Stocks the Rich Executives Are Buying

Put five Fools in a room, ask them how they invest, and you'll likely get five different answers. Some like growth, others value, or small caps, or dividends, or, well, you get the picture.

Yet, while our styles differ, we all want excellent, engaged managers running the companies we own. We like it even more when these managers are also owners -- investors like you and me who, in trying times like these, are willing to buy as others sell. That's why I write this column weekly.

The week's buying
So which rich executives are buying now? Have a look, courtesy of our friends at Form 4 Oracle:

Company

Closing Price 2/4/09

Total Value Purchased

52-Week Change

Seagate Technology (NYSE: STX  )

$4.28

$1,779,100

(78.6%)

Blyth (NYSE: BTH  )

$21.36

$329,163

(74.8%)

Royal Caribbean (NYSE: RCL  )

$6.73

$133,300

(82.6%)

Regions Financial (NYSE: RF  )

$2.50

$393,109

(89.4%)

American Express (NYSE: AXP  )

$16.36

$959,059

(64.9%)

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

Swimming toward the Seagate
The list of tech titans in transition is too long already. Microsoft plans to cut 5,000 workers. Yahoo! (Nasdaq: YHOO  ) has a new chief executive. So, too, does Seagate. Chairman Stephen Luczo replaced Bill Watkins as CEO last month.

But, for this once-dominant maker of disk drives for PCs and laptop computers, transition is less about executive churn than it is the churning and burning of a lagging research and development operation. Seagate badly trails SanDisk (Nasdaq: SNDK  ) and others in the emerging market for solid-state drives (SSD) based on flash memory.

And yet Luczo knows that shareholders expect both innovation and responsible management: Seagate this week filed a plan with the SEC that specifies its rights in reclaiming compensation from executives found to have committed fraud.

"The executive officer's repayment obligation applies to any bonus paid, stock grant issued and/or vested or stock option exercised during the period," the filing reads. It also specifies salaries for both Luczo and chief technology officer Bob Whitmore, both of whom are subject to a previously announced 25% pay cut. Board members will accept a 15% cut.

That has to be music to the ears of Seagate shareholders, some of whom you might find in our 125,000-strong Motley Fool CAPS community:

Metric

Seagate

CAPS stars (5 max)

****

Total ratings

958

Percent Bulls

94.5%

Percent Bears

5.5%

Bullish pitches

153 out of 162

Data current as of Feb. 5, 2009.

Clearly, they still like Seagate. One CAPS member, dickseacup, appreciates the company's competitive position.

"Stock price dropped off a cliff in JAN 09. I think that was a market overreaction to the news of firmware issue. Perhaps traders were anticipating recalls of drives, retooling/remanuf. or liability issues. A firmware patch fixed the problem, though, with minimal fuss," the member wrote on Tuesday, referring to a series of highly publicized failures of Seagate's Barracuda drives. Continuing:

Nice dividend, management has invested R&D in future technologies (SSD, for instance), and they remain competitive with [Western Digital], their primary rival in the market. They have slipped on leading with market innovations, but if they get back on track, they'll be in even better shape.

I'm hearing this a lot, and not just from CAPS investors. The skeptic in me wonders if Seagate can pull it off. Luczo apparently harbors no such doubts. Last week, he purchased a half-million shares of his company's stock on the open market, at prices well below yesterday's close.

Intrigued? Me, too.

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

Get the inside scoop on stocks of all sizes:

Fool contributor Tim Beyers is slowly improving his CAPS score. Thankfully, he's doing better as an analyst for Motley Fool Rule Breakers. American Express and Microsoft are Inside Value picks. The Fool owns shares of American Express. Try any of these Foolish services free for 30 days.

Tim didn't own shares in any of the stocks mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy knew a rich executive once. She never bought anything.


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