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.

A.M. Castle

One metal fabrication player that insiders are moving into here is A.M. Castle  (CAS), which operates as a specialty metals and plastics distribution company in the U.S., Canada, Mexico, France, the U.K., Spain, China and Singapore. Insiders are buying this stock into significant weakness, since shares have dropped by 52.4% over the last three months.

A.M. Castle has a market cap of $77 million and an enterprise value of $391 million. This stock trades at a cheap valuation, with a price-to-sales of 0.08 and a price-to-book of 1.10. Its estimated growth rate for this year is 20.3%, and for next year it's pegged at 44.7%. This is not a cash-rich company, since the total cash position on its balance sheet is $11.50 million and its total debt is $326.68 million.

A beneficial owner just bought 150,000 shares, or about $498,000 worth of stock, at $3.32 per share. That same beneficial owner also just bought 350,400 shares, or about $1.23 million worth of stock, at $3.44 to $3.52 per share.

From a technical perspective, A.M. Castle is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been attempting to carve out a bottom over the last month or so, with shares finding buying interest a number of times at right around or below $3 a share. Shares of A.M. Castle have now started to spike sharply higher off its new 52-week low of $2.79 a share and it's beginning to move within range of triggering a near-term breakout trade.

If you're bullish on A.M. Castle, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $3 or at its 52-week low of $2.79 a share and then once it breaks out above its 20-day moving average of $3.31 a share and then above more near-term overhead resistance levels at $3.50 to $3.77 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 394,183 shares. If that breakout triggers soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $4 to $4.20, or even its 50-day moving average of $4.93 a share.

Sotheby's

Another stock that insiders are active in here is Sotheby's  (BID - Get Report), which operates as an auctioneer of authenticated fine art, decorative art and jewelry in the U.S., the U.K., China, France, Switzerland and internationally. Insiders are buying this stock into notable weakness, since shares are off by 14.5% over the last three months.

Sotheby's has a market cap of $2.6 billion and an enterprise value of $3.1 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 22.4 and a forward price-to-earnings of 14.2. Its estimated growth rate for this year is 13.8%, and for next year it's pegged at 16.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $613.69 million and its total debt is $1.11 billion. This stock currently sports a dividend yield of 1.1%.

A director just bought 20,000 shares, or about $761,000 worth of stock, at $38.09 per share. The CEO also just bought 61,950 shares, or about $2.38 million worth of stock, at $38.45 per share.

From a technical perspective, Sotheby's is currently trending well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly over the last month and change, with shares falling from its high of $47.28 to its recent low of $36.35 a share. During that downtrend, shares of Sotheby's have been consistently making lower highs and lower lows, which is bearish technical price action. That said, this stock has recently started to rebound off that $36.35 low and it's now moving within range of triggering a near-term breakout trade.

If you're in the bull camp on Sotheby's, then I would look for long-biased trades as long as this stock is trending above that recent low of $36.35 a share and then once it breaks out above some near-term overhead resistance levels at $38.66 to just over $39 a share with volume that hits near or above its three-month average action of 645,392 shares. If that breakout gets underway soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 20-day moving average of $40.08 to its 200-day moving average of $42.47 a share.

Rexnord

One industrial machinery player that insiders are jumping into here is Rexnord  (RXN - Get Report), which designs, manufactures, markets and services process and motion control and water management products worldwide. Insiders are buying this stock into notable weakness, since shares have fallen by 23.3% over the last six months.

Rexnord has a market cap of $2.1 billion and an enterprise value of $3.7 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 23.9 and a forward price-to-earnings of 12.3. Its estimated growth rate for this year is 0.70%, and for next year it's pegged at 13.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $329.70 million and its total debt is $1.94 billion.

A director just bought 10,000 shares, or about $212,000 worth of stock, at $21.30 per share.

From a technical perspective, Rexnord is currently trending well below both its 50-day and 20-day moving averages, which is bearish. This stock has been downtrending over the last three months and change, with shares moving lower from its high of $27.73 to its recent low of $20.84 a share. During that downtrend, this stock has been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on Rexnord, then I would look for long-biased trades as long as this stock is trending above its recent low of $20.84 a share and then once it breaks out above some near-term overhead resistance at $21.82 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 volume of 884,658 shares. If that breakout develops soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $23.13 to $23.50, or even $24 to $24.32 a share.

Merrimack Pharmaceuticals

One biopharmaceutical player that insiders are in love with here is Merrimack Pharmaceuticals  (MACK), which engages in discovering, developing and preparing to commercialize medicines paired with companion diagnostics for the treatment of cancer primarily in the U.S. Insiders are buying this stock into relative weakness, since shares have dropped by 19.5% over the last three months.

Merrimack Pharmaceuticals has a market cap of $1.1 billion and an enterprise value of $1.2 billion. This stock trades at a premium valuation, with a price-to-sales of 10.61. Its estimated growth for this year is -40%, and for next year it's pegged at 29.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $67.65 million and its total debt is $124.18 million.

A director just bought 100,000 shares, or about $1.01 million worth of stock, at $10.15 per share.

From a technical perspective, Merrimack Pharmaceuticals is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending over the last few weeks, with shares moving higher from its low of $9.32 to its recent high of $11.18 a share. During that uptrend, shares of Merrimack Pharmaceuticals have been making mostly higher lows and higher highs, which is bullish technical price action. This uptrend has now pushed this stock within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on Merrimack Pharmaceuticals, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $10.26 and then once it breaks out above some near-term overhead resistance levels at its 200-day moving average of $10.96 and its 50-day moving average of $11.09 a share and then above more resistance at $11.18 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 1.26 million shares. If that breakout gets set off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $12 to $12.32, or even $13 to $13.26 a share.

Array BioPharma

One final stock with some large insider buying is biopharmaceutical player Array BioPharma  (ARRY), which focuses on the discovery, development and commercialization of small molecule drugs to treat patients with cancer in North America, Europe and the Asia Pacific. Insiders are buying this stock into large weakness, since shares have plunged lower by 31.6% over the last six months.

Array BioPharma has a market cap of $804 million and an enterprise value of $747 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 82.1. Its estimated growth for this year is -914.3%, and for next year it's pegged at 21.1%. This is a cash-rich company, since the total cash position on its balance sheet is $190.07 million and its total debt is $107.99 million.

A beneficial owner just bought 532,500 shares, or about $3.13 million worth of stock, at $5.85 to $5.93 per share. From a technical perspective, Array BioPharma 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 moving lower from its high of $8.04 to its recent low of $5.53 a share. During that downtrend, this stock has been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on Array BioPharma, then I would look for long-biased trades as long as this stock is trending above that recent low of $5.53 a share and then once it breaks out above its 20-day moving average of $5.91 a share and then above some more near-term overhead resistance levels at $6.04 to $6.23 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 1.68 million shares. If that breakout materializes soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $6.46 to its 50-day moving average of $6.69 a share, or even $7 to $7.25 a share.

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.