Who's Buying Now?

It's time once again to check out the most interesting insider purchases of the past week. After reading through numerous filings using insider tracking tool Form 4 Oracle, here are my top five today.

The week's buying

Company

Closing Price 5/20/08

Total Value Purchased

52-Week Change

Enterprise Products Partners (NYSE: EPD  )

$31.38

$1,130,835

4.4%

Mercer International (Nasdaq: MERC  )

$7.80

$62,824

(26.1%)

Prospect Capital (Nasdaq: PSEC  )

$15.99

$1,290,962

0.9%

RF Micro Devices (Nasdaq: RFMD  )

$3.78

$36,800

(37.6%)

Western Gas Partners (NYSE: WES  )

$17.14

$3,133,350

NA*

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings.
*NA = not applicable. Western Gas began trading on May 9, 2008.

Macro returns from RF Micro Devices
The truth about tech investing -- and, for that matter, growth investing -- is that your best ideas will always be under assault by something newer.

To me, the rewards of being right are well worth the extra risk. But I also have a soft spot for cheap techies. Innovation is, of course, constant, but genuine disruption is rare. Need proof? Ask IBM (NYSE: IBM  ) when it last sold a mainframe computer. (Answer: last quarter.)

My point, simply, is that cheap techies aren't always the stock-market garbage that rah-rah "here comes the next big thing" headlines would have you believe.

Consider RF Micro Devices, which suffered from an ugly earnings report earlier this month. The problem? Low revenue and weak margins. Here's how Foolish colleague Toby Shute put it in a recent take:

After RF Micro's earnings implosion last quarter, I wrote: "The fourth quarter is a pivotal one for RF Micro. Should any more hiccups hit operations, it would be hard for investors to believe that these struggles are short-term."

With RF Micro simultaneously announcing its intent to offload its wireless systems division, its problems are obviously anything but short term. What little hope I had only a few weeks ago for significant margin improvements at RF Micro has been dashed.

Even so, our 105,000-strong Motley Fool CAPS community sees value in RF Micro's business, through top handset makers such as Nokia (NYSE: NOK  ) .

Metric

RF Micro Devices

CAPS stars (out of 5)

*****

Total ratings

418

Bullish ratings

394

Percent bulls

94.3%

Bearish ratings

24

Percent bears

5.7%

Bullish pitches

52

Bearish pitches

3

Data current as of May 20, 2008.

And they're not alone. Master investor John Keeley Jr., manager of the market-thumping Keeley Small Cap Value fund, recently bought 10,000 shares.

I think I know why. Keeley is a deep-value investor whose specialty is small, overlooked bargains. RF Micro could fit that profile; it trades for a little more than 10 times next fiscal year's consensus earnings estimate.

For those who don't trust the price-to-earnings ratio -- and I can't say that I blame you -- there are the insiders. At least three officers and directors have been buying shares in the $3 range since January. Last week, CFO William Priddy added 10,000 shares to his already-sizeable direct stake. Anyone think the numbers guy would be buying for no reason? Yeah, me neither.

There's your update. See you back here in two weeks, when we dig through more insider filings in search of the next home run stock.

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Fool contributor Tim Beyers, who is ranked 15,989 out of more than 105,000 participants in CAPS, also writes for Rule Breakers. He owned shares of IBM and Nokia at the time of publication. See Tim's portfolio and his latest blog commentary. The Motley Fool has a disclosure policy.


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