Who's Buying Now?

It's time to check the most interesting insider purchases of the week. After reading through numerous filings using insider tracking tool Form 4 Oracle, here are my top five from the last seven days:

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

That's no con job
We begin this week with food producer ConAgra, which has struggled recently. Indeed, expectations have disappointed. Earnings have come in light. And a restructuring plan that includes cutting the dividend and selling businesses that, during 2005, accounted for 20% of ConAgra's sales has only just begun.

While the prologue of this so-called turnaround story has barely been written, last week brought a plot twist. CEO Gary Rodkin, architect of the restructuring plan, opened an ownership stake in the company the same day as Robert Sharpe, ConAgra's top PR guy. Together the pair bought 109,000 shares for close to $2.3 million.

At first, my inner skeptic wondered whether the buying amounted to little more than a very expensive PR stunt. Let me explain. Sharpe and Rodkin were together at PepsiCo (NYSE:PEP) in years past, and Sharpe's post at ConAgra is a new position. He joined the company from an investor relations firm in December, two months after Rodkin assumed the top job.

What's more, Rodkin's employment agreement says that his 2006 salary could be at least $3 million after bonuses. Put in that context, his $1.5 million stock purchase, while substantial, isn't nearly as huge as it might sound at first blush.

But all of this assumes there is no case to be made for ConAgra's shares. That's simply not true. Indeed, a thumbnail valuation shows that the stock trades for roughly 15.8 times this year's earnings and 18.4 times 2007 income. Both are substantially lower than the firm's 19.2 average annual P/E, according to researcher Value Line. For those willing to study the dozens of chapters still being written in this sordid tale, value may be tucked away in the margins.

Hawk performs a flyby
Next up is Hawk, a maker of industrial parts, including brakes and clutches for cars, airplanes, and farm equipment. The stock has had a great run over the last year, but the company has seen better days. For example, earnings were lower in the most recent quarter because of a pending move of manufacturing facilities to Oklahoma.

Management says growth should recover when the move is completed and the company is yielding the benefits of a better production facility. That's a roll of the dice, to be sure. (Manufacturing is never easy to master.) But management isn't hedging its bets. Both CEO Ronald Weinberg and Chief Financial Officer Joseph Levanduski bought shares last week.

Should you follow in their footsteps? It's too early to tell. For example, Hawk had negative owner earnings through the trailing 12 months leading up to its fourth-quarter earnings report, and it reported negative net income for Q4. Plus, the company's $230 million enterprise value makes it a micro-cap stock, which opens the door to stomach-churning volatility.

If there's anything to like about Hawk, it's that, at 10 times next year's projected earnings, the stock is priced as though the investment in Oklahoma won't work out as planned. And if it does work out, management, which owns roughly 39% of the shares, stands to profit handsomely right alongside common investors. Such alignment has worked wonders for Tom Gardner and Bill Mann in constructing portfolios for Motley Fool Hidden Gems subscribers. Maybe Hawk deserves a spot on the watch list, fellas?

That's all for now. See you back here next week, when we dig through more insider deals in search of great stock ideas.

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Fool contributor Tim Beyers usually 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 Fool profile. The Motley Fool has an ironclad disclosure policy.