One of the primary goals of Stockpickr.com is to allow everyday investors a look at what the big guns are buying. Often, we see a big-name investor loading up on a particular stock. This is usually a good sign, because you know that person put a lot of time and due diligence into that process.

But when that same company announces that an insider has purchased a large chunk of stock or, even better, the board announces a new share-buyback program, that usually seals the bullish case for the stock.

As Jim Cramer often points out, insider selling happens all the time for many different reasons, but insiders buy for only one reason: They think their stock is going higher.

That's why, each week at Stockpickr, we update the Top 10 Insider Purchases and Buybacks portfolio, featuring stocks that have had either big insider purchases or newly announced buybacks as well as super investors accumulating shares.

For instance, Broadcom (BRCM) is in this week's portfolio. The Irvine, Calif.-based manufacturer of semiconductors announced a new $1 billion buyback plan. The repurchases will be made from time to time depending on market conditions until the program terminates on July 31, 2011. Under the company's previous buyback, which began in 2005, it repurchased $2.43 billion in stock.

The company has 507.3 million shares outstanding.

On July 22, Broadcom posted stellar second-quarter results, with net income nearly quadrupling on heavy demand for its communication products. During the quarter, the company earned $134.8 million, or 25 cents a share, up from $34.3 million, or 6 cents a share, in the same period last year. Revenue surged 34% to $1.2 billion from $897.9 million.

"Despite continued economic turmoil, demand for Broadcom's wired and wireless communications products strengthened in the second quarter," said Scott A. McGregor, Broadcom's president and CEO. "Our quarterly product revenue, excluding royalties, surpassed the $1.0 billion milestone for the first time in our history."

After listening to Broadcom's second-quarter conference call, analysts at Kintisheff Research reiterated their buy rating and inflated their targets. They were pleased to see better-than-expected results in all of Broadcom's segments; broadband networking (38% of second-quarter sales), enterprise networking (27%), and mobile and wireless (35%).

Two universal themes -- cable upgrades and the recent iPhone 3G design win -- make for favorable near-term position, said the analysts. They raised their six-to-12-month price target to $44 from $41, representing about 60% upside potential from current levels.

It's also good to see that Renaissance Technologies is interested in Broadcom. Renaissance is a $5 billion New York-based hedge fund founded by Jim Simons in 1982. He has earned 38% returns since 1989 and is considered to be the best in the industry. In addition to Broadcom, he also owns Linear Technologies (LLTC) and Diageo< (DEO).

Another fund who's buying Broadcom is the Alger Capital Appreciation Fund. This open-ended fund, run by Patrick Kelly, has a Morningstar rating of three stars. The fund boasts a one-year return of 37% and a three-year return of 26%. Its other top picks include Apple (AAPL) and Altria (MO).

So we have a buyback, an outstanding second quarter, a buy rating with increased targets, and two top-of-the-line investors buying shares of Broadcom. It might be time to take a closer look at this stock.

Next on the list is IntercontinentalExchange (ICE). ICE is a leading operator of global exchanges and over-the-counter markets with headquarters in Atlanta. On Monday, August 4, the company said it will repurchase up to $500 million in common stock over the next year. The buybacks will be financed through a mix of cash on hand, future cash flows and the company's existing credit line.

The company will begin repurchasing shares after it completes the acquisition of Creditex Group, a credit processor, in a deal worth $625 million.

Scott Hill, ICE's CFO said, "This program reflects our belief that the current share price does not appropriately reflect the strong underlying fundamentals of our global business."

ICE reported its second-strongest quarter ever as oil prices surged to record highs. In the second quarter, net income rose to $84.9 million, or $1.19 a share, a 58% jump from $53.7 million, or 75 cents a share, reported in the same period last year. The operator of Europe's largest energy market said that revenue improved 44% to $197.2 million. ICE reported $58.1 million in contracts for its future exchanges, an increase of 18% from the year-ago period.

Jeffrey C. Sprecher, ICE chairman and CEO commented: "ICE's strong second quarter performance demonstrates our team's continued focus on growth and execution." He continued: "We continue to invest in new avenues of growth and to evaluate M&A opportunities to expand our position as one of the most global, diversified derivatives markets in the world."

After shares sank 11% following the earnings report, Credit Suisse issued a note saying the selloff was unwarranted. Analyst Howard Chen said: "We view 2Q results as healthy, believe growth outlook is intact and view yesterday's 11%+ selloff in ICE shares as dramatically overdone. ICE is our top pick in the sector as we continue to see best-in-class organic growth in the franchise at valuations close to a S&P 500 market multiple (13x 2009 EPS)." Credit Suisse rates ICE outperform and has a $170 price target on the stock.

We also took notice when we saw Caxton Associates buying shares of ICE. Caxton Associates is a $20 billion New York-based trading and investment firm formed as the successor to Caxton Corporation, which was founded in 1983 by legendary billionaire macro trader Bruce Kovner. In its portfolio, you'll also find Proctor & Gamble (PG) and Burlington Northern Santa Fe (BNI).

Another noteworthy firm bullish on ICE is DE Shaw. This global investment firm with over $50 billion in investment capital also likes MasterCard (MA) and Owens Corning (OC).

So we have a buyback, solid earnings, an analyst who considers ICE "best-in-class" and two top-notch investment firms buying shares. That's a solid foundation for ICE to take off from.

And finally, we have Humana (HUM) making this week's list. Louisville's health care provider announced that its board increased the company's buyback program to $250 million. This amount excludes the $92.8 million used during the last repurchase authorization of $150 million, which was initiated in February 2008. The repurchases can be made at any time as long as they are before the expiration date of December 31, 2009.

After Humana's second-quarter results beat everyone's estimates, the stock jumped 6% in Monday trading. The company earned $209.9 million, or $1.24 a share, a slight drop from the year-ago period when Humana earned $216.8 million, or $1.28 a share. Humana was expecting $1.15 to $1.20 a share, while Wall St. was anticipating $1.18 a share.

Revenue for the quarter was $7.35 billion compared with last year's $6.43 billion. The company added that the better-than-expected results were due to surprise results in its Medicare Prescription Drug Plan.

Humana increased its full-year forecast to $4.30 to $4.40 a share from its previous expectation of $4.10 to $4.35 a share. Analysts are expecting $4.23 a share.

Humana also recently agreed to purchase Cariten from Knoxville, Tenn.-based Covenant Health for about $245 million in cash. The deal will close in the fourth quarter of this year.

Oppenheimer Research has an outperform rating on the stock and was bullish on the company's surprising second quarter and the Cariten purchase. The Cariten acquisition could add more than 10 cents to EPS next year and 2% to Humana's earnings growth rate in 2009. The 12-to-18-month target is set at $76, offering huge upside potential.

It's also good to see that SAC Capital is investing in Humana. This $12 billion group of hedge funds was founded by Steven A. Cohen in 1992 and has earned 40% returns every year since inception. It just recently bought Petroleo Brasileiro (PBR) and sold out of Marriott (MAR).

We are also pleased to see that the Citadel Investment Group likes Humana. This is a $20 billion Chicago-based hedge fund was founded by billionaire trader Kenneth C. Griffin and 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. Its other top picks are CF Industries (CF) and AT&T (T).

So we have a buyback, better-than-expected earnings, positive analyst feedback and two of the big time investors putting their money into Humana. It may be time to reconsider this stock for 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 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

Top 10 Insider Purchases and Buybacks LXI

Top 10 Insider Purchases and Buybacks LXII

Top 10 Insider Purchases and Buybacks LXIII

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 on Aug. 13, 2008