5 Stocks With Big Insider Buying

 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.

General Motors

One auto manufacturer that insiders are active in here is General Motors  (GM), which designs, builds and sells cars, crossovers, trucks and automobile parts worldwide. Insiders are buying this stock into notable strength, since shares have spiked higher by 9.2% over the last six months.

General Motors has a market cap of $56.4 billion and an enterprise value of $82.7 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 16.3 and a forward price-to-earnings of 6.8. Its estimated growth rate for this year is 47.2%, and for next year it's pegged at 13.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $22.08 billion and its total debt is $48.26 billion. This stock currently sports a dividend yield of 4.1%.

A director just bought 28,343 shares, or about $999,000 worth of stock, at $35.28 per share.

From a technical perspective, GM is currently trending above its 200-day moving averages and below its 50-day moving average, which is neutral trendwise. This stock has been downtrending over the last two months, with shares moving lower from its high of $38.99 to its recent low of $34.51 a share. During that downtrend, shares of GM have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of GM have now started to bounce off that $34.51 low and it's beginning to trend within range of triggering a near-term breakout trade.

If you're bullish on GM, then I would look for long-biased trades as long as this stock is trending above that recent low of $34.51 or above its 200-day at $33.97 and then once it breaks out above some near-term overhead resistance levels $35.59 to $36 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 volume of 14.54 million shares. If that breakout begins soon, then GM will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $36.54 to $37.45, or even $38 to $39 a share.



Northern Oil and Gas

Another independent energy player that insiders are loading up on here is Northern Oil and Gas  (NOG), which engages in the acquisition, exploration, development and production of oil and natural gas properties in the U.S. Insiders are buying this stock into large weakness, since shares have been smacked lower by 40% over the last six months.

Northern Oil and Gas has a market cap of $413 million and an enterprise value of $1.2 billion. This stock trades at a reasonable valuation, with a price-to-sales of 1.10 and a price-to-book of 0.78. Its estimated growth rate for this year is -45.3%, and for next year it's pegged at -105.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $5.74 million and its total debt is $845.68 million.

A director just bought 150,000 shares, or about $1.05 million worth of stock, at $7.01 per share.

From a technical perspective, NOG is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last two months, with shares dropping from its high of $9.51 to its recent low of $6.38 a share. During that downtrend, shares of NOG have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of NOG have started to bounce off some previous support at $6.36 a share, and it's beginning to move within range of triggering a near-term breakout trade.

If you're in the bull camp on NOG, then I would look for long-biased trades as long as this stock is trending above support at $6.36 or above $6 and then once it breaks out above some near-term overhead resistance levels at $7.10 to $7.50 a share and then above its 50-day moving average of $7.90 a share with volume that hits near or above its three-month average action of 1.79 million shares. If that breakout hits soon, then NOG will set up to re-test or possibly take out its next major overhead resistance levels at $8.50 to $9 a share.



Dillard's

One department stores player that insiders are jumping into here is Dillard's  (DDS), which operates as a fashion apparel, cosmetics and home furnishing retailer in the U.S. Insiders are buying this stock into modest strength, since shares have move higher by 6.4% over the last six months.

Dillard's has a market cap of $4.8 billion and an enterprise value of $5.7 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 15 and a forward price-to-earnings of 13. Its estimated growth rate for this year is 5%, and for next year it's pegged at 10.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $403.75 million and its total debt is $821.54 million.

A director just bought 4,000 shares, or about $462,000 worth of stock, at $115.61 per share.

From a technical perspective, DDS is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly over the last two months, with shares plunging lower from its high of $144.21 a share to its recent low of $112.30 a share. During that downtrend, shares of DDS have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of DDS have now started to rebound off that $112.30 low and it's beginning to trend within range of triggering a near-term breakout trade.

If you're bullish on DDS, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $114 or above that recent low of $112.30 and then once it breaks out above some near-term resistance just above $120 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 470,606 shares. If that breakout materializes soon, then DDS will set up to re-fill its previous gap-down-day zone that started just above $126 a share.

Cumulus Media

One broadcasting player that insiders are loading up on here is Cumulus Media  (CMLS), which owns and operates radio stations in the U.S. Insiders are buying this stock into major weakness, since shares have plunged lower by 38% over the last three months.

Cumulus Media has a market cap of $585 million and an enterprise value of $3 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 69.7 and a forward price-to-earnings of 10. Its estimated growth rate for this year is 180%, and for next year it's pegged at 78.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $22.76 million and its total debt is a whopping $2.49 billion.

A beneficial owner just bought 400,000 shares, or about $958,000 worth of stock, at $2.40 per share. That same beneficial owner also just bought 807,173 shares, or about $1.86 million worth of stock, at $2.11 to $2.34 per share.

From a technical perspective, CMLS is currently trending well below its 200-day moving average and right at its 50-day moving average, which is neutral trendwise. This stock has been uptrending over the last month, with shares moving higher from its low of $1.90 to its intraday high on Tuesday of $2.56 a share. During that uptrend, shares of CMLS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CMLS within range of triggering a near-term breakout trade.

If you're bullish on CMLS, then I would look for long-biased trades as long as this stock is trending above some near-term support at around $2.20 and then once it breaks out above some near-term overhead resistance levels at $2.60 to $2.65 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 1.61 million shares. If that breakout develops soon, then CMLS will set up to re-test or possibly take out its next major overhead resistance levels at $2.88 to $3.07 a share, or even $3.36 to $3.50 a share.

Annaly Capital Management

One final stock with some big insider buying activity is REIT player Annaly Capital Management  (NLY), which owns a portfolio of real estate related investments in the U.S. Insiders are buying this stock into notable weakness, since shares have dropped by 11.1% over the last six months.

Annaly Capital Management has a market cap of $9.6 billion and an enterprise value of $72.47 billion. This stock trades at a fair valuation, with a forward price-to-earnings of 9.8. Its estimated growth rate for this year is -4.4%, and for next year it's pegged at -5.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $2.16 billion and its total debt is $64.97 billion. This stock currently sports a dividend yield of 11.9%.

The CEO just bought 184,948 shares, or about $1.85 million worth of stock, at $10.04 per share. From a technical perspective, NLY is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending a bit over the last month, with shares moving higher from its low of $9.75 to its recent high of $10.25 a share. During that uptrend, shares of NLY have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on NLY, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $10 or above that recent low of $9.75 and then once it breaks out above its 50-day moving average of $10.27 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average volume of 7.92 million shares. If that gets set off soon, then NLY will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $10.50 to $10.63 a share, or even $10.80 to $11 a share.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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