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 buy for only one: They think the price is going to go up!

Today, I've highlighted a handful of insiders who have made big purchases of their own company's stock in the past week. These aren't executives getting big chunks of shares from option grants. Rather, they're insiders putting their own money on the line and buying shares at market prices. I then paired 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)

HomeAway (Nasdaq: AWAY)

Christopher Marshall, director

$4.8 million


KiOR (Nasdaq: KIOR)

Stuart Peterson, 10% owner

$1.7 million


TrustCo Bank Co NY (Nasdaq: TRST)

Robert McCormick, CEO

$0.6 million


Sources: wsj.com; Motley Fool CAPS. UR = unrated.

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

Just stay away
The IPO last week of vacation home rental agency HomeAway got bid up like a Florida timeshare on a mandatory condo tour. It calls itself the largest listing of vacation rental properties, but it has some stiff competition from Wyndham Resorts (NYSE: WYN), which operates the largest timeshare business, Resorts Condominium International, and Interval International, run by Interval Leisure Group. As of the end of last year, Interval's exchange included 2,600 resorts located in more than 75 countries. Wyndham oversees 97,000 vacation properties at more than 4,000 resorts globally. And the market's set to get a new timeshare player, as Marriott International (NYSE: MAR) is going to be spinning off its vacation rental operations.

Unless you have some prime real estate you're thinking about listing at HomeAway, it might be best to just swear the company off. And that includes staying away from a HomeAway investment, which looks like little more than a glorified Craigslist for timeshare owners. Worse, it may not be all that different from the classified ads section of your local penny-saver newspaper.

But CAPS member Stocktradingman finds HomeAway's niche an interesting exploitation of the market that can pay dividends for investors.

This is a new stock in a novel market niche. It is the kind of stock that appeals to anyone on a tight budget and to others who desire a more spacious accommodation. I believe that there is tremendous room for growth in this area and investors will be rewarded, especially as the concept becomes more well-known, as it seems likely to do.

It's new to the market, so not many people have weighed in on the listing agent. But among those who have, almost two-thirds see it underperforming the broad indexes. You can list your own view on the HomeAway CAPS page.

A transforming event
KiOR is another IPO, though perhaps not as hot as HomeAway, but it seems to offer the same lackluster opportunity as the vacation rental specialist.

Using wood and farm waste as the basis for its biomass fuels, KiOR is among a growing list of alternative fuel companies going public and trying to cash in on high oil prices. However, the company is using a Chevron (NYSE: CVX) and Weyerhaeuser (NYSE: WY) joint venture to provide all of the pulpwood, whole tree chips, and forest residuals it will need to get its production facility going when it's built.

And there's one of the keys to staying away from this investment, too. It's not producing anything yet. Plus, the likelihood that biofuels will retain their generous tax credit is slim, and suddenly everyone wants to be an alt-fuel provider. Gevo, Solazyme, Codexis, and Amyris Biotechnologies have all gone public in the past year.

Only a handful of CAPS members have discovered KiOR thus far, but three-quarters of them are betting it can beat the market, including JarheadL337: "Disruption! A breakthrough technology like this could shake the market."

Head over to the KiOR CAPS page, where you can help it develop a critical mass of opinion about its future, and follow along on its progress by adding the stock to the Fool's free portfolio tracker.

A conservative estimate
The best of the bunch this week seems to be TrustCo Bank Co NY, a conservatively run savings and loan that largely avoided the morass of the financial meltdown because it eschewed making risky subprime mortgage bets like its larger, politically connected brethren did. It didn't need to get bailed out by taxpayers, and it has paid a dividend consecutively for more than 100 years.

With $4 billion in assets and 134 branches in the Northeast and Florida, TrustCo recently had a public offering that netted it $68 million and had some 13 insiders participating in, including the CEO, the CFO, and numerous directors.

The low-key bank also flies low under Wall Street's radar, but almost 100 CAPS members have rated the financial institution, and 90% say it will outperform the broad market indexes. Think you can bank on its continued success? Add the stock to your watchlist to find out.

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.