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 3/3/09

Total Value Purchased

52-Week Change

Coach (NYSE: COH  )

$13.01

$876,200

(57.7%)

General Electric (NYSE: GE  )

$7.01

$1,909,000

(77.4%)

Herbalife

$14.01

$999,000

(67.4%)

Monster Worldwide (NYSE: MWW  )

$6.27

$1,174,229

(75.9%)

Psychiatric Solutions

$13.85

$752,911

(51.1%)

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

Coach turns to the bench
Thanks to a rotten economy, luxury goods have gone out of style. Both Saks (NYSE: SKS  ) and Nordstrom (NYSE: JWN  ) recently reported huge declines in fourth-quarter earnings. Ford (NYSE: F  ) , unable to realize enough profit from its Land Rover and Jaguar luxury marques, sold to Tata Motors (NYSE: TTM  ) a year ago. Is Coach better positioned than these other premium brands?

No, argues Cellarhold in a January CAPS pitch: "It seems like most women have Coach purses," he wrote. "I even see middle school aged girls carrying them. While the expansion and popularity of their product was good in the short term, Coach will continue to be hurt by the fact that their bags are no longer unique."

Perhaps. But handbags aren't a buy-once-and-never-again item. No doubt, women will give more thought to replacing such arm candy during a recession, but eventually they will update them. Coach could grab an outsized share of the business when they do.

Management is already preparing for that day. "We conduct interviews literally with many tens of thousands of consumers individually around the world each year so that we can understand their attitudes, their likes for products, and even in the product-development process prior to going into production on major collections," said CEO Lew Frankfort in a December interview with members of the Motley Fool Stock Advisor team.

The process, as Frankfort describes it, inspires faith among the majority of those in our 125,000-strong Motley Fool CAPS community who follow Coach:

Metric

Coach

CAPS stars (out of 5)

****

Total ratings

2,026

Percent bulls

93%

Percent bears

7%

Bullish pitches

303 out of 330

Data current as of March 4, 2009.

CAPS investor l1350649 best summarized the bullish case in this pitch, posted last month:

The fundamentals at this time, given the price of the stock, are attractive. The management is tops, the product is sought after by all, and will be sought after in any financial environment to some degree. They have a great combination of retail and outlet stores including all the major department stores. More importantly, they are recently expanding into China and other emerging markets which should supply continued growth for the future.

Frankfort and Michael Tucci, president of Coach's North American retail operation, would appear to agree. Tucci bought 15,000 shares last week and Frankfort added 50,000 shares on Monday, continuing a buying streak that began a year ago. My guess is that they'll be rewarded.

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:

Fool contributor Tim Beyers is slowly improving his CAPS score. Thankfully, he's doing better as an analyst for Rule Breakers. Coach is a Stock Advisor selection. Try either of these Foolish services free for 30 days.

Tim didn't own shares in any of the companies 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.


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