It's time once again to check the most interesting insider purchases over the past week. After reading through numerous filings using insider tracking tool Form 4 Oracle, here are my top four today.
The week's buying
|
Company |
Closing Price 1/10/08 |
Total Value Purchased |
One-Year Change |
|---|---|---|---|
|
Equity One |
$22.24 |
$10,300,315 |
(16.39%) |
|
Goodrich Petroleum |
$23.16 |
$27,490 |
(30.51%) |
|
KB Home |
$17.86 |
$95,083 |
(63.24%) |
|
ShorTel |
$6.03 |
$1,278,979 |
(50.37%)* |
Sources: Fool.com, Yahoo! Finance, Form 4 Oracle, SEC filings.
*ShorTel began trading on July 3, 2007.
Home Sweet KB Home?
When Mr. Market has a clearance sale, outrageously cheap stocks come to the fore. But cheap stocks are rarely obvious. Sometimes, the best bargains are found in the worst industries -- Nucor in steel in the 1980s, for example.
Can you think of a worse industry than housing right now? I can't. Neither can the vast majority of the folks making up our 80,000-strong Motley Fool CAPS community. Here's how they rate California builder KB Home:
|
Metric |
|
|---|---|
|
CAPS stars (out of 5) |
* |
|
Total ratings |
908 |
|
Bullish ratings |
289 |
|
Bull ratio |
31.8% |
|
Bearish ratings |
619 |
|
Bear ratio |
68.2% |
|
Bullish pitches |
52 |
|
Bearish pitches |
89 |
They may be right. Earlier this week, KB reported a massive $9.99-per-share loss for its fourth quarter, thanks to a $403 million writedown of inventory and a $514.2 million deferred tax valuation allowance.
The size of the loss appeared to frighten investors; KB's shares are down 4% for the week and 63% since last January. Ouch.
Will the pain continue? I'm not so sure. Here's why:
|
Builder |
Net Buying (Last Week) |
Net Buying (Past 52 Weeks) |
|---|---|---|
|
KB Home |
$95,083 |
$219,400 |
|
D.R. Horton |
$0 |
($634,180) |
|
Hovnanian Enterprises |
$0 |
($1,130,000) |
|
Pulte Homes |
$0 |
($1,800,000) |
|
Lennar |
$0 |
($6,990,000) |
|
Toll Brothers |
($891,290) |
($90,310,000) |
Talk about a staggering difference. While KB general counsel Wendy Shiba and HR chief John Staines were buying nearly $100,000 worth of their company's stock this week, Toll Brothers director Roger Hillas shed 48,000 shares of stock in the builder he helps to govern.
Insiders at Hovnanian, Lennar, and Pulte Homes have all sold more than $1 million in stock over the past 52 weeks. Only the managers at KB have expressed any degree of faith in the underlying business via insider purchases. Shiba, for example, has bought shares three times since October.
There's no way to know for sure whether she'll be rewarded, but I like KB's strides toward improving its balance sheet. Net debt was down more than $650 million in Q4 over Q3, and cash on hand improved by more than $600 million.
Translation: Even if 2008 is a tough year for housing -- and KB's management says to expect that it will be -- the builder appears to have enough socked away to keep the doors open till a turnaround ensues.
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.
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