Part of the philosophy of Stockpickr is to follow in the footsteps of smart people. This could mean a few different things.

First, it could mean piggybacking great investors like Warren Buffett or George Soros. Other times it means buying what the CEOs, employees and directors of a company are buying. These are people who know the intimate details of their companies far better than you or me.

The perfect setup is when one of these company insiders or an entire board (in the case of a stock buyback) are buying shares at the same time that some smart savvy investors are as well.

Each Thursday we update the Stockpickr Top 10 Insider Purchases and Buybacks portfolio, featuring the stocks of the week that had either big insider purchases or newly announced buybacks as well as "smart money" accumulating shares.

For instance, Teekay (TK) is in this week's portfolio. The oil tanker company announced that its board approved the repurchase of $200 million in common stock. When the buyback is completed, it will reduce the company's outstanding shares by 14%. Since 2004, the Nassau, Bahamas-based company has repurchase 26% of its outstanding stock.

"We believe Teekay's shares represent very good value and the most compelling investment we can make at this time," stated Bjorn Moller, Teekay's president and CEO. "We have ample liquidity to act on this opportunity. Already in 2008, we have raised over $300 million of public equity at the subsidiary company level and completed over $225 million of vessel sales to third parties which have helped increase Teekay's current total liquidity to approximately $1.8 billion."

On top of the buyback, Teekay also announced that it will increase its quarterly dividend by 15%. Shareholders on record as of Oct. 17, 2008 will receive $0.31625 a share, up from $0.275 a share in the previous quarter.

For the second quarter, Teekay reported net income of $104.47 million, or $1.43 a share, up from $78.41 million, or $1.04 a share, in the same period last year. Total revenue climbed to $790.53 million, up from $566.13 million, in the year-ago period. Excluding one-time events, Teekay earned only $1.05 a share, well short of the $1.16 level analysts were expecting. Investors were also not happy to learn that the company will be restating its financials from 2003 to 2008.

Teekay, which transports more than 10% of the world's seaborne oil, was upgraded to outperform from neutral by Credit Suisse. CS feels that the recent drop in stock price provides a great buying opportunity for investors. However, it cut its price target to $53 from $60 because it remains cautious on tanker rates in 2009.

It's also good to see that the D.E. Shaw Group is buying share of Teekay. Since its organization in 1988, this $50 billion global investment firm has earned an international reputation for financial innovation and an extraordinarily distinguished staff. You'll also find Exxon Mobil (XOM) and General Electric (GE) in its portfolio.

Another top-notch firm buying shares of Teekay is Spencer Capital. Spencer Capital is headed by Kenneth H. Shubin Stein. Shubin Stein, 35, previously co-founded Compo Asset Management, a U.S.-based value investment partnership that later merged into Promethean Investment Group. Its other top plays are Winn-Dixie Stores (WINN) and Target (TGT).

So we have a buyback, an inflated dividend, an upgrade and two successful investors buying shares. It might be time to do some homework on Teekay.

Next on the list is Quest Software (QSFT). The Aliso Viejo, Calif.-based tech company announced that it will repurchase as much $400 million in common stock through a modified Dutch auction tender offer with an expected price of $13.25 to $15.50 a share. If the full buyback is completed, it would represent 26% of outstanding shares. The buybacks will be financed through cash on hand and $300 million in debt.

The company also announced that president Doug Garn will replace Vinny Smith as CEO. Smith will now become executive chairman.

On Aug. 5, the company reported second-quarter earnings with total revenues increasing 21.9% to $173.4 million, compared with revenues of $142.3 million in the same period last year. Net income came in at $8.3 million, or 8 cents a share, up slightly from $7.9 million, or 8 cents a share, in the year-earlier period. Excluding items, it earned 17 cents a share, but analysts were expecting 21 cents a share, which sent share down 10%.

It's also good to see that MKM Partners lifted its rating on Quest to buy from neutral, noting the CEO switch and the buyback. Analyst Kevin Shea commented on CEO change: "Mr. Garn has a reputation as a results-oriented executive, and we expect him to focus the company on margin expansion and shareholder returns." Shea was also bullish on the buyback, which could boost 2009 EPS by 12%. He has a $16 price target, representing 40% upside potential.

We also like to see that the Citadel Investment Group owns Quest shares. This $20 billion Chicago-based hedge fund founded by billionaire trader Kenneth C. Griffin is one of the world's largest hedge funds. The firm is known for its daily trading volume, which amounts to 1% to 2% of daily trading activity in New York and Tokyo. It also likes Wal-Mart (WMT) and CMS Energy (CMS).

SAC Capital Partners is another fund that's betting Quest Software will take off. SAC Capital is a $12 billion group of hedge funds founded by Steven A. Cohen in 1992. SAC closely guards its returns, but published reports and people who have seen the fund's letters to its investors say that SAC had a gross return, before its fees, of at least 40% in every year since inception, making it astoundingly successful. The fund's newest positions are Pilgrim's Pride (PPC) and The Estee Lauder Companies (EL).

So we have a buyback, a new CEO, an upgrade and two noteworthy investors buying shares. It might be time to take a closer look at Quest Software.

And finally, we have Linn Energy (LINE) making this week's list. The Houston-based oil and gas company announced that it will buy back up to $100 million in common stock. The repurchases will be made from time to time depending on market conditions.

"The Board's authorization of the unit repurchase program reflects its confidence in Linn Energy's business and its belief that our units are significantly undervalued," said Michael C. Linn, chairman and CEO. "Furthermore, this program underscores our strong balance sheet and liquidity position. Linn Energy's current yield is approximately 22%, and we believe that repurchasing our units at these levels will deliver value to our unitholders."

On Aug. 7, the company reported a net loss of $712.1 million, or $6.23 a share, compared with a net loss of $17.1 million, or 29 cents a share, in the same period last year. Total revenues were negative $611 million, compared with revenues of $18 million in the year-ago period. Oil, natural gas and NGL revenues for the quarter were $255.6 million, compared with $32.5 million in the same quarter last year.

Despite the negative earnings, Linn offered some positive comments: "The Company posted the highest production rates, adjusted EBITDA and distributable cash flow in its history."

We're glad to see that Renaissance Technologies is putting its money in Linn. Renaissance is a New York-based hedge fund started by Jim Simons in 1982. Its $5 billion Medallion Fund has averaged 38% annual returns, after fees, since 1989, and is considered in the industry to be the most successful hedge fund. It also owns Bank of America (BAC) and Mosaic (MOS).

Leon Cooperman is another all-star investor that's bullish on Linn. Leon G. Cooperman founded Omega Advisors, a $4.5 billion hedge fund based in New York City. Prior to starting Omega, Cooperman spent 25 years at Goldman Sachs (GS), where he was a general partner, and chairman and CEO of Goldman's Asset Management division. He also likes Corning (GLW) and Research in Motion (RIMM).

So we have a buyback, and two superstar investors buying shares hand over fist. It may be time to add Linn to your portfolio.

For more stocks and analysis, check out this week's Top 10 Insider Purchases and Buybacks portfolio at Stockpickr.com.

For the 10 most-recent portfolios, check out:

Top 10 Insider Purchases and Buybacks LXXI

Top 10 Insider Purchases and Buybacks LXX

Top 10 Insider Purchases and Buybacks LXIX

Top 10 Insider Purchases and Buybacks LXVIII

Top 10 Insider Purchases and Buybacks LXVII

Top 10 Insider Purchases and Buybacks LXVI

Top 10 Insider Purchases and Buybacks LXV

Top 10 Insider Purchases and Buybacks LXIV

Top 10 Insider Purchases and Buybacks LXIII

Top 10 Insider Purchases and Buybacks LXII

You can also review Barron's Top Insider Purchases from the prior week and Jim Cramer's "Mad Money" Buybacks.

Posted on Oct. 15, 2008