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

It could mean piggybacking great investors such as Warren Buffett and George Soros. Or it could mean 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) is buying shares at the same time that some smart savvy investors are.

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, Coca-Cola (KO) is in this week's portfolio. The global leader in soft-drink sales said it repurchased $1 billion in common stock through the first half of the year, and it plans to repurchase a total of $1.75 billion to $2 billion for the full year.

The Atlanta-based soda giant announced this in its second-quarter earnings report, which also revealed a 23% drop in profit. This sent Coca-Cola share plunging, landing 18 cents shy of the 52-week low. During the quarter, worldwide unit case volume increased 3%, not as impressive as the 9% growth achieved last year.

However, net revenue jumped 17% to $9.05 billion, from $7.73 billion in the same period last year.

Coca-Cola also sells Vitamin Water, Dasani and Powerade, which have been growing faster than the traditional carbonated beverages. The numbers show that carbonated drinks rose 1% this quarter, while still beverages (such as the ones mentioned above) increased 13%.

President and CEO Muhtar Kent said: "Our results were once again led by our international operations, which delivered 5% unit case volume growth, and we maintained volume in North America despite significant challenges.

Davenport analyst Ann H. Gurkin commented: "We believe KO will navigate successfully despite short-term challenges. The company's balanced model, both in terms of geography and brands, is driving consistent strong growth." She has a buy rating on the stock and a price target set at $65.

It's also good to see that The D.E. Shaw group is buying shares of Coca-Cola. Founded in 1988, this global investment firm has approximately $50 billion in aggregate investment capital. Its other top stock picks are Proctor & Gamble (PG) and Chevron (CVX).

We also like to see that the one of the greatest investors ever, Warren Buffet, is bullish on Coca-Cola stock. The oracle of Omaha began buying Coca-Cola in 1988 and eventually owned 7% of the company. This move turned out to be one of Berkshire's most lucrative investments. Recently, Buffett increased his positions in Wells Fargo (WFC) and Kraft Foods (KFT).

So we have a buyback, a buy rating and two of the most trusted and consistently successful investment firms buying shares of Coca-Cola. It might be time to take a closer look at the stock.

Next on the list is Occidental Petroleum (OXY). The Los Angeles-based maker of oil and chemical products announced that its board added 20 million shares to the company's buyback plan. This addition brings the total amount of shares authorized for repurchase to 95 million, dating back to when the buyback program began in 2005.

From 2005 through the second quarter of 2008, Occidental has bought back about 59.5 million shares, leaving 35.5 million shares available for repurchase. The buybacks will be made from time to time pending on market conditions. In addition, Occidental will not use any credit to fund buybacks.

Ray R. Irani, Occidental's chairman and CEO, said: "Market conditions have given us the opportunity to purchase additional Oxy shares which we believe are currently trading at a significant discount to intrinsic share value."

In late April, Occidental, the fourth-largest U.S. oil company, reported record first-quarter earnings, with profit surging 52% to $1.85 billion, or $2.23 cents a share, from $1.21 billion, or $1.43 a share, in the same period last year. Revenue for the quarter increased 50% to $6.02 billion. The huge surge in profit can be attributed to the skyrocketing crude prices. Occidental paid 68% more for its oil this year than it did in the year-earlier period.

Credit Suisse has an outperform rating on the stock and issued a bullish note after Occidental and SandRidge Energy (SD) teamed up to develop a new Co2 extraction plant in West Texas. The CS analysts increased their price target from $103 to $109 to reflect the optimistic news.

When we saw Dodge & Cox buying share of Occidental, we took notice. Dodge & Cox is a $100 billion investment fund founded in San Francisco in 1930. The firm's Stock Fund has posted an annual average return of 14.47% over the past 10 years and 14.9% over the past 20 years, easily outperforming the S&P 500. The firm also holds positions in Wal-Mart (WMT) and Dow Chemical (DOW).

Another stellar investor into Occidental is Atticus Capital. Atticus Capital is a leading investment management firm, with $13 billion of assets under management. Founded by Timothy Barakett in 1995, the fund tends to take big concentrated positions in certain stocks. Its other top picks are Freeport-McMoRan (FCX) and MasterCard (MA).

So we have a buyback, record first-quarter profit, an outperform rating and increased targets on good news, and two top-notch investors buying shares. That's a solid foundation for this stock to take off from.

And finally, we have Terex (TEX) making this week's portfolio. The maker of tractors, cranes and other construction equipment announced that its board increased its buyback plan by $500 million. With this additional buyback, the company is now authorized to repurchase as much as $1.2 billion in common stock. Terex maintained its expiration date of June 30, 2009.

The Westport, Conn.-based company has repurchased $362 million in stock as of June 30, 2008.

"This action represents the second step-up in our share repurchase program since the program began. We continue to believe that investing in our shares provides an attractive return," said Ronald M. DeFeo, chairman and CEO of Terex.

On April 24, Terex issued first-period results, with profit soaring 43%. Net income came in at $163.3 million, or $1.59 a share, up from $113.8 million, or $1.09 a share, in the year-earlier period. The results, which shattered analysts' expectations, were attributed to overseas strength in demand for aerial platforms and cranes.

Wachovia (WB), which has an outperform rating on the stock, issued a positive note, saying the buyback acts "as a potential defense against the significant selling pressure the stock has experienced." It feels Terex should be trading at $56 to $59, representing approximately 15% upside from current prices.

We were also glad to see that the Alger Capital Appreciation fund is invested in Terex. This fund has a Morningstar rating of three stars and is run by Patrick Kelly, who holds the Chartered Financial Analyst designation. The fund boasts a one-year return of 37.61%, and it also has its money in On Semiconductor (ONNN) and General Dynamics (GD).

When Renaissance Technologies buys a stock, we do some homework, and Renaissance bought Terex. Based out of New York, the firm's $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 picked up some shares of Lockheed Martin (LMT) and Colgate-Palmolive (CL).

So we have a buyback, strong first-quarter results, positive analyst support and two renowned investment firms into the stock. It may be time to do some more homework on Terex.

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 LI

Top 10 Insider Purchases and Buybacks LII

Top 10 Insider Purchases and Buybacks LIII

Top 10 Insider Purchases and Buybacks LIV

Top 10 Insider Purchases and Buybacks LV

Top 10 Insider Purchases and Buybacks LVI

Top 10 Insider Purchases and Buybacks LVII

Top 10 Insider Purchases and Buybacks LVIII

Top 10 Insider Purchases and Buybacks LIX

Top 10 Insider Purchases and Buybacks LX

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

A note from James Altucher:

Every weekend I send an email to Jim Cramer and several hedge fund managers about the most interesting portfolios posted on Stockpickr that week. Usually those portfolios not only list stocks according to a theme but also offer significant analysis as to why the stocks are cheap.

Here are some examples:

Stocks related to drilling the Marcellus Shale

MLPS with yields above 7%

Microcaps trading for less than tangible book

Stocks that do well after Hurricanes

Here's the challenge: Build a portfolio at Stockpickr.com with great analysis, and send me the link. Each great portfolio (with analysis) will get posted on TheStreet.com with your byline (as a "Stockpickr Guest Columnist") and will be included in my email I send to Jim and the other
hedge fund managers on my list.


Posted July 23, 2008