Who's Buying Now?

First, thanks to all of you who wrote in wondering where last week's column was. It was nice to be missed, but it was even nicer to have the day off so that my wife and I could celebrate our eighth anniversary. And let's face it, a day without SEC filings can do the eyeballs good.

You know me, though. I just can't go more than a week without knowing who's buying what and why. So without further ado, let's get back to it. Here are my top five insider purchases from the past seven days:

The week's buying

Company

Closing price 11/7/05

52-week change

AutoZone (NYSE: AZO  )

$87.65

2.7%

General Electric (NYSE: GE  )

$34.02

- 1%*

General Growth Properties (NYSE: GGP  )

$41.05

31%*

Oakley (NYSE: OO  )

$15.16

19%*

RedbackNetworks (Nasdaq: RBAK  )

$11.88

162%

Sources: Fool.com, Yahoo! Finance
*Returns calculated inclusive of dividends

Eddie in the zone
Unless you've been asleep for the past year or so, you know investor Eddie Lampert bought up Kmart's debt in bankruptcy, giving him control of the ailing retailer, which he then helped merge with Sears (Nasdaq: SHLD  ) . The new Sears Holdings has proven to be a wonderful investment for Lampert and others. Over the past 52 weeks alone, the stock is up roughly 30%, according to Yahoo! Finance.

AutoZone, also a Motley Fool Inside Value pick, has long been in Lampert's sights, as well. And last week, he bagged a whole lot more of the stock. According to this filing, Lampert's ESL Investments -- his private investment partnership -- bought 680,000 more shares for approximately $78.11 per stub, or $53 million. Wow.

But the story isn't that simple. According to the recently filed proxy statement, Lampert was in some way responsible for nearly 28% of insider holdings. (Yahoo! Finance pegs insider ownership at 28.81%.) That's waaaaaay up from the 15.7% of AutoZone ESL Investments owned when Lampert was elected to the company's board of directors in 1999. (Details can be found in this proxy statement.)

But before the most recent purchase, ESL Investments actually owned less AutoZone stock than it did in 1999. Have a look at the breakdown, taken from the footnotes in the latest, as well as the 1999, proxy statements:

ESL Investments ownership - 10/17/05

Fund

Shares owned

ESL Partners

11,520,943

ESL Institutions

71,771

ESL Investors

3,858,519

Acres Partners

5,875,557

ESL Investment Management

19,130

Lampert's personal stake

4,221

Lampert's exercisable options

8,500

TOTAL SHARES OWNED

21,358,821



ESL Investments ownership - 9/30/99

Fund

Shares owned

ESL Partners

10,775,083

ESL Limited

2,645,021

ESL Institutions

348,528

Acres Partners

6,867,928

Marion Partners

1,124,840

TOTAL SHARES OWNED

21,761,400



So why does Lampert own a larger percentage of AutoZone today? Fewer shares. Since 1999, more than 70 million stubs have been repurchased and retired by the company. That's arguably an excellent use of shareholder cash, but none has benefited more than Lampert. Maybe that's why he's steadily moved up the Forbes list of the 400 richest people.

Indeed, there's little doubting Lampert's investing acumen, especially with the 29% annual return Forbes says he's achieved since ESL was founded in 1988. Still, I can't help but wonder why he wasn't more of a net buyer while AutoZone was repurchasing shares. I mean, really, why now?

Maybe it's because the stock dropped under $80. After all, that's where the shares were a year ago, the last time Lampert bought. Sure, that could be a coincidence. Or it could mean AutoZone's intrinsic value is well north of $80 by Lampert's estimation. You don't really need help figuring this one out, do you?

Aging hipster or profitable stock?
Next we'll move on to another member of the Forbes list. No. 207, to be exact. There you'll find James Jannard, founder and chairman of Oakley. He's supposedly worth $1.5 billion. And it seems he's aiming to boost that total. Over the past two weeks, as investors were dumping shares of his company, which has served hordes of hipsters with sleek eyewear and equally svelte clothing for years, Jannard spent more than $15 million to buy stock. The purchases gave Jannard direct control over 44,051,600 stubs, or more than 64% of the shares outstanding, according to figures available at Yahoo! Finance.

Such extraordinary buying raises two possible scenarios. First, Jannard may have had enough of the public markets. He's already a billionaire, after all. And some back-of-the-napkin math says he could buy out all of the remaining shares for $368 million. I doubt he'd swallow the whole deal himself, but Jannard probably has enough cash to buy the majority while offering a minority stake to a private equity firm, current executives, or so-called angel investors.

Or Jannard may just smell opportunity. His track record of purchases is, after all, pretty startling. A check of this page at Form 4 Oracle shows that he's earned double-digit returns on the majority of his buys over a fairly short period. It also shows his last purchases were in February and March, right in the middle of temporary declines in the share price. So which is it, tired entrepreneur or savvy investor? That's hard to say for sure, but Jannard isn't a billionaire because he's dumb. I believe he's simply going where the money is.

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 Fool profilehere. The Motley Fool has an ironcladdisclosure policy.


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