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Soros, Icahn Make Eight-Figure Bets on Stocks

Stocks in this article: HAIN EXAR AEO

By David Sterman

NEW YORK ( TheStreet) -- Billionaire investors George Soros and Carl Icahn helped push up the shares of Exar (EXAR) and Hain Celestial (HAIN), respectively, last month.

Above are the most significant acquisitions of stock.

Exar rose more than 3% in September after the chipmaker's stock fell to a low for the year at the end of August. Hain climbed 2.5% last month, bringing the year's gains to 41% at the health foods and tea company.

As October begins, I took a look at the most significant purchases of company insiders. I focused on the 26 companies that saw at least $1 million in insider buying this past month. Here's a breakdown of three stocks.

Hain Celestial: As we've seen with the case of Motorola (MOT), hedge fund investor Carl Icahn never makes a small bet. (Read Carl Icahn's Favorite Stock.)

Motorola is Icahn's favorite stock, but Hain Celestial may be a close second. Icahn has been steadily buying shares of this health foods and tea maker on the open market, and just acquired another $30 million worth in September. Curiously, he's been buying shares even as they have been steadily rising. Insider buying is more often associated with beaten-down stocks.

This is an unusual growth story. The company has a long history of acquisitions, helping to boost sales 10% to 20% most years. But in the absence of acquisitions, organic growth has been very small. And investors tend to avoid growth-led acquisition strategies because they don't always boost the bottom line. Indeed, Hain Celestial's earnings per share have hovered between $0.50 and $1 for most of the past eight years.

Recent trends have become a bit more favorable. Per-share profits are likely to rise more than 25% to around $1.30 this year, but in the absence of more deals, profit growth is expected to slink back to single-digits next year.

From Icahn's perspective, near-term profits may not be the litmus test. Instead, he likely sees an asset that is being built that would ultimately make a nice fit for a larger food maker such as Kraft (KFT), Nestle or Conagra (CAG). But that's a risky strategy. Who knows if such a deal will materialize? Hain Celestial looks only modestly undervalued by traditional investment metrics, so anyone looking to ride along with Icahn may be counting on him to do some cage-rattling to unlock shareholder value, as he has done with Motorola.

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