HAVE BILL GATES

and his wife suddenly fallen in love with a Sun Belt garbage collector? A look at our insider-buying screen shows the $24 billion Bill & Melinda Gates Foundation snapping up 150,000 shares of a certain Fort Lauderdale, Fla.-based waste-removal company since September, bringing its total holdings to 900,000 shares.

Insider buying, of course, refers to purchases of a company's shares by either its officers or its so-called beneficial owners, those with more than a 10% stake. Savvy investors pay attention to insider buys because they know that such people often have a clearer understanding of a particular company's prospects than the rest of us.

Note that insider selling usually isn't as significant as buying. That's because many executives receive shares as part of their compensation, so it makes sense for them to periodically sell some off to diversify their portfolios. When insiders buy, though, they spend their own money on a bet that their company's shares are poised for a lift.

Best of all, insider buying is easy to track. The Securities and Exchange Commission requires that such trades be reported to the public within two business days. And SmartMoney.com's stock-screening tool allows you to search anytime for companies whose insiders are feeding on shares.

We recently ran a screen for the top insider-buying dollar amounts over the past six weeks. Values had to be within the top quartile of our 8,300-company database. We made just two other requirements: that annual sales exceed $200 million, and that average daily trading volume be at least 100,000 shares. We turned up 29 names, including Republic Services.

Why is Gates buying? Is it a plot to dominate the world market for garbage collection in the same way Microsoft dominates the market for operating systems? Has the foundation developed a secret garbage-into-gold formula?

Not quite. "I don't think Bill Gates is particularly interested in the garbage business," says Republic spokesman Will Flower. "It's more likely that [Gates Foundation adviser] Cascade Investment is interested in core businesses that can deliver strong cash flow and predictable returns. Strong cash flow leads to strong earnings, which is good not only for Bill Gates but for other investors."

Strong cash flow, you say? Predictable returns? So much for fiendish intrigue.

Republic provides waste collection, transfer, disposal and recycling and has hauled in $2.45 billion in revenues over the past 12 months. That makes it the third largest trash collector, behind Waste Management, with $11.3 billion in trailing-12-month sales and Allied Waste, with $5.5 billion. Republic serves 80 markets in 22 states, with a large presence in Florida, Georgia, Nevada, California and Texas.

Here's a of all of the Gates buys over the past 12 months. They've generally occurred on dips, and Aug. 29 provided a big one. That was when the company announced revised earnings guidance for 2003 of $1.32 to $1.34 a share, 14 cents lower than its previous projection.

In its press release, the company blamed about nine cents of the cut on additional self-insurance funding recommended by the plan's new actuary, and the other nickel on "higher disposal costs related to above-average rainfall in the eastern half of the United States, increased fuel costs and continued pricing pressures in the cyclical component of the company's business resulting from the sluggish economy."

Over the next few days, the stock dropped about 10%, hitting $22 on Sept. 15. The Gates Foundation's three 50,000-share purchases between Sept. 2 and Oct. 3 averaged $22.50 a share. The slow-moving stock now goes for about $23.50.

Did the foundation get a good deal? Let's take a look at Republic side-by-side with its two largest peers using SmartMoney.com's stock-comparison tool:

All three stocks have betas well below 1.0, indicating low volatility relative to the Standard & Poor's 500 index. That's not surprising, given the defensive nature of the garbage business. Note that while Republic's stock has lagged Waste Management and Allied Waste over the past 12 months, its three-year return of 76% is more than double that of the others.

Republic's forward price/earnings multiple of 17.8 times analysts' $1.32 consensus for 2003 is less than the Waste Management's 21.5 or Allied's 19.3. All are projected to increase earnings at roughly 12% per year over the next five years. That gives Republic a price/earnings growth, or PEG, ratio of 1.48, less than Waste Management's 1.72, Allied's 1.57, or the S&P 500's 1.70.

All told, investors who worry that the market is due for a dip may find Republic shares worth a look. Should tech highfliers hit the rubbish pile again, trash-collector stocks should come out smelling sweet.