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 today.

The week's buying

Company

Closing Price 7/8/08

Total Value Purchased

52-Week Change

ConAgra (NYSE: CAG  )

$20.36

$647,389

(22.8%)

Equity One (NYSE: EQY  )

$20.72

$7,375,338

(17.4%)

Discover Financial Services (NYSE: DFS  )

$14.17

($103,255)

(43.9%)

Sigma Designs (Nasdaq: SIGM  )

$15.63

$14,400

(40.3%)

BE Aerospace (Nasdaq: BEAV  )

$24.15

$385,189

(43.3%)

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

Designs on Sigma
When growth meets value, massive returns are often the result. We've seen this firsthand at Motley Fool Rule Breakers. Analyst Charly Travers re-upped his recommendation of Vertex Pharmaceuticals (Nasdaq: VRTX  ) last August, after investors failed to reward outstanding performance.

They still weren't in a giving mood when the winter winds of February blew through. Vertex said then that it would have to go to the capital markets to raise funds to execute what Charly and Foolish colleague Brian Lawler saw as a perfectly plausible strategy.

Good call, guys. My Vertex pick, made in CAPS shortly after insiders were spotted buying, is up more than 90%. Today, I'm wondering if fellow rebel Sigma Designs offers a similar opportunity.

Our 110,000-person-strong Motley Fool CAPS community would likely say 'yes!' The numbers:

Metric

Sigma Designs

CAPS stars (5 max)

*****

Total ratings

1,345

Bullish ratings

1,309

Percent Bulls

97.3%

Bearish ratings

36

Percent Bears

2.7%

Bullish pitches

208

Bearish pitches

3

Data current as of July 8, 2008.

Other Fools who have singled out Sigma:

  • Motley Fool co-founder David Gardner, in the September 2007 issue of Rule Breakers. "Market research firm Multimedia Research Group estimates that IPTV subscribers will increase from 14.3 million this year to 63.6 million in 2011, a compound annual growth rate of 45%," David wrote at the time. "Sigma is poised to ride this wave: Selling chipsets for IPTV boxes produced 78% of Sigma's revenue in the most recent quarter.
  • Foolish newsletter associate advisor Stan Huber, in the April 2008 issue of Hidden Gems Pay Dirt. "I think Sigma is likely to trade close to $40 by the end of 2008," Stan said. "Management was willing to issue more equity at $46 some months ago, and that is usually a sign of where it considers the stock to be fully valued."

A week ago, Sigma chief financial officer Thomas Gay joined them by purchasing 1,000 shares. He's the second insider to buy recently. Longtime board member Bill Almon added 10,000 shares on June 30. His last purchase was above $20 per share in March.

Color me convinced; Sigma joins my CAPS portfolio today.

How to weigh a buy versus a sale
Now, for another lesson in our continuing series about insider buys that may be less important than they at first seem. Let's put Discover Financial under the microscope.

Last Tuesday, company president and chief operating officer Roger Hochschild bought 3,000 shares. But then, yesterday, chief risk officer James Panzarino sold more than three times that.

There are two problems with this equation. First, the selling easily outweighs the buying. Second, while Hochschild is Discover's president, Panzarino is the guy in charge of measuring risk. I never like betting against someone whose job depends on intimately understanding what risks his business faces. (A CEO, for example.)

Sorry, Discover, but you'll have to stay on my watch list.

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.

Related Foolishness:

Get all the inside information you need in the Fool's collection of investing newsletters. From wallflowerish small caps to swashbuckling Rule Breakers we've got something for every investor. All of our newsletters offer a 30-day risk-free trial. All you have to lose is the prospect of better returns.

Discover Financial is an Inside Value pick. Vertex and Sigma Designs are Rule Breakers recommendations. Sigma is also a Hidden Gems Pay Dirt recommendation.

Fool.com contributor Tim Beyers, who is ranked 18,462 out of more than 110,000 participants in CAPS, also writes for Rule Breakers. He didn't own shares in any of the companies mentioned in this article at the time of publication. Find Tim on CAPS by clicking here. The Motley Fool has a disclosure policy.


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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.

  • Report this Comment On July 10, 2008, at 7:00 AM, Rugbysdad wrote:

    Great article, I would also mention that Vertex avoided the dilutive trip to the market for cash by cleverly monetizing its HIV business.

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