5 Big Surprise Stock Losers of 2011 Other they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share. But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside. The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying. At the end of the day, its large institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity, but it's twice as important to make sure the trend of the stock coincides with the insider buying. Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks. Here's a look at some stocks where insiders have been doing some big buying in per SEC filings.
Marriott Vacations Worldwide One real estate operations player where insiders are actively buying some stock in is Marriott Vacations Worldwide ( VAC). This company, along with its subsidiaries, is the worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands. This stock has done nothing in 2011 with shares off by 4.5%. Marriott Vacations Worldwide has a market cap of $578.43 million and an enterprise value of $1.39 billion. This stocks trades at a price-to-sales of 0.36 and a price-to-book of 0.35. This is not a cash-rich company, since the total cash position on their balance sheet is $25 million and their total debt is $833 million. The CEO and president just bought 16,500 shares, or $296,000 worth of stock, at $17.95 per share. From a technical standpoint, VAC recently IPO'ed and hit a high of $22.50 a share on its first day of trading. Since hitting that high, the stock dropped down to a low of $15.75, but it has now rebounded to its current price of $17.17 a share. Shares of VAC could be putting in a near-term double bottom here with the stock finding some buying support near $17 a share. If you're interested in VAC from the long side, one could be a buyer off of any weakness and simply place a mental stop just under $17 in case the double bottom doesn't hold. If that $17 level holds as support, then look to add aggressively to any long positions once VAC breaks out above some near-term overhead resistance at $18.89 with volume. Look for volume on the breakout that's near or above its three-month average action of 889,061 shares.
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