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

Company

Closing price 12/12/05

Total value of stock purchased

52-week change

Reliant Energy (NYSE: RRI  )

$10.34

$476,277

-10%

Restoration Hardware
(Nasdaq: RSTO  )

$6.54

$5,622,125

31%

Reynolds & Reynolds
(NYSE: REY  )

$27.95

$4,195,822

18%*

Sears Holdings (Nasdaq: SHLD  )

$124.34

$1,230,800

21%

White Mountains Insurance
(NYSE: WTM  )

$594.40

$771,433

-1%

Sources: Fool.com, 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:

Company

Inventory turns

Inventory turns (TTM)

Restoration Hardware

0.56

2.4

Williams-Sonoma (NYSE: WSM  )

0.90

3.7

Bombay Company

0.56

2.5



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 Overstock.com (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:

Get all the inside information you need in our collection ofinvesting newsletters. From wallflowerish small caps to swashbuckling Rule Breakers, we've got something for every investor.Get in on the actiontoday; all of our newsletters offer a 30-day risk-free trial. Or sign up for a year and getStocks 2006, our best picks for the year ahead, for nothing.

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.


Read/Post Comments (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 500428, ~/Articles/ArticleHandler.aspx, 11/26/2014 4:21:55 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement