Stocks the Rich Executives Are Buying

Put five Fools in a room, ask them how they invest, and you'll likely get five different answers. Some like growth, others value, or small caps, or dividends, or, well, you get the picture.

Yet, while our styles differ, we all want excellent, engaged managers running the companies we own. We like it even more when these managers are also owners -- investors like you and me who, in trying times like these, are willing to buy as others sell. That's why I write this column every week.

The week's buying
So which rich executives are buying now? Have a look, courtesy of our friends at Form 4 Oracle:

Company

Closing Price 11/4/08

Total Value Purchased

52-Week Return

Allscripts-Misys (Nasdaq: MDRX  )

$6.66

$1,246,400

(73.1%)

Cincinnati Financial (Nasdaq: CINF  )

$27.45

$1,292,000

(25.8%)

Dow Chemical (NYSE: DOW  )

$27.09

$790,462

(35.2%)

Exelixis (Nasdaq: EXEL  )

$3.80

$1,276,151

(62.9%)

Fortune Brands (NYSE: FO  )

$40.07

$253,274

(50.4%)

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

An excellent sign for Exelixis
When the Rule Breakers team visited drugmaker Exelixis during our recent tour of Silicon Valley's innovators, we were struck by the steely resolve of the firm's management team. CEO George Scangos, in particular, said it was a goal of his team to "alleviate a lot of the concern about the financial stability of the company."

They've had success with our 120,000-strong Motley Fool CAPS community:

Metric

Exelixis

CAPS stars (out of 5)

*****

Total ratings

2,214

Bullish ratings

2,136

Percent bulls

96.5%

Bearish ratings

78

Percent bears

3.5%

Bullish pitches

337

Bearish pitches

16

Data current as of Nov. 5, 2008.

My rebellious teammate, Karl Thiel, was also bullish after meeting Scangos. But then development partner GlaxoSmithKline (NYSE: GSK  ) chose not to license any additional compounds, and Exelixis reported another large third-quarter loss. The stock fell 12%. Karl voiced the question all of us Rule Breakers longed to ask: Would Scangos buy shares now?

"Well, the window's not -- oh, the window will open soon. Actually, I may. I usually don't think about that because the opportunities are so few and far between," Scangos said in an Oct. 27 interview.

Fast-forward three days. Scangos spent $80,000 for 25,000 new shares. Chief Financial Officer Frank Karbe purchased 10,000 shares the same day. And board member Stelios Papadopoulos, in Lynchian style, backed up the truck, buying 300,000 shares.

Not everyone likes the thesis, however. "The targets -- such as PI3K and CDC7 -- for their drug candidates are so important for normal cell function that I believe adverse events or unforeseen complications in patients are inevitable," wrote CAPS All-Star quinpeung on Halloween. "Consider that Phase 3 clinical trials for oncology are long, expensive endeavors. A soon-to-be 100 million cap company like Exelixis can not go it alone. The stock price may show a short-term increase here or there, but I am in this for the long-term, all the way to penny stock heaven!"

I'd be extremely surprised to see Exelixis go it alone for very long. The company simply has too many biotech assets and more than $100 million in cash and equivalents.

And let's not forget: As investors, we've seen this before. Vertex Pharmaceuticals (Nasdaq: VRTX  ) sold off in February on liquidity and capital-raising concerns. Executives and board members bought then, too, and the stock has risen close to 60% since.

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.

Get the inside scoop on stocks of all sizes:

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

Fool contributor Tim Beyers is slowly recovering a decent CAPS rating. He's also an analyst for Rule Breakers, which features Exelixis and Vertex on its scorecard. Get access to all of Tim's Foolish writings here.

Tim didn't own shares in any of the stocks mentioned in this article at the time of publication. GlaxoSmithKline, Dow Chemical, and Cincinnati Financial are Income Investor recommendations. The Fool owns shares of Exelixis. The Motley Fool's disclosure policy knew a rich executive once. But she never bought anything.


Read/Post Comments (1) | Recommend This Article (6)

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.

  • Report this Comment On November 20, 2008, at 7:33 AM, jhatlarge wrote:

    The Motley Fool has been leading their followers to financial demise as of late. The MDP their star portfolio is down a whopping 46% with some positions down 80% + - A shell shock for those who paid $999 for the premium service. The Fool have been touting the Buffet way for years to gain investor confidence in subscribing to their service, the MF's dire performance is presently tarnishing the Buffet name and discrediting his stellar strategy with rotten picks. Would Mr. Buffet be a buyer of the MDP picks? That is the million dollar question, if so, at what price? Certainly not at the price touted by the Motley Fool to its MDP subscribers. Another question, is how much of the Fools marketing is pure hype and that of an irresponsible service to average investors who are puting their confidence and hard earned money in the MF services hoping for a safer way to play the markets. Beware! MDP is not as rosy as its made out to be. For many Foolish investors the $999 subscription was followed by sharp pain, one that is far from having instant relief.

    The MF is irresponsible and misleading.

Add your comment.

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: 770170, ~/Articles/ArticleHandler.aspx, 9/16/2014 5:49:21 PM

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