Who's Buying Now?

It's a new week, which means it's time to check the most interesting insider purchases. After reading 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 1/16/07

Total Value of Stock Purchased

52-Week Change

Fleetwood Enterprises (NYSE: FLE  )

$8.65

$80,875

(23%)

Ladenburg Thalmann (AMEX: LTS  )

$1.70

$1,801,904

233%

Lawson Software (Nasdaq: LWSN  )

$6.81

$543,010

(10%)

NATCO Group (NYSE: NTG  )

$29.44

$86,550

25%

Repros Therapeutics (Nasdaq: RPRX  )

$13.02

$24,400

159%

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

Long arm of the Lawson?
When enterprise resource planning software maker Lawson reported earnings last week, fellow Fool Tom Taulli theorized that, with a history of relatively poor results, there's little chance the company's stock will recover soon.

Seems reasonable to me. Lawson boosted its share count by more than 47% to book a deal with Sweden's Intentia that, while juicing revenue by more than 100% during fiscal Q2, has so far created little but net losses. Perhaps that's why short sellers have grabbed hold of more than 5% of Lawson's available shares?

Perhaps. But not all investors are bearish. Certainly not those participating in the Motley Fool CAPS investor intelligence database. They're extremely bullish:

Metric

Lawson

CAPS Stars (out of five)

*****

Total Ratings

30

Bullish Ratings

29

Bull Ratio

96.7%

Bearish Ratings

1

Bear Ratio

3.3%

Bullish Pitches

4

Bearish Pitches

0

Data current as of Jan. 17, 2007.

What gives? Foolish friend Rick Munarriz explains in his CAPS pitch: "Heading into earnings next week (and it hasn't come up short in quite a few quarters). [Lawson is] good on its own and it would look nice on Larry Ellison's plate as the next Oracle (Nasdaq: ORCL  ) buyout."

But that was September. Lawson fell short of Street expectations by $0.03 in last week's report. And that's after accounting for merger and acquisition costs. Nevertheless, management, on the whole, remains bullish. Just ask CEO Harry Debes. Between last Thursday and Friday, he spent more than $540,000 to acquire 80,000 new shares of the stock.

Bears might point to recent sales from senior vice president Dean Hager and co-chairman Richard Lawson. But neither sold on the open market. Instead, they each filed 10b5-1 trading plans that allow for insiders to acquire or dispose of stock on a set schedule that ignores prevailing market conditions.

If there's a reasonable bear case for the shares, it's this: Lawson competes in one of the world's toughest markets. Between Oracle, SAP (NYSE: SAP  ) , Microsoft, and dozens of open-source alternatives, there's no shortage of substitutes for its software. As Tom writes, "Lawson is continuing to deal with the huge challenges of merging with a large foreign company.... Besides cultural differences, there are the complexities of managing two technology platforms."

Indeed. That's why I'm inclined to wait for more buying before adding this stock to my CAPS portfolio.

When speculation makes sense
As a member of the Rule Breakers team, I tend to favor the occasional informed speculation. What's that, exactly? For me, an informed speculation is a stock that, by the numbers, should be left outside with the trash.

Ladenburg Thalmann is like that. For years, the financier has booked nothing but losses thanks to lawsuits, high operating expenses, and erratic interest income. Even today the stock trades for 47 times its per-share earnings -- hardly cheap for a broker.

So why invest in this stock? Insiders. According to a recent Wall Street Journal article, Ladenburg's managers and directors have, for the past five years, consistently been in the money with their entry points. Last week brought more of the same. On Monday, eight separate insiders spent more than $1.8 million to acquire shares at an average price of $1.20 per share. The stock trades for $1.68 as I write -- a 40% gain.

My point? If you're going to speculate, do it when management is on your side. That seems to be the case here. Accordingly, I'll be adding Ladenburg Thalmann to my CAPS portfolio today.

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

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Fool contributor Tim Beyers, ranked 1,093 out of more than 20,200 in Motley Fool CAPS, usually favors two scoops of ice cream over the inside scoop. Tim owns shares of Oracle. Get the skinny on all of the stocks in his portfolio by checking Tim's Fool profile. Microsoft is an Inside Value pick. The Motley Fool's disclosure policy is a strong buy.


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