Who's Buying Now?

It's Tuesday, and that means it's time to check the most interesting insider purchases from the past week. After checking 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 11/14/05

Total value of stock purchased

52-week change

Global Axcess Corp (OTC BB: GAXC.OB)

$1.28

$1,500,000

- 15%

HealthTronics (Nasdaq: HTRN  )

$7.02

$8,227,037

1%

Midway Games (NYSE: MWY  )

$19.87

$1,143,913

76%

Playboy Enterprises (NYSE: PLA  )

$15.19

$1,188,190

26%

Radiation Therapy Services (Nasdaq: RTSX  )

$37.22

$168,344

149%

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

An ode to Benjamin Graham
We'll kick off this week with an ode to Benjamin Graham. Yeah, I know, we've written many times about the legendary pioneer of value investing in these digital pages. Perhaps you'll indulge one more contribution? This one is a little different, because it involves a spate of insider buying.

The story begins with Boston hedge fund Prides Capital Partners. According to the firm's website, it seeks to buy huge interests in small- and micro-cap stocks, then work with management to create value. That's an enviable strategy, which Prides says it enhances by choosing stocks where there's a "valuation gap" and limited analyst coverage. (Editor's note: If those sound a little like the tactics Tom Gardner and Bill Mann are using to smash the market for Motley Fool Hidden Gems subscribers, you're probably right.)

I tend to agree with Prides Capital's approach, but it's hardly original. And that's what brings me back to Graham. During the mid-1920s, Graham, in perusing research available through the Interstate Commerce Commission, found that Northern Pipeline boasted $95 per share in assets. Yet the stock was selling for $65 per share. He seized the opportunity, buying up shares till he earned a seat on the board. Once there, he convinced management to pay out a huge $50 per stub dividend, creating outsized returns for himself and his fellow shareholders.

Pride, similarly, claims to be an activist investor. This past week, the fund loaded up on shares of medical device maker HealthTronics. A year ago, Pride owned roughly 8% of the shares outstanding; it has nearly doubled its stake since, to 5.1 million stubs, or roughly 15% of the company. Will the firm be able to extract value in the same way that Graham did? Only time will tell, but I say pretty much anything would be an improvement.

No pictorial included
Next up is Playboy Enterprises. The latest steamy affair involving this king of the so-called sin stocks features iconic founder Hugh Hefner and ... himself. Or at least, his own company.

Two weeks ago, Playboy reported the kind of sales you'd never find in the pages of its namesake magazine: flat. Investors were unimpressed. No longer sexy, it seems, the stock sagged by more than 10%.

Hef must've seen things differently. Two days after the earnings report, he dipped into his ample reserves and propositioned the market for more shares of Playboy's stock. Five days later, the seduction was complete, and Hef's portfolio had added about $1.18 million worth of shares to the trust fund he established in 1991. All told, the trust holds 7,884,666 stubs, or nearly 24% of the company, according to figures available at Yahoo! Finance. Sounds like more than a mere flirtation, doesn't it?

A simple prognosis
Finally, I'd like to touch on the meager buying happening at Radiation Therapy Services, a regional operator of cancer treatment centers. There's absolutely nothing unusual going on -- which, in a way, makes these purchases unusual. Allow me to explain. Most of the time, when a director buys, it's a hedge fund manager seeking to bolster his position, marked by a filing littered with footnotes. Not here. Director Ronald Inge opened a position in the stock with 5,000 shares, while fellow board member Solomon Agin, a rabbi, added 15 more shares to bring his total position to 75 stubs. Yeah, I know, those aren't impressive numbers. But there were also no footnotes in either filing. Which means, quite simply, that sometimes insider buying is just that.

That's all for this week. See you back here next Tuesday, 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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