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 4/4/06

Total value of stock purchased

52-week change

Arbitron (NYSE: ARB  )

$33.28

$111,261

(23%)*

Brooke (Nasdaq: BXXX  )

$11.09

$50,853

(17%)*

Chico's FAS
(NYSE: CHS  )

$38.79

$140,509

39%

Noble (Nasdaq: NOBL  )

$16.79

$86,012

17%*

Vical (Nasdaq: VICL  )

$5.81

$6,170

50%

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings.
*Returns adjusted to reflect the affect of dividends and splits.


Is Chico's the man?
My wife isn't much for fashion retailer Chico's, which is OK with me. (Money saved is money earned, right?) But over the past five years, she's been among the minority. Through March, the shares were hotter than Phoenix in August.

But the stock hit the skids in early March, when Chico's missed Wall Street expectations by a penny. Big deal, wrote Foolish friend and colleague Alyce Lomax at the time. A 15% rise in same-store sales and a 35% boost on the bottom line convinced me she was right. Investors, however, don't seem to share my confidence, and that's why insider buying at the retailer has captured my attention this week.

President and CEO Scott Edmonds bought 400 shares on Friday. Two weeks earlier, director Michael Weiss, formerly the CEO of Express, a subsidiary of Limited Brands (NYSE: LTD  ) , bought 3,000 stubs. The buying suggests that both believe the risks to Chico's to be overstated.

There's certainly a case to be made for the stock. For example, at 24 times forward earnings, Chico's is trading for its lowest multiple in three years, according to Value Line. Yeah, I know that still sounds a little high. But is it really too lofty for a retailer that generates a 27% return on capital? Probably not, especially when you consider that Chico's next-closest competitors don't come too close, as far as I can tell.

It's easy to see why Alyce shrugged off Chico's doldrums. Unfortunately, this retailer's investing case involves much more than svelte blouses and push-up bras. For one thing, management has minimum stock ownership requirements. According to this report (downloads a PDF file), Edmonds is on the hook for three times his annual base salary (roughly $900,000, according to the most recent proxy filing) while Weiss must own three times his non-employee director's annual retainer ($40,000, according to the proxy). Edmonds already beneficially owned more than $5 million worth of Chico's stock before last week's purchase. Weiss, however, was a little short. His 2,500 shares were worth just more than $100,000 when he bought.

Can we read anything into either of these purchases? Well, I think it's fair to say that Edmonds believes his company represents a long-term value, even if he isn't buying much. Weiss, on the other hand, appears to just be playing catch-up. As much as I think Edmonds is right, I'd prefer to see a lot more buying from other executives before making a final judgment on this stock.

Old forms never die
I'll be honest: After Fossil, I didn't think I'd see another 10b5-1 filing to purchase stock. Whoops. Some spelunking yesterday revealed that not one but two executives at biotech specialist Vical have filed programmatic purchase plans. I called Vical investor relations for more information, but I didn't hear back before my deadline. I'll include whatever else I learn in next week's column.

In the meantime, here are the most recent form 4s for CEO Vijay Samant and CFO Jill Church. Since the 10b5-1s were filed in December, Samant has acquired 1,000 shares, and Church has acquired 500 shares. According to this filing, it's at least the second time in three years that Samant has bought on a 10b5-1 trading schedule. Interesting, eh?

That's all for now. 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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