WINDERMERE, Fla. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price. >>5 Favorite Stocks From the Pros Other times 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. >>4 Reasons to Buy Stocks in 2013 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 five stocks whose insiders have been doing some big buying per SEC filings. >>5 Stocks Poised for Breakouts
Natural Resource Partners
An oil and gas stock that insiders are loading up on here is Murphy Oil ( MUR), a worldwide oil and gas exploration and production firm with refining and marketing operations in the U.S. and the United Kingdom. Insiders are buying this stock into modest strength, since shares are up 8.7% during the last three months.Murphy Oil has a market cap of $11.7 billion and an enterprise value $12.9 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 12.20 and a forward price-to-earnings of 9.58. Its estimated growth rate for this year is 13.8%, and for next year it's pegged at 18.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $947.32 million and its total debt is $2.25 billion. A director just bought 20,000 shares, or about $1.21 million worth of stock, at $60.86 per share. From a technical perspective, MUR is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last four months, with shares moving higher from its low of $54.07 to its recent high of $63.77 a share. During that uptrend, shares of MUR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of MUR within range of triggering a near-term breakout trade. Traders should now look for long-biased trades in MUR as long as it's trending above its 50-day at $60.52 and then once it breaks out above some near-term overhead resistance levels at $62.48 to $63.77 a share and then above some past resistance at $64.72 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 1.81 million shares. If that breakout hits soon, then MUR will set up to re-test or possibly take out its next major overhead resistance level at $71.71 a share.
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