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.

Inovalon

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One technology player that insiders are active in here is Inovalon  (INOV - Get Report) , which provides advanced cloud-based data analytics and data-driven intervention platforms to the healthcare industry in the U.S. Insiders are buying this stock into large weakness, since shares have fallen sharply by 29.9% over the last six months.

Inovalon has a market cap of $3.2 billion and an enterprise value of $2.7 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 45 and a forward price-to-earnings of 32. Its estimated growth rate for this year is 3.9%, and for next year it's pegged at 28.3%. This is a cash-rich company, since the total cash position on its balance sheet is $796.99 million and its total debt is $290.39 million.

The CEO just bought 50,000 shares, or about $1.06 million worth of stock, at $21.20 to $21.45 per share.

From a technical perspective, Inovalon is currently trending below its 50-day moving average and above its 20-day moving average, which is neutral trendwise. This stock has been trending sideways and consolidating over the last month, with shares moving between $17.78 on the downside and $23 on the upside. Any high-volume move above the upper-end of its recent sideways trending chart pattern could trigger a big breakout trade for shares of Inovalon.

If you're bullish on Inovalon, then I would look for long-biased trades as long as this stock is trending above some near-term support at $20 a share and then once it breaks out above some near-term overhead resistance levels at $22.24 to $23 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 411,975 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 its 50-day moving average of $24.42 to $26, or even $27 to $28 a share.

New Senior Investment Group

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Another residential REIT player that insider are active in here is New Senior Investment Group  (SNR - Get Report) , which manages a portfolio of senior housing properties across the U.S. Insiders are buying this stock into large weakness, since shares have fallen by 33.1% over the last six months.

New Senior Investment Group has a market cap of $974 million and an enterprise value of $2.3 billion. This stock trades at a cheap valuation, with a forward price-to-earnings of 7.1. Its estimated growth rate for this year is 11.6%, and for next year it's pegged at 63.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $343.64 million and its total debt is $1.68 billion. This stock currently sports a divided yield of 9.6%.

A director just bought 200,000 shares, or about $2.27 million worth of stock, at $11.29 to $11.46 per share.

From a technical perspective, New Senior Investment Group 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 four months, with shares moving lower from its high of $16.20 to its recent low of $10.67 a share. During that downtrend, shares of New Senior Investment Group have been consistently making lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to rebound off that $10.67 low and it's beginning to move within range of triggering a near-term breakout trade.

If you're in the bull camp on New Senior Investment Group, then I would look for long-biased trades as long as this stock is trending above its recent low of $10.67 a share and then once it breaks out above some near-term overhead resistance at $11.62 to its 20-day moving average of $11.67 and then above more resistance at $12.05 a share with volume that hits near or above its three-month average action of 1.12 million shares.

If that breakout begins 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 $12.68 to $13.09, or even $13.50 to $13.85 a share.

New Media Investment Group

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One publishing player that insiders are loading up on here is New Media Investment Group  (NEWM - Get Report) , which owns, operates and invests in local media assets in the U.S. Insiders are buying this stock into large weakness, since shares have dropped by 38.8% over the last six months.

New Media Investment Group has a market cap of $671 million and an enterprise value of $1.05 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 49.3 and a forward price-to-earnings of 9.8. Its estimated growth rate for this year is 950%, and for next year it's pegged at 81.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $12.67 million and its total debt is $386.61 million.

A beneficial owner just bought 77,000 shares, or about $1.17 million worth of stock, at $15.25 per share.

From a technical perspective, New Media Investment Group is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last six months, with shares moving lower from over $24 a share to its recent low of $13.96 a share. During that downtrend, this stock has been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of New Media Investment Group have started to rebound off that $13.96 low and it's beginning to move within range of triggering a near-term breakout trade.

If you're bullish on New Media Investment Group, then I would look for long-biased trades as long as this stock is trending above its recent low of $13.96 and then once it breaks out above some near-term overhead resistance levels at $15.36 to $15.96 and then above its 50-day moving average of $16.30 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 930,288 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 $18.20 to $19, or even its 200-day moving average of $20.19 a share.

CrossAmerica Partners

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One energy player that insiders are in love with here is CrossAmerica Partners  (CAPL - Get Report) , which operates as a wholesale distributor of motor fuels, and owns and leases real estate used in the retail distribution of motor fuels in the U.S. Insiders are buying this stock into major weakness, since shares have dropped sharply by 32.7% over the last six months.

CrossAmerica Partners has a market cap of $763 million and an enterprise value of $1.03 billion. This stock trades at a fair valuation, with a forward price-to-earnings of 38.4. Its estimated growth for this year is 153.1%, and for next year it's pegged at 252.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $4.59 million and its total debt is $274.29 million.

The CEO just bought 55,500 shares, or about $1.26 million worth of stock, at $22.11 to $22.97 per share.

From a technical perspective, CrossAmerica Partners 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 $19.51 to its recent high of $23.31 a share. During that uptrend, shares of CrossAmerica Partners have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed this stock within range of triggering a near-term breakout trade.

If you're bullish on CrossAmerica Partners, then I would look for long-biased trades as long as this stock is trending above some near-term support at $21 and then once it breaks out above some near-term overhead resistance levels at $23.31 to $23.55 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 246,318 shares.

If that breakout kicks off 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 $25.80 to $28.50, or even $30 a share.

Shutterstock

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One final stock with some large insider buying is business services player Shutterstock  (SSTK - Get Report) , which operates as an online marketplace for commercial digital content imagery. Insiders are buying this stock into massive weakness, since shares have plunged by 48.6% over the last three months.

Shutterstock has a market cap of $1.1 billion and an enterprise value of $949.5 million. This stock trades at a fair valuation, with a trailing price-to-earnings of 55.8 and a forward price-to-earnings of 21.5. Its estimated growth for this year is 9.4%, and for next year it's pegged at 29.3%. This is a cash-rich company, since the total cash position on its balance sheet is $266.37 million and its total debt is zero.

The CEO just bought 100,000 shares, or about $3.4 million worth of stock, at $34.02 per share.

From a technical perspective, Shutterstock 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 is low of $28.96 to its recent high of $34.70 a share. During that uptrend, shares of Shutterstock have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now started to push this stock within range of triggering a near-term breakout trade.

If you're bullish on Shutterstock, then I would look for long-biased trades as long as this stock is trending above some near-term support at $31.98 or above more support at $30 to that that recent low of $28.96 and then once it breaks out above some near-term overhead resistance at $34.70 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 615,591 shares.

If that breakout kicks off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance level at its gap-down-day high from early August at $41 a share. Any high-volume move above $41 will then give this stock a chance to re-fill some of its previous gap-down-day zone that started near $53 a share. 

 

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