Who's Buying Now?

It's Tuesday, and that means it's time to check the most interesting insider purchases from the last week. After checking through numerous filings using insider tracking tool Form 4 Oracle, here are my top five from the past seven days:

The week's buying


Closing price 12/12/05

Total value of stock purchased

52-week change

Reliant Energy (NYSE: RRI  )




Restoration Hardware
(Nasdaq: RSTO  )




Reynolds & Reynolds




Sears Holdings (Nasdaq: SHLD  )




White Mountains Insurance




Sources:, Yahoo! Finance, Form 4 Oracle
*Adjusted for dividends.

Restoring a portfolio?
First up this week is probably the most controversial buy I've covered since beginning this column several months ago: Restoration Hardware. The home furnishing retailer's stock price has experienced a bit of a renaissance in recent times. Investor and company director Glenn Krevlin was buying on the downturn and has continued to do so. Last week alone saw nearly 500,000 more shares make their way into his portfolio.

I'm honestly not sure why. Same-store sales have been miserable. For example, third-quarter comps declined by 2.1% versus an 8.7% increase during the year-ago period. In the fourth quarter, comps are expected to decline in the single digits again.

Inventory management has also been an issue. Here's what inventory turns looked like during Q3 and on a trailing 12-month basis (to control for seasonal variation) when compared with similar mall haunts:


Inventory turns

Inventory turns (TTM)

Restoration Hardware



Williams-Sonoma (NYSE: WSM  )



Bombay Company



Ouch. Restoration can't even outpace Bombay, which I think says a lot. Sure, Yahoo! Finance pegs the price-to-earnings-to-growth ratio of the stock at 0.75, which normally signals a deep value. But that's only true if the quality of earnings is up to snuff. With debt equaling more than 83% of tangible stockholder equity, and less than two times interest coverage for the last available fiscal year and trailing 12 months, I doubt it is.

Krevlin doesn't appear to share that opinion. According to the latest Form 4, his total share ownership comes in at just a bit more than 3.5 million.

Note that more than 700,000 shares of Krevlin's common-stock position came from a late July conversion of preferred shares -- and at a deeply discounted $1.99 per stub. (The shares were trading at $8.29 on Aug. 1.) Yet it's equally notable that he's bought much more than that in the last two weeks alone.

What to do, then? How about nothing? While Krevlin's 13F lists a number of what I'd consider to be very good holdings -- including Motley Fool Stock Advisor picks Activision and Charles Schwab -- discerning Fools should always make up their own minds. That's especially true in cases like this, where the investing thesis is anything but clear.

An Overstock restock
In last week's column, I implied that (Nasdaq: OSTK  ) CEO Dr. Patrick Byrne had sold shares. I didn't mean to. The point, instead, was to illustrate that SEC filings aren't always what they seem. In Dr. Byrne's case, a recent filing of his personal holdings didn't list Overstock shares he owns through a limited liability corporation called High Plains Investments.

That's now been remedied. This amended Form 4 shows that Dr. Byrne owns more than 6.67 million shares, or more than 34% of the shares outstanding, according to Yahoo! Finance. More importantly, though, are the prices at which he's bought. In February, for example, he bought 20,000 shares at an average price of $48.61. He also bought above $46 and $47 during the summer. Look at where the shares are today.

Either he's really right, or really wrong. Either way, there's going to be a lot more of the story to tell. Rule Breaking investors probably ought to stay tuned.

That's all for this week. See you back here next Tuesday, when we dig through more insider deals in search of the next home run stock.

Further fiduciary Foolishness:

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Fool contributorTim Beyersusually favors two scoops of ice cream over the inside scoop. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.

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