Mr. Market is still periodically suffering from panic attacks.

But you might not know that an awful year for stocks overall was a great year for biotech Sequenom, creator of a noninvasive prenatal test for Down syndrome.

SEQureDx, as it's called, is proving to be excellent technology: 100% of its 420 test samples were accurate. And while it's no longer perfect -- Sequenom has now missed once out of 858 tries -- there's every reason to believe that new parents will demand that doctors offer the test after its expected arrival in the middle of the year. Until now, patients had to trust the more dangerous and invasive process of amniocentesis.

Even so, the majority of our 125,000-strong Motley Fool CAPS community isn't sold on the need for this sort of prenatal test, or at least the test as Sequenom offers it:

Metric

Sequenom

CAPS stars (5 max)

**

Total ratings

312

Percent Bulls

82.4%

Percent Bears

17.6%

Bullish pitches

38 of 47

Data current as of Feb. 17, 2009.

I'm going to break with the crowd on this one. The opportunity is too big to ignore, as CAPS All-Star zzlangerhans points out in this recent pitch:

Sequenom is taking a well-deserved hit after having to revise the final results of the trial of SEQureDx. However, 96% sensitivity is still comparable to amniocentesis not to mention the benefits of the less invasive testing. Marketing is unlikely to be delayed, as long as the company has no more negative surprises in store. As long as there are no other direct competitors in non-invasive genetic testing, profits should be substantial. Hopefully the company can tweak the test to improve sensitivity once it's already on the market.

Foolish colleague Brian Orelli, meanwhile, calls Sequenom a Rule Breaker. "I don't know if its competitors are inept, but other tests give a 5% false positive rate, and no one has come close to the 0.1% that Sequenom has," he wrote last month. Sounds like a rebel to me.

Sequenom insiders apparently agree. They spent more than $170,000 to pad their positions last week, led by CEO Harry Stylli, who purchased 10,000 shares. Talk about a bullish bet.

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.

The inside scoop on stocks of all sizes:

Fool contributor Tim Beyers is slowly improving his CAPS score. Thankfully, he's doing better as an analyst for Rule Breakers, which counts Interactive Intelligence among its recommendations. Try this Foolish service free for 30 days.

Tim owned shares of Prospect Capital 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.


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