You're Not the Only One Buying Here

Famed money manager Peter Lynch gave us the inside scoop on how to look at insider transactions. Executives can sell their stock for any reason, he said, but they only buy for one: They think the price will rise!

Below, we highlight a handful of insiders who are making big purchases of their own companies' stock in the last week. These aren't executives getting big chunks of shares from option grants. Instead, they're insiders putting their own money on the line, buying shares at market prices. We'll then pair that information with insights from the members of Motley Fool CAPS, to see whether they think the stock has the same prospects the insiders do.

Stock

Insider, Position

Market Value of Transactions

CAPS Rating (out of 5)

ZIOPHARM Oncology (Nasdaq: ZIOP  )

Randal Kirk, director, 10% owner

$11.6 million

*****

MSCI (NYSE: MSCI  )

Henry Fernandez, CEO

$0.2 million

**

Hain Celestial (Nasdaq: HAIN  )

Carl Icahn, 10% owner

$0.7 million

***

Source: wsj.com; Motley Fool CAPS.

Although following the lead of insiders can be profitable, we still recommend you do further due diligence to determine whether these stocks make a good addition to your own portfolio. This isn't a list of stocks to buy -- just the inside track on companies you might want to check out further.

An investment in the future
You might look at that $11.6 million figure from ZIOPHARM Oncology's director and think, "Yowser! That's a huge commitment." And while it is, it's also a lot less than meets the eye -- and a lot more.

The investment actually comes from synthetic biology company Intrexon, in which Randal Kirk has a majority ownership position. The company is taking a 12.5% stake in the biotech; in exchange, ZIOPHARM will use Intrexon's unique therapy, which injects synthetic DNA molecules near a tumor to trigger the release of powerful immune-system proteins that can kill cancer cells. ZIOPHARM's lead cancer treatment is palifosfamide, which could see results by 2012. If ZIOPHARM brings palifosfamide or any drug into phase 2 trials using Intrexon's DNA therapy, Kirk can boost his stake in the biotech to 20%. He also got a seat on ZIOPHARM's board.

ZIOPHARM has had some hits and misses. Last year, its stock took a hit when the biotech said it would conduct trials on palifosamide without receiving a special protocol assessment from the FDA, but rebounded when it announced that the agency granted its peripheral T-cell lymphoma drug darinaparsin orphan-drug status. Allos Therapeutics  (Nasdaq: ALTH  )  has the only drug currently approved for PTCL, but it's for patients whose disease had stopped responding to chemotherapy.

CAPS member StockDocStan is willing to follow Kirk's lead into the biotech, but you can lead off with your own opinion on the ZIOPHARM Oncology CAPS page.

Enterprising growth
Equity portfolio analytics sounds like it could double as a non-prescription sleep aid, but market index giant MSCI has found a way to make it sexy. (Relatively, anyway.) Large investors like the ability to optimize their portfolios by breaking stock returns into a set of common factors; marketing its model under the Barra name it acquired in 2004, MSCI is the leader in this field. Rival FactSet Research Systems (NYSE: FDS  ) has even integrated Barra's data into its own application.

Even so, this new initiative isn't risk-free. MSCI has been slow to adopt new products for its service, and fourth-quarter earnings took a hit when one large customer left. As the CEO noted, "The client eventually gave up on our promises that we were going to be coming up with a lot of new products."

Shares have fallen 12% over the past month, no doubt spurring the CEO's purchase. You can follow along by adding the software maker to your watchlist and having all the Foolish news and analysis aggregated for you.

Put up or shut up
Readers here are no stranger to Carl Icahn's appearance, depending upon where he's deploying his money week to week.

Icahn's been a regular buyer of Hain Celestial, securing 15% ownership of the company and controlling two seats on the board of directors. He's bought more than $29 million worth of shares since September, even as the stock has climbed 66% over the last 12 months. There's speculation that Icahn wants to break up the company, which makes herbal teas and organic cereals, but it's also possible he may just want to shed some operations while making strategic acquisitions elsewhere.

The longer-term trend of natural organics has served Whole Foods Markets (Nasdaq: WFMI  ) , and Hain is tapping into that same market. When he first established his stake, Icahn praised Hain for its position in the "continuing secular shift toward organic and all natural foods and consumer packaged goods." CAPS member glensteph agrees: "The way we look at food is changing and this company looks like it has what it takes to enjoy the ride up."

Add Hain to the Fool's free portfolio tracker, then head over to the Hain Celestial CAPS page and brew up some opinions on its future.

On the inside track
Following the insiders can be a path to profits, but it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Sign up today for the completely free service, and tell us whether its worth trading on this inside information.

FactSet Research Systems is a Motley Fool Rule Breakers recommendation. Whole Foods Market is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. 

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


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