Corporate Insiders at These 5 Companies Are Buying Large Sums of Stock
There is an exploration company on the list

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.

Och-Ziff Capital Management Group

One financial player that insiders are in love with 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 dropped by 10% over the last six months.

Och-Ziff Capital Management Group has a market cap of $1.5 billion and an enterprise value of $712 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 6.73. Its estimated growth rate for this year is -146.9%, and for next year it's pegged at 308.7%. 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 653,900 shares, or about $2.12 million worth of stock, at $3.25 per share. That same beneficial owner also just bought 1,027,020 shares, or about $3.31 million worth of stock, at $3.23 per share.

From a technical perspective, Och-Ziff Capital Management Group is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently spiked notably higher right off its 20-day moving average of $3.13 a share with strong upside volume flows. That move to the upside is now starting to push shares of Och-Ziff Capital Management Group within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on Och-Ziff Capital Management Group then I would look for long-biased trades as long as this stock is trending above its 50-day moving average of $3.09 a share or above more near-term support levels at $2.90 to $2.80 a share and then once it breaks out above some near-term overhead resistance levels at $3.42 to its 200-day moving average of $3.61 a share and then above more resistance at $3.62 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 795,176 shares. If that breakout hits soon, then 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 $4.60 to $4.80 a share.

Mirati Therapeutics

Another clinical-stage biopharmaceutical player that insiders are loading up on here is Mirati Therapeutics (MRTX) , which develops a pipeline of products targeting oncology. Insiders are buying this stock into modest strength, since shares have risen by 1.2% over the last six months.

Mirati Therapeutics has a market cap of $134 million and an enterprise value of $34 million. This stock trades at a fair valuation, with a price-to-book of 1.69. Its estimated growth rate for this year is -9.9%, and for next year it's pegged at 17.4%. This is a cash-rich company, since the total cash position on its balance sheet is $73.82 million and its total debt is zero.

A beneficial owner just bought 581,870 shares, or about $3.25 million worth of stock, at $5.60 per share. Another beneficial owner also just bought 286,163 shares, or about $1.60 million worth of stock, at $5.60 per share.

From a technical perspective, Mirati Therapeutics is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways and consolidating over the last two months and change, with shares moving between $4.60 a share on the downside and $6.25 a share 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 Mirati Therapeutics.

If you're bullish on Mirati Therapeutics, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $5 or $4.60 a share and then once it breaks out above some near-term overhead resistance levels at $5.75 to $5.90 a share and then above more resistance at $6.25 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 156,195 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 $7 to $7.25, or even $8 to $9 a share.

Aquinox Pharmaceuticals

One clinical-stage pharmaceutical player that insiders are jumping into here is Aquinox Pharmaceuticals (AQXP) , which engages in discovering and developing targeted therapeutics in disease areas of inflammation and immuno-oncology. Insiders are buying this stock into notable strength, since shares have spiked higher by 45.4% over the last three months.

Aquinox Pharmaceuticals has a market cap of $425 million and an enterprise value of $275 million. This stock trades at a fair valuation, with a price-to-book of 2.72. Its estimated growth rate for this year is -17.3%, and for next year it's pegged at 1.5%. This is a cash-rich company, since the total cash position on its balance sheet is $145.94 million and its total debt is just $26,000.

A beneficial owner just bought 398,062 shares, or about $6.83 million worth of stock, at $15.13 to $17.76 per share.

From a technical perspective, Aquinox Pharmaceuticals is currently trending above both its 50-day and 20-day moving averages, which is bullish. This stock has been uptrending very strong over the two months and change, with shares moving higher off its low of $9.83 a share to its recent high of $19.12 a share. During that uptrend, shares of Aquinox Pharmaceuticals have been making mostly higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on Aquinox Pharmaceuticals, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of$16.60 a share or above its 50-day moving average of $14.67 a share and then once it breaks out above some near-term overhead resistance levels at $18.50 to its 52-week high of $19.12 a share with volume that hits near or above its three-month average action of 185,643 shares. If that breakout develops soon, then this stock will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $22.50 to $25 a share.

NiSource

One diversified utilities player that insiders are active in here is NiSource (NI) , which provides natural gas, electricity, and other products and services in the U.S. Insiders are buying this stock into notable weakness, since shares have fallen by 15.5% over the last six months.

NiSource has a market cap of $7.1 billion and an enterprise value of $14.8 billion. This stock trades at a reasonable valuation, with trailing price-to-earnings of 23.3 and a forward price-to-earnings of 18.9. Its estimated growth rate for this year is 13.8%, and for next year its pegged at 8.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $16.10 million and its total debt is $7.74 billion. This stock currently sports a dividend yield of 2.8%.

A director just bought 12,000 shares, or about $270,000 worth of stock, at $22.53 per share.

From a technical perspective, NiSource is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern, after shares found some buying interest at $21.17 to $21.31 a share over the last two months. Following that potential bottom, this stock has now started to spike higher a bit and flirt with both its 50-day moving average of $22.03 a share and its 20-day moving average of $22.18 a share. That spike is now starting to push shares of NiSource within range of triggering a near-term breakout trade.

If you're bullish on NiSource, then I would look for long-biased trades as long as this stock is trending above some near-term support at $21.60 a share or above those recent double bottom support levels and then once it breaks out above some near-term overhead resistance levels at $22.20 to $22.77 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 2.84 million shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $23.30 to its 200-day moving average of $23.50 a share, or even $24.50 to $25 a share.

Bonanza Creek Energy

My final stock with some decent insider buying is independent energy player Bonanza Creek Energy (BCEI) , which engages in the acquisition, exploration, development, and production of onshore oil and associated liquids-rich natural gas in the U.S. Insiders are buying this stock into major strength, since shares have ripped higher by 79.4% over the last three months.

Bonanza Creek Energy has a market cap of $95 million and an enterprise value of $980 million. This stock trades at a fair valuation, with price-to-sales of 0.45 and a price-to-book of 1.08. Its estimated growth rate for this year is -17.5%, and for next year it's pegged at 4.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $133.43 million and its total debt is $1.02 billion.

A beneficial owner just bought 3,618,922 shares, or about $4.85 million worth of stock, at $1.34 to $1.45 per share.

From a technical perspective, Bonanza Creek Energy 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 month, with shares moving higher off its low of 67 cents per share to its recent high of $2.33 a share. During that uptrend, shares of Bonanza Creek Energy have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on Bonanza Creek Energy, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $1.55 a share or above its previous breakout level of $1.42 a share and then once it breaks out above some near-term overhead resistance levels at $2.33 to $2.35 a share with volume that hits near or above its three-month average action of 3.63 million 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 $3 to $3.25, or even $3.75 to $4 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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