Who's Buying Now?

You may have seen my introduction last week to a very handy tool called Form 4 Oracle, which tracks the buying and selling of insiders at most publicly traded U.S. corporations. I think it can be remarkably useful in your stock research -- and I aim to prove it.

Beginning today and continuing each week, I'll use Form 4 Oracle's list of stocks experiencing insider buying during the prior week to introduce you to a business or two that might be worth a little extra Foolish research. So who's being bought now?

Company

Closing price 8/15/05

52-week change

Conceptus (Nasdaq: CPTS  )

$10.00

+19%

Dean Foods (NYSE: DF  )

$35.44

-2%

Natus Medical (Nasdaq: BABY  )

$10.09

+81%

Octel (NYSE: OTL  )

$16.79

-28%

Salton (NYSE: SFP  )

$2.83

-37%

Xenogen (Nasdaq: XGEN  )

$3.15

-51%

Sources: Fool.com, Yahoo! Finance

On this list, I'm most interested in Natus Medical. The company made Tom Gardner's Motley Fool Hidden Gems Watch List in the July 2004 issue, and it's risen more than 68% since. On Monday, small-cap fund manager David Nierenberg, a director and owner of more than 2.7 million of the company's shares, padded his position with more than 150,000 additional shares at prices between $10.03 and $10.09 per stub.

That's just his latest salvo. Nierenberg has been buying shares on the open market since last May -- and we can guess why. He's twice spoken with Tom Gardner about the investing philosophy he employs through his "D3" funds -- that's short for "David's Dirty Dogs," small caps trading at a discount to their real worth. (Click here to see the first interview if you're a Hidden Gems subscriber. Otherwise, take a risk-free trial and get complete access in minutes.) Apparently, Nierenberg still feels there's plenty of money to be made. Considering his track record -- better than 24% annual returns since 1999 -- I wouldn't doubt it.

Are insiders always right? Of course not. Fellow Fool Rich Smith made that perfectlyclear just yesterday. But you'll typically find no sign more bullish than someone with an already big stake in a firm buying more. I believe that's the case with Natus today, and I think many more situations like it are out there, waiting to be found. Come back next week, and we'll continue the search.

Further financial Foolishness:

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. Your portfolio will thank you.

Fool contributor Tim Beyers would love to be a motivational speaker -- but you won't find him living in a van down by the river. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has an ironclad disclosure policy.


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