There are reasons to like the insider activity at

BellSouth

(BLS)

-- reasons, hard as it is to imagine, that have nothing to do with the debate over how the

AOL Time Warner

deal will affect the

Baby Bells

. For one thing, the four insiders involved

and

the 44,000 shares purchased from Oct. 26 to Dec. 13 represent statistical anomalies for BellSouth. Insider buys at the company are not entirely unheard of, but they have historically been modest and hardly ever occur in clusters. The buyers don't include the chairman and CEO, but they do include what you might call second-tier insiders: the corporate compliance officer, the chief staff officer and a director, William Stavropoulos, who is also the CEO of

Dow Chemical

(DOW) - Get Report

.

Even more striking are the prices these insiders were willing to pay. From 43 1/2 to about 47 11/16 per share, the recent transactions occurred at prices not far from the stock's all-time high of just above 50, reached in August 1999. It would be difficult to overstate just how rare it is to find insiders accumulating stock this much nearer to the top than to the bottom of an issue's long-term trading range.

Finally, consider what happened to fellow Baby Bell,

Cincinnati Bell

, now

Broadwing

(BRW)

, after insiders purchased shares in the 18-to-21 range back in July and August. Those trades sure seem to have worked out for the insiders. Broadwing peaked at more than 41 Jan. 10 and only recently drifted back into the mid-30s.

And how about AOL Time Warner? An initial assumption was that the Baby Bells would be left behind. If nothing else, the merger shifted the focus at least a little away from

how

content would be delivered -- to

who

would have

what

content to deliver. Add to this Time Warner's formidable cable network, totally free of geographical concerns, and things start to look bleak for the Bells. Little wonder cable TV stocks surged -- and the Baby Bells swooned.

Since the announcement, analysts have drifted to the Baby Bells' defense, however. With a little reflection, it seems certain that AOL Time Warner will need access to homes not included in the 13 million wired to Time Warner cable. What's more, some have even suggested that the Baby Bells may soon have more households wired to high-speed Internet than the cable companies themselves. Perhaps this is what prompted BellSouth spokesman Jeff Battcher to hail the merger as good news, insisting that AOL Time Warner is "going to be a large customer for us."

That could, of course, be mere bravado, and maybe the insiders are bluffing too: The stock certainly hasn't reacted in any meaningful way, despite more than one analyst's protestations that the Baby Bells -- BellSouth included -- are woefully undervalued.

Nevertheless, we've ruled out the possibility that they are driven by ownership guidelines and company-sponsored loans. And two other bits of evidence bolster our confidence that these insider purchases are driven by nothing more than the simple desire for gains. For one, BellSouth shares are hardly cheap from an historical perspective.

Second, only one of those who bought BellSouth holds a substantial options position -- in fact, only one of the reporting insiders holds any options that are both in the money and currently exercisable.

Why does that matter? Because if the buyers had been sitting on a pile of in-the-money options, we might dismiss all this as mere showmanship. The fact that these buyers have turned to the open market convinces us that these particular insiders aren't interested in merely attempting to paint the tape.

Bob Gabele has been tracking and analyzing insider trading since 1978, most recently for First Call/Thomson Financial. This column is not meant as investment advice; it is instead meant to provide insight into the methods of insider trading. At time of publication, Gabele held no position in any of the companies discussed in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Gabele appreciates your feedback at

rgabele@thestreet.com.