You're Not the Only One Buying Here

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 are 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 if they think the stock has the same prospects the insiders do.

Source: wsj.com; Motley Fool CAPS.

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

Right on the mark
From Berkshire Hathaway (NYSE: BRK-B) at the high end, to Biglari Holdings (NYSE: LUK) in the middle, and on to Compass Diversified at the small end, creating a conglomerate of disparate businesses can be a successful strategy, as those three companies have proved.

Yet what is also clear is that the unifying core of the companies is their top managers. Warren Buffett, Sardar Biglari, and Joseph Massoud are the driving forces behind each. Lose them and there's going to be consternation at the future of the company as Buffett's succession plans prove.

Compass Diversified just found that out too when Massoud announced he was taking a leave of absence to deal with an informal SEC inquiry unrelated to the company. Certainly anytime the regulators are snooping around a business, regardless of whether the corporate line is that it doesn't impact the company, it's going to worry investors -- and it did for Compass whose stock sold off in the aftermath of the news. While it hasn't recovered from the impact, it has bounced off the lows and investors remain intrigued by the 9.4% dividend it pays, which shouldn't be affected by Massoud's departure, temporary or extended.

CAPS member blesto wouldn't add new money yet until things clarify themselves, but he wouldn't sell either.

The biggest thing on my mind right now is Joseph Massoud. His absence right now is something to keep a close eye on. He seems to be the lynchpin that is holding it all together. The current managing staff is more than qualified to run the ship

But you can cobble together your own opinion in the comments section below or on the Compass Holdings CAPS page.

Profiting at the margins
Last year I noted the dry bulk shipping sector was engaging in "slow steaming" -- or purposely sailing at less than full speed -- to come to grips with the glut of ships on the market.

Now it seems the oil tanker sector is engaging in the same tactic in an effort to support flagging shipping rates. Bloomberg has compiled data showing the fleets are sailing at an average of 10.7 knots, which is about one knot slower than they were traveling last year, with Overseas Shipholding Group, Frontline (NYSE: FRO), and Moeller-Maersk all confirming they've pulled back on the throttle.

Shares of Overseas Shipholding are down more than 40% in the past year, but CAPS member saraherik, while noting the bad business conditions, still feels the tanker fleet operator is a good deal: "Tons of cash, nice dividend, good management. bad business environment at the moment, but the valuation more than compensates. going long on this one."

Steer your way aft to the Overseas Shipholding Group CAPS page or add it to your watchlist to see if it's able to turn the ship around.

A transforming event
Director Bruce Kovner isn't the only one buying into Synta Pharmaceuticals. He was joined by two other directors, Keith Gollust and Robert Wilson, who bought more than $733,000 worth of stock between them.

The experimental-drug developer had rallied over the past year to almost $7.00 a share, but now trades about 18% below those highs. Last year when it was trading in the mid-$3 range it was seen as ready to record some big gains despite a failed partnership with GlaxoSmithKline (NYSE: GSK). Now that it's given up some of them insiders might think the stock has gotten too cheap to ignore.

With 93% of the CAPS members rating it apparently agreeing, you can add Synta to the Fool's free portfolio tracker to see whether it can regain its momentum.

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 its worth trading on this inside information.