Famed money manager Peter Lynch gave us the inside scoop on how to look at insider transactions. Executives can sell their stock for any reason, he said, but they only buy for one: They think the price is going to go up!

Below, we highlight a handful of insiders who've been making big purchases of their own company's stock in the last week. These aren't executives getting big chunks of shares from option grants. Rather, they're insiders putting their own money on the line, buying shares at market prices. We'll then pair that information with insights from the members of Motley Fool CAPS, to see whether they think the stock has the same prospects the insiders do.


Insider, Position

Market Value of Transactions

CAPS Rating (out of 5)

KKR Financial (NYSE: KFN)

Leon Cooperman, 10% owner

$10.0 million


MannKind (Nasdaq: MNKD)

Alfred Mann, chairman and CEO

$5.9 million


Vantage Drilling (NYSE: VTG)

Hsinchi Su, director

$5.9 million


Source: wsj.com; Motley Fool CAPS.

Although following insiders' lead can be profitable, we still recommend that you do further due diligence to determine whether these stocks make a good addition to your own portfolio. This isn't a list of stocks to buy --  just the inside track on companies you might want to check out further.

An investment in the future
With many businesses left weakened by a tough economy, investment companies such as Apollo Investment and KKR Financial have a host of attractive companies to pursue these days. Look no further than KKR's pursuit of Del Monte Foods (NYSE: DLM).

A recent secondary offering helped KKR improve its capital base, which in turn will provide the company with the resources it needs to acquire additional assets. When the stock pulled back on the news, it apparently convinced beneficial owner that Cooperman the time was right to move in. CAPS member jquigley2 agrees, believing that KKR's dividend makes it an attractive investment itself:

This company in presently part of a group offering to purchase [Del Monte] they are a specialty financing company and I believe will continue to move higher as the market improves. Their dividend return of 6% will help that as well.

Only you can decide whether KKR is worth an investment for your own portfolio. Add it to your watchlist, and we'll aggregate all the Foolish news and analysis on the company for you.

All charged up
In October, Alfred Mann bought $5 million worth of company at just more than $7 a share. Shortly afterward, the stock plunged in response to a lawsuit filed by a disgruntled employee, alleging that biotech MannKind had hidden serious problems with its novel insulin therapy Afrezza. Yet the biotech seems to have effectively managed the news, noting that its own internal investigation found  no basis for the allegations, and that the FDA itself had discovered no problems with the data.

Assuming Afrezza gets approved -- a decision is expected by the end of the month -- it would amount to a hard-fought victory. Yet will MannKind win the battle, only to lose the war? Larger, better-funded rivals like Eli Lilly and Novo Nordisk went far with rival insulin innovations, only to withdraw from the field of battle afterward. Pfizer (NYSE: PFE) and Nektar Therapeutics (Nasdaq: NKTR) ended up with a marketing disaster with Exubera.

Alfred Mann's addition of another $10 million tranche to his holdings, however, strongly suggests that he's confident the FDA will approve Afrezza, and that MannKind won't suffer the same misfortunes that befell its rivals. CAPS member 1ld says the market for Afrezza is well beyond the narrow scope to which many people now limit it:

They have a product that will be driven by customer demand. As long as they are able to market(appeal) to the patient they will be able to garner prescriptions from doctors. Existing adult patients want a non-injectable alternative and this has potential applicability to juvenile patients as well.

Let us know on the MannKind CAPS page whether you think the stock will continue to post healthy returns.

Advantage: Vantage
With shares up 50% over the past three months, it's perhaps not surprising that Vantage Drilling would see its stock give back some of those gains. Shares plunged last week on no news, following a big run-up a few days prior on news of a new long-term contract for one of its rigs. The latter seems a stronger signal than the former, and it could explain why director Su has been regularly adding the stock to his portfolio. He's bought $7.7 million worth of shares so far this month.

Even so, outside investors might want to consider buying shares of Vantage only as part of a basket of drilling stocks -- including Transocean (NYSE: RIG) or Nabors -- since the company itself is relatively small and subject to market vagaries. Besides, those companies are doing well, too, even including Nabors' recent pullback. Land drilling opportunities remain plentiful, so a play on Nabors could be lucrative.

Vantage is looking beyond U.S. borders for offshore opportunities, and CAPS member Pennyperson thinks the Indian contract is a sign of things to come:

… Plus it just launched the ultra-deepwater drillship, the Platinum Explorer, which has set sail from Singapore and is currently enroute to India to "commence a five year contract with Oil & Natural Gas Corporation Limited".

Could be a nice long play, but I'm not an owner "yet".

On the inside track
Following the insiders can be a path to profits, but it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Sign up today for the completely free service, and tell us whether it's worth trading on this inside information.