Finisar

Observers think that a recent spate of insider trading at Finisar Corp. (Nasdaq: FNSR) could maybe, just possibly, signal an upturn in the component manufacturer's fortunes.

The theory goes that corporate insiders, especially chief financial officers, have a pretty good idea of when their stock is undervalued. When they reach for their personal checkbooks, it's often a good time to buy.

And that's exactly what's been going on at Finisar over the last couple of weeks. On September 28th, Steve Workman, CFO of Finisar, picked up 10,000 shares at the bargain basement price of $3.80 a share, increasing his stake in the maker of optical and storage components to 542,082 shares. (At Wednesdays $5 closing price, Workman had already racked up a 32 percent gain in less than two weeks.)

Workman's not the only insider making moves at Finisar. All of the following purchases were made in the last two weeks: Chairman Frank Levinson picked up 395,000 shares in the $3.63 to $4 range, increasing his holdings to nearly 44 million shares. Vice president Jan Lipson bought 2,000 shares at $4.13, raising his stake to 577,312 shares. Director Roger Ferguson bought 10,000 shares at $3.75, bringing his share total to 90,000. And director Larry Mitchell picked up 25,000 shares at $4.55.

Of course, buying back your own stock in a market as volatile as this one takes cojones and can misfire. Finisar was in freefall Tuesday, dipping to a low of $4.22, amidst reports of the company closing a convertible debt sale that would be tied to a 22.5 percent premium over Tuesday’s closing stock price. Still, it's bounced back since then. At press time today (Thursday) it was trading at $5.53, up 10 percent on the day.