Don't Tell Anyone: Insiders Are Buying These Stocks Like Crazy
Insiders have had five stocks on their radar screen of late

Editors' pick: Originally published Jan. 4.

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 a yacht--or they might need the cash to fund a charity. Sometimes they sell as part of a planned program for diversification purposes, which allows them to sell stock in stages rather than all at one price.

Other times, they sell because they think their stock is overvalued and that the risk vs. 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.

Meanwhile, 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 a stock is going to trade higher doesn't mean it will. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree, 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.

Och-Ziff Capital Management Group

One financial player that insiders are active in here is Och-Ziff Capital Management Group  (OZM) , which is a publicly owned hedge fund sponsor. Insiders are buying this stock into notable weakness, since shares have fallen by 13.2% over the past six months.

Och-Ziff Capital Management Group has a market cap of $1.6 billion and an enterprise value of $741 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 6.66. Its estimated growth rate for this year is -149%, and for next year it's pegged at 308.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $430.47 million and its total debt is $561.76 million.

A beneficial owner just bought 513,480 shares, or about $1.64 million worth of stock, at $3.17 to $3.21 per share.

From a technical perspective, Och-Ziff Capital Management Group is trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending over the past few weeks, with shares moving higher off their low of $2.81 to a recent high of $3.40. During that uptrend, shares of Och-Ziff Capital Management Group have been consistently making higher lows and higher highs, which is bullish technical price action. That uptrend has now pushed this stock within range of triggering a big breakout trade above some key overhead resistance levels.

If you're bullish on Och-Ziff Capital Management Group, I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $3.08 a share or above more near-term support levels at $3 to $2.90 a share and then once it breaks out above some near-term overhead resistance levels at $3.42 to $3.62 a share and then above its 200-day moving average of $3.64 a share to $3.76 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 787,804 shares. If that breakout hits soon, this stock will set up to re-test or possibly take out its next major overhead resistance levels at $4.10 to $4.30, or even $4.50 to $4.80 a share.

Versartis

Another health care player that insiders are jumping into here is Versartis (VSAR) , which operates as an endocrine-focused biopharmaceutical company in the U.S. Insiders are buying this stock into massive strength, since shares have soared by 43.3% over the past six months.

Versartis has a market cap of $542 million and an enterprise value of $358 million. This stock trades at a fair valuation, with a price-to-book of 3.97. Its estimated growth rate for this year is -8.5%, and for next year it's pegged at 12.7%. This is a cash-rich company, since the total cash position on its balance sheet is $160.43 million and its total debt is zero.

A beneficial owner just bought 47,375 shares, or about $680,000 worth of stock, at $14.37 per share.

From a technical perspective, Versartis is trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending very strong over the last two months, with shares soaring higher off their low of $9.05 to a recent high of $16.30. During that uptrend, shares of Versartis have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're bullish on Versartis, I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $14.35 a share or above its 50-day moving average of $12.92 a share and then once it breaks out above its 52-week high of $16.30 a share to some past resistance around $16.50, 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 159,944 shares. If that breakout fires off soon, this stock will set up to re-test or possibly take out its next major overhead resistance levels at $18 to $20, or even $23 a share.

Tronc

One media player that insiders are loading up on here is Tronc (TRNC) , which is a multiplatform media and marketing solutions firm that publishes newspapers in the U.S. Insiders are buying this stock into notable weakness, since shares have fallen by 18% over the past three months.

Tronc has a market cap of $517 million and an enterprise value of $686 million. This stock trades at a fair valuation, with a forward price-to-earnings of 64. Its estimated growth rate for this year is -103.2%, and for next year it's pegged at 833.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $187.12 million and its total debt is $375.57 million.

A director and beneficial owner just bought 2,500,000 shares, or about $37.50 million worth of stock, at $15 per share.

From a technical perspective, Tronc is trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending very strong over the past two months, with shares ripping higher off their low of $8.76 to an intraday high on Wednesday of $14.34 a share. During that uptrend, shares of Tronc have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on Tronc, then I would look for long-biased trades as long as this stock is trending above its 200-day moving average of $13.42 a share or above its 50-day moving average of $12.96 a share and then once it breaks out above some near-term overhead resistance levels at $14.10 to $14.34 a share with volume that registers near or above its three-month average action of 324,630 shares. If that breakout kicks off soon, then this stock will set up to re-fill some of its previous gap-down-day zone from last October that started near $17 a share.

Infinity Pharmaceuticals

One drug discovery and development player that insiders are in love with here is Infinity Pharmaceuticals (INFI) , which discovers, develops, and delivers medicines to patients with difficult-to-treat diseases. Insiders are buying this stock into strength, since shares have moved higher by 7.3% over the past six months.

Infinity Pharmaceuticals has a market cap of $73 million and an enterprise value of -$43.6 million. This stock trades at a fair valuation, with a price-to-sales of 2.47 and a price-to-book of 0.67. Its estimated growth rate for this year is 72.9%, and for next year it's pegged at -95.8%. This is a cash-rich company, since the total cash position on its balance sheet is $112.30 million and its total debt is zero.

A beneficial owner just bought 742,401 shares, or about $991,000 worth of stock, at $1.34 per share.

From a technical perspective, Infinity Pharmaceuticals is trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been uptrending over the past few weeks, with shares moving higher off their low of $1.15 to a recent high of $1.49. During that uptrend, shares of Infinity Pharmaceuticals 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 above some key overhead resistance levels.

If you're bullish on Infinity Pharmaceuticals, I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $1.36 a share or above its 50-day moving average of $1.26 a share and then once it breaks out above some near-term overhead resistance levels at $1.48 to $1.50 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 569,148 shares. If that breakout hits soon, this stock will set up to re-test or possibly take out its next major overhead resistance levels at $1.65 to $1.77, or even $1.80 a share. Any high-volume move above $1.80 will then give this stock a chance to re-fill some of its previous gap-down-day zone from last June that started near $5 a share.

Delek Logistics Partners

My final stock with some decent insider buying is energy player Delek Logistics Partners (DKL) , which owns and operates logistics and marketing assets for crude oil, and intermediate and refined products in the U.S. Insiders are buying this stock into modest strength, since shares have risen by 6.7% over the past six months.

Delek Logistics Partners has a market cap of $734 million and an enterprise value of $1.08 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 13.68 and a forward price-to-earnings of 13.69. Its estimated growth rate for this year is -17.5%, and for next year it's pegged at 4.3%. This stock sports a dividend yield of 9.1%.

A beneficial owner just bought 12,620 shares, or about $356,000 worth of stock, at $28.17 to $28.47 a share. That same beneficial owner also just bought 13,400 shares, or about $390,000 worth of stock, at $28.49 to $29.74 per share.

From a technical perspective, Delek Logistics Partners is trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong over the past two months, with shares moving higher off their low of $21.30 to a recent high of $30.60. During that uptrend, shares of Delek Logistics Partners have been consistently making 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 Delek Logistics Partners, look for long-biased trades as long as this stock is trending above its 20-day moving average of $28.58 a share or above more near-term support at $27.50 a share, and then once it breaks out above some near-term overhead resistance levels at $30.15 to $30.60 a share with volume that registers near or above its three-month average action of 62,386 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 $31.77 to $32.11, or even $33.42, to its 52-week high of $34.51 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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