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 today.
The week's buying
|
Company
|
Closing Price 1/16/08
|
52-Week Change
|
Total Value Purchased
|
CAPS Rating (out of 5)
|
|
American Capital Strategies (Nasdaq: ACAS)
|
$30.98
|
(34.25%)
|
$1,275,289
|
****
|
|
Hovnanian Enterprises (NYSE: HOV)
|
$6.63
|
(78.80%)
|
$2,060,637
|
*
|
|
NaviSite (Nasdaq: NAVI)
|
$3.95
|
(36.29%)
|
$38,900
|
**
|
|
WD-40 (Nasdaq: WDFC)
|
$32.67
|
(0.55%)
|
$157,994
|
***
|
|
Zale
Corp. (NYSE: ZLC)
|
$14.20
|
(48.98%)
|
$11,413,351
|
*
|
Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings.
Buy American
As an investor, I'm somewhat skeptical of stock buybacks. It's like the empty-net goal that your hockey team scored last night. A 3-1 victory looks like a blowout on paper, but it was the empty-netter that added the value -- with almost zero work.
Surely, it's no surprise to you that, as the author of this column, I much prefer insider buying to buybacks. But what happens when you get both? You're about to find out.
Last week, Motley Fool Income Investor pick American Capital Strategies agreed to repurchase a half-billion dollars' worth of its own stock on the cheap. Two different insiders bought shares for themselves at roughly the same time. CEO Malon Wilkus put nearly $1 million in personal wealth on the line. Director Kenneth Peterson Jr. was also a buyer.
No wonder our 81,000-investor-strong Motley Fool CAPS community loves this stock:
|
Metric
|
American Capital
|
|
CAPS stars (out of 5)
|
****
|
|
Total ratings
|
1,222
|
|
Bullish ratings
|
1,187
|
|
Bull ratio
|
97.1%
|
|
Bearish ratings
|
35
|
|
Bear ratio
|
2.9%
|
|
Bullish pitches
|
239
|
|
Bearish pitches
|
9
|
But there's more than buybacks and insider buying at work here. American Capital has a history of producing very high returns on the assets in which it invests. Net asset value (NAV) was up 18.7% over the first three quarters of the year, for example.
Yet unless that trend has suddenly reversed, American Capital trades for at least an 11% discount to NAV right now (reported to be $34.92 per share as of Sept. 30). I can't see how that's reasonable. Nor, apparently, can AmCap's insiders. I'll be re-upping AmCap in my CAPS portfolio today.
One more thing ...
Last week, I said that KB Home (NYSE: KBH) was the lone builder to have insiders buying shares. No longer. Insiders at Hovnanian apparently believe there's a bargain brewing near home.
Company chairman Kevork Hovnanian spent roughly $2 million to add shares to his already ample position. That's reassuring, although I think the situation at KB is still far different ... and better. More insiders are committing capital to KB, for one thing.
And let's not forget that there were good reasons for the Fool to name Hovnanian the "worst stock in the world" not so long ago. My advice? Wait for more insiders to buy before giving Hovnanian a second look.
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.
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