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 7/25/06

Total Value of Stock Purchased

52-Week Change

Fastenal (Nasdaq: FAST  )

$35.45

$42,254

13%

Luby's (NYSE: LUB  )

$8.90

$54,000

(36%)

Methode Electronics (Nasdaq: METH  )

$8.07

$156,393

(33%)

St. Jude Medical (NYSE: STJ  )

$35.94

$119,988

(24%)

TD Ameritrade (Nasdaq: AMTD  )

$16.76

$113,816,338

(13%)

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

In praise of METH
Last September, when fellow Fool Shannon Zimmerman examined Methode Electronics, rising oil prices had recently punished the bottom line. Nevertheless, the company remained optimistic, projecting full-year sales of $385 million and per-share earnings of $0.56 to $0.63.

Fast forward to mid-July. Full-year results are in, and despite $421.6 million in sales -- well ahead of earlier estimates -- the bottom line didn't measure up, managing only $0.47 of net income. To its credit, Methode didn't blame its miss on a sneezing rhino on the African plain or a poor economic climate. Instead, it cited internal inefficiencies, its cost of doing business in China, and trouble at its automotive customers. Investors didn't seem to care, though; the shares are down 16% since the earnings news.

For management, that's created a buying opportunity. Methode insiders have been loading up on shares since last Wednesday, led by board member Christopher Hornung, who purchased 10,000 shares. CEO Donald Duda, Chief Financial Officer Douglas Koman, and board member Paul Shelton also participated in the buying spree.

Is there merit to the purchases? Well, the stock does look cheap. According to Yahoo! Finance, Methode trades for roughly 1.2 times its tangible book value and 15 times forward earnings. That leaves a lot of room for upside, especially if management can find a way to begin meeting the Street's lowered expectations. Keep an eye on this one, Fool.

Is Luby's worth the label?
Next up is restaurateur Luby's, which operates 131 locations around the American South and Southwest. More could be in the works. Third-quarter earnings were impressive; net profit rose roughly 19% year over year, after adjusting for a one-time tax gain. In addition, the chain has managed to increase same-store sales for 10 consecutive quarters, including a 4% bump in Q3.

Against that backdrop, management is buying. Last Wednesday, Chief Financial Officer Ernest Pekmezaris spent $54,000 to snap up 6,000 shares, boosting his direct holdings by more than 20%. That's encouraging, and it continues a trend: Insiders own more than 26% of Luby's available shares.

Meanwhile, institutions have yet to buy into the Luby's story, owning roughly 40% of the float. But the funds that have taken a nibble are some of the best in the business, including the five-star Bridgeway Ultra-Small Company Market (FUND: BRSIX  ) , which has pummeled the S&P 500 over the past five years. It's also a cousin to Bridgeway Small Cap Value (FUND: BRSVX  ) , which has been a stellar performer for the Motley Fool Champion Funds portfolio. Color me intrigued.

And that's all for this week. See you back here next Wednesday, when we dig through more insider deals in search of the next home run stock.

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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.


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