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Tickers in this Article: KO, GFIG, AN, PAG
A number of reasons can lead an insider to buy shares of a stock. When an insider purchases shares, it is usually an indication that they believe that a stock is undervalued or will be going higher. Following insider transactions is one action that potential investors can take to help gauge the prospects of a particular stock. Here are three of the largest insider purchases that have gone down during the past 30 days.

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One Director's Big Bet
One of the most intriguing insider transactions to surface in recent days was a $27.6 million direct purchase of Coca-Cola (NYSE: KO) by one of the company's directors. The purchase was made at $54.03 per share on October 26. The stock is currently trading right around this same price which is just below a 52-week high and about 20% above where the stock opened 2009.

In mid-October, the Coca-Cola reported Q3 EPS that were in line with the company's year-ago quarter. Net operating revenue fell by 4%, but the company announced both volume and value share gains for the ninth consecutive quarter. In addition to the appeal that the stock has garnered from this insider purchase, Coca-Cola is also attractive to income investors as the stock carries a 3.1% dividend yield.

Optimism Despite Dip
Another notable insider transaction occurred on Tuesday when an officer at GFI Group (Nasdaq: GFIG) bought $1.5 million worth of company stock at $4.88 per share. Shares of GFI recently took a hit when the company reported a profitable Q3, but issued revenue guidance that Wall Street viewed as being weak.

Shares of GFI Group have lost about a third of their value since the company reported its earnings on Friday. Perhaps the selling could be overdone? The company is optimistic that legislative issues that have cast a cloud of uncertainty over the derivatives market in recent months could soon be resolved. GFI was able to hold its quarterly dividend in tact and its stock now wields a dividend yield of 4%.

Inside Auto Plays
Also on the list of eyebrow raising insider purchases was an $8.8 million buy of AutoNation (NYSE: AN) shares by the Bill & Melinda Gates Foundation. These shares were picked up for between $17.61 and $18.22 per share. This automotive retailer has seen its stock price nearly double so far this year.

A similar trend has occurred at Penske Auto Group (NYSE: PAG), one of AutoNation's top competitors. After completely writing off the auto industry at the end of 2008, investors have pushed shares of PAG up 106% this year. A boost from the cash-for-clunkers program and the realization that the automotive industry may stage a comeback in the U.S. has helped bring new life to both of these names.

The Bottom Line
These insider purchases do not necessarily mean that a potential investor should immediately run out and buy shares of one of these stocks. However, such a transaction does lend confidence to shareholders as insiders are typically more knowledgeable about a company and/or have more money riding on one of these buys than the average investor. It is still wise to conduct additional due diligence and not rely entirely on the judgment of insiders - regardless of how sound that judgment may be. (Find out more on why insider transactions can be valuable information in Can Insiders Help You Make Better Trades?)

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