5 Stocks Insiders Are Snapping Up: Biglari, Catalyst Pharma and More

DELAFIELD, Wis. (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.

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.

At the end of the day, it's 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 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.

Biglari

One restaurant player that insiders are jumping into here is Biglari (BH) , which is engaged in the operation and franchising of restaurants in the U.S. Insiders are buying this stock into strength, since shares have trended higher b y 25% over the last three months.

Biglari has a market cap of $854 million and an enterprise value of $1 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 24. Its estimated growth for next year is 209.80%. This is not a cash-rich company, since the total cash position on its balance sheet is $145.81 million and its total debt is $324.58 million.

The CEO just bought 6,411 shares, or about $2.59 million worth of stock, at $403.25 per share. The same CEO also just bought 7,902 shares, or about $3.21 million worth of stock, at $406.25 per share.

From a technical perspective, BH is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last three months and change, with shares moving higher from its low of under $320 a share to its recent high of $423.40 a share. During that uptrend, shares of BH have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on BH, then I would look for long-biased trades as long as this stock is trending above some key near-term support at $397.10 a share and then once it breaks out above some near-term overhead resistance at $423.40 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 9,244 shares. If that breakout triggers soon, then BH will set up to re-test or possibly take out its next major overhead resistance levels $450 to its 52-week high at $475.40 a share.

Catalyst Pharmaceutical Partners

Another development-stage specialty pharmaceutical player that insiders are active in here is Catalyst Pharmaceuticals Partners (CPRX) , which focuses on the development and commercialization of novel prescription drugs targeting rare neuromuscular and neurological diseases and disorders. Insiders are buying this stock into decent strength, since shares have jumped higher by 20% over the last three months.

Catalyst Pharmaceutical Partners has a market cap of $196 million and an enterprise value of $156 million. This stock trades at a fair valuation, with a price-to-book of 5.27. Its estimated growth rate for this year is 3.7%, and for next year it's pegged at 11.5%. This is a cash-rich company, since the total cash position on its balance sheet is $41.45 million and its total debt is zero.

The CEO just bought 50,000 shares, or around 139,000 worth of stock, at $2.80 per share.

From a technical perspective, CPRX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last three months and change, with shares moving higher from its low of $2.26 a share to its recent high of $3.14 a share. During that uptrend, shares of CPRX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CPRX within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're in the bull camp on CPRX, then I would look for long-biased trades as long as this stock is trending above its 200-day moving average of $2.52 a share and then once it breaks out above some key near-term overhead resistance levels at $3.07 to $3.14 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 507,619 shares. If that breakout materializes soon, then CPRX will set up to re-test or possibly take out its 52-week high at $3.49 a share. Any high-volume move above that level will then give CPRX a chance to make a run at $4 to $4.50 a share.

Oasis Petroleum

One independent energy player that insiders are loading up on here is Oasis Petroleum (OAS) , which focuses on the acquisition and development of oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. Insiders are buying this stock into massive weakness, since shares have crashed by a whopping 75% over the last six months.

Oasis Petroleum has a market cap of $1.3 billion and an enterprise value of $3.8 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 3.4 and a forward price-to-earnings of 9.4. Its estimated growth rate for this year is -7.6%, and for next year it's pegged at -41.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $67.19 million and its total debt is $2.55 billion.

A beneficial owner just bought 2,160,100 shares, or about $32.52 million worth of stock, at $14.97 per share.

From a technical perspective, OAS is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last few weeks, with shares moving lower from its high of $17.75 a share to its intraday low on Wednesday of $12.42 a share. During that downtrend, shares of OAS have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of OAS are now starting to bounce off that intraday low with heavy upside volume flows. That bounce is quickly pushing shares of OAS within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on OAS, then I would look for long-biased trades as long as this stock is trending above around $12 a share and then once it breaks out above some near-term overhead resistance levels at $14 to $15.52 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 6.62 million shares. If that breakout develops soon, then OAS will set up to re-test or possibly take out its next major overhead resistance levels at $17.14 to $17.27 a share, or even its 50-day moving average of $19.19 a share.

Regional Management

One specialty consumer finance player that insiders are active in here is Regional Management (RM) , which provides various loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other traditional lenders. Insiders are buying this stock into notable weakness, since shares have dropped by 10.2% over the last three months.

Regional Management has a market cap of $201 million and an enterprise value of $530 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 10.3 and a forward price-to-earnings of 8.1. Its estimated growth rate for this year is -46.6%, and for next year it's pegged at 54%. This is not a cash-rich company, since the total cash position on its balance sheet is $3.83 million and its total debt is $339.32 million.

A beneficial owner just bought 40,000 shares, or about $625,000 worth of stock, at $15.64 per share. The same beneficial owner also just bought 45,000 shares, or about $691,000 worth of stock, at $15.19 per share.

From a technical perspective, RM is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong over the last two months and change, with shares moving higher from its low of $11.16 a share to its recent high of $16.26 a share. During that uptrend, shares of RM have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of RM within range of triggering a big breakout trade above some key overhead resistance levels.

If you're bullish on RM, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $13.91 a share and then once it breaks out above some near-term overhead resistance levels at its 200-day moving average of $16.23 a share to more resistance at $16.26 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 206,424 shares. If that breakout kicks off soon, then RM will set up to re-fill its previous gap-down-day zone from last October that started at $18.32 a share. Any high-volume move above that level will then give RM a chance to tag or trend north of $20 a share.

Almost Family

One final stock with some decent insider buying is Almost Family (AFAM) , which provides home health services in the U.S. Insiders are buying this stock into big strength, since shares have ripped higher over the last six months by 28%.

Almost Family has a market cap of $282 million and an enterprise value of $329 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 30.7 and a forward price-to-earnings of 16. Its estimated growth rate for this year is 101.10%, and for next year it's pegged at 1.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $5.36 million and its total debt is $52.62 million.

A beneficial owner just bought 97,300 shares, or about $2.84 million worth of stock, at $29.21 to $29.55 per share.

From a technical perspective, AFAM is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the last six months, with shares moving higher from its low of $22.69 a share to its recent high of $31.26 a share. During that uptrend, shares of AFAM have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AFAM within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on AFAM, then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $28.61 a share or above more near-term support at $28.10 a share and then once it breaks out above some near-term overhead resistance levels at $31.26 a share to its 52-week high at $32.83 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 volume of 45,121 shares. If that breakout triggers soon, then AFAM will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45 a share.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

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