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.

Exar: In a similar vein, legendary investor George Soros is placing a rising pile of bets on chipmaker Exar. He bought another $10 million in stock in September, pushing his total holdings above $25 million, or roughly one-tenth of the company. Unlike Icahn, Soros doesn't apply pressure to the companies in which he invests, and instead typically takes a passive role.

Exar, which makes a range of chips used in telecom, data-storage and power-management environments, has been a decent growth story in recent years. Sales for fiscal (March) 2011 are on track to rise at a double-digit pace for the fourth straight year.

Yet even as sales have been rising, bottom-line results haven't followed suit. Exar hasn't been profitable since fiscal 2007. The shares had rebounded in the past year on hopes that the company would finally generate high enough gross margins to push profits to the bottom line. Recent weak quarterly results dashed those hopes, and the stock fell from $7.50 to under $6 in the past six months. They're not likely to drop much farther than that -- Exar has almost $5 a share in cash, and the shares trade slightly below book value of $6 per share.

Those kind of metrics enable Soros to keep from worrying about the position, even as the company isn't expected to finally move back into profitability until the fiscal year that beings next April. Jonathan Moreland, who runs, thinks investors won't need too much patience: "Management's cost-cutting moves should help Exar to start posting even more quarters in the black in the coming year."

This looks like a safe value play with moderate upside, unless Soros suspects that Exar might find a home at a larger tech firm and be bought out at a nice premium.

Medivation ( MDVN): Investment firm QVT Associates is backing this former high-flying biotech. Medivation was a rising star in 2009 on the heels of a promising drug that appeared to effectively treat prostate cancer. The shares soared last fall as investors anticipated and then received word of a lucrative marketing deal, and the stock jumped to nearly $40.

But in early March, the company released Phase III clinical data that proved disappointing, sending the shares down 70% in just one day.

At this point, analysts are divided as to where the stock goes from here. Medivation has a few more clinical trials under way showing promise in the treatment of Huntington's disease and Alzheimer's disease. But analysts at Brean Murray predict that Medivation will stumble in these trials as well, and the shares may eventually fall to $6. Analysts at Global Hunter think the pipeline still holds a great deal of promise, and that the shares are worth $16. Clearly the recent heavy insider buying from QVT, which owns more than 10% of the company, implies that upside could be far higher.

Office Depot ( ODP): This stock caught my eye, even as it sat at the bottom of this list, as a cluster of insiders stepped up to the plate. I profiled this office supply chain a few weeks ago and even though shares are up more than 10% since then, they still look to have some pretty significant upside. Please revisit that column for a fuller look at why I'm a bull on Office Depot. (Read Insiders are Scooping Up These 3 Retails Stocks.)

Action to Take: Following stocks with heavy insider buying takes a good bit of follow-up work. The motivations behind those purchases aren't always clear, so it pays to listen to conference calls to glean hints of developments that most investors may be missing. Of the stocks profiled here, I remain an especially strong fan of Office Depot as it is quite cheap and highly leveraged to an eventual increase in employment. Medivation remains a stock to heavily research before making any commitments and is only suitable for risk-tolerant investors, while Exar looks to have the best combination of value and upside.

This article originally appeared on StreetAuthority. To read more articles from David Sterman on StreetAuthority, you can visit this link.

Disclosure: At the time of publication, David Sterman owned no positions in the stocks mentioned.


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This article originally appeared on StreetAuthority, founded in 2001 by industry veterans Lou Betancourt and Paul Tracy. StreetAuthority is a financial research and publishing company with offices in Austin, Texas and Gaithersburg, Maryland. The company aims to help individual investors earn above-average profits by providing a source of independent and unbiased investing ideas.

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