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 cash to fund a charity. Sometimes they sell as part of a planned selling program 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 when it comes to buying shares in their companies, insiders usually do it for one reason: They think the stock is a bargain and has tremendous upside.

The key word in this 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. These 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.

Twitter

One social media player that insiders are loading up on here is Twitter (TWTR) , which operates as a global platform for public self-expression and conversation in real time. Insiders are buying this stock into notable weakness since shares have fallen by 21.1% over the last six months.

Twitter has a market cap of $11.7 billion and an enterprise value of $9.1 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 38.5. Its estimated growth rate for this year is -43.9%, and for next year it's pegged at 34.4%. This is a cash-rich company since the total cash position on its balance sheet is $3.77 billion and its total debt is $1.69 billion.

The CEO just bought 63,007 shares, or about $1 million worth of stock, at $15.87 per share. That same CEO also just bought 362,991 shares, or about $6 million worth of stock, at $16.53 per share.

From a technical perspective, Twitter is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down sharply lower from $18.77 a share to under $16 a share with heavy downside volume flows. Following that move, shares of Twitter went on to print a low of $15.50 a share, but the stock has now started to rebound off that low to trade just over $16 a share. That rebound is now starting to push this stock within range of triggering a near-term breakout trade.

If you're bullish on Twitter then I would look for long-biased trades as long as this stock is trending above its recent low of $15.50 a share and then once it breaks out above its 20-day moving average of $16.97 a share and its 200-day moving average of $17.60 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 18.96 million shares. If that breakout hits soon, then this stock will set up to re-fill some of its recent gap-down-day zone that started at $18.77 a share. Any high-volume move above $18.77 will then give this stock a chance to tag its next major overhead resistance levels at $19.50 to $19.84 a share.

Coty

is Coty (COTY) , which manufactures, markets, and distributes beauty products worldwide. Insiders are buying this stock into massive weakness since shares have fallen sharply by 34.2% over the last six months.

Coty has a market cap of $14.6 billion and an enterprise value of $19.2 billion. This stock trades at a fair valuation, with a forward price-to-earnings of 20. Its estimated growth rate for this year is -42.3%, and for next year it's pegged at 24.1%. This is not a cash-rich company since the total cash position on its balance sheet is $939.20 million and its total debt is $6.50 billion. This stock currently sports a dividend yield of 2.7%.

A beneficial owner just bought 4,090,000 shares, or about $75.90 million worth of stock, at $18.39 to $18.97 per share.

From a technical perspective, Coty is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trend wise. This stock recently formed a double-bottom chart pattern, after shares found some buying interest at $18.14 to $18.12 a share over the last two months and change. Following that potential bottom, shares of Coty have now started to spike higher back above both its 50-day moving average of $18.87 a share and its 20-day moving average of $19.11 a share. That spike is now quickly pushing this stock within range of triggering a big breakout trade.

If you're bullish on Coty, then I would look for long-biased trades as long as this stock is trending above those recent double-bottom support levels, or above its recent low of $17.82 a share and then once it breaks out above some key near-term overhead resistance levels at $20 to $20.09 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 6.54 million shares. If that breakout materializes soon, then this stock will set up to re-fill some of its previous gap-down-day zone from last November that started near $22 a share. Any high-volume move above $22 will then give this stock a chance to make a run at $23 to $25 a share.

AMC Entertainment

One movie production player that insiders are active in is AMC Entertainment (AMC) , which operates as a theatrical exhibition company in the U.S. and internationally. Insiders are buying this stock into modest strength since shares have risen by 5.1% over the last six months.

AMC Entertainment has a market cap of $3.4 billion and an enterprise value of $4.9 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 24.6 and a forward price-to-earnings of 30.1. Its estimated growth rate for this year is 9.4%, and for next year it's pegged at -10.3%. This is not a cash-rich company since the total cash position on its balance sheet is $46.31 million and its total debt is $1.95 billion. This stock currently sports a dividend yield of 2.5%.

The CEO just bought 31,747 shares, or about $1 million worth of stock, at $31.50 per share.

From a technical perspective, AMC Entertainment is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trend wise. This stock has been down trending over the last month and change, with shares moving lower off its high $35.50 a share to its recent low of $30.8 a share. During that downtrend, shares of AMC Entertainment have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're in the bull camp on AMC Entertainment, then I would look for long-biased trades as long as this stock is trending above its 200-day moving average of $30.78 a share and then once it breaks out above some near-term overhead resistance levels at $31.55 to $32 a share with volume that hits near or above its three-month average action of 730,419 shares. If that breakout triggers soon, then this stock will set up to re-fill some of its recent gap-down-day zone that started near $33 a share.

Versartis

One healthcare 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 notable strength since shares have trended up by 19.3% over the last six months.

Versartis has a market cap of $537 million and an enterprise value of $382 million. This stock trades at a fair valuation, with a price-to-book of 4.13. Its estimated growth rate for this year is -8.5%, and for next year it's pegged 12.3%. 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 145,823 shares, or about $2 million worth of stock, at $13.51 to $14.27 per share.

From a technical perspective, Versartis is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently formed a double-bottom chart pattern, after shares found some buying interest at $12.70 to $12.80 a share over the last few weeks. Following that potential bottom, shares of Versartis have now started to rip higher and move back above both its 20-day moving average of $14.46 a share and its 50-day moving average of $14.61 a share. That sharp spike to the upside is now quickly pushing this stock within range of triggering a near-term breakout trade.

If you're bullish on Versartis, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $14.46 a share or above some near-term support at $13.50 a share and then once it breaks out above some near-term overhead resistance levels at $15.85 to its 52-week high of $16.55 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 103,498 shares. If that breakout kicks off 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 $18 to $19, or even $20 a share.

Tuesday Morning

My final stock with some decent insider buying is discount store player Tuesday Morning (TUES) , which operates as a retailer of upscale decorative home accessories, housewares, seasonal goods, and gifts in the U.S. Insiders are buying this stock into massive weakness since shares have plunged by 50.5% over the last six months.

Tuesday Morning has a market cap of $175 million and an enterprise value of $161 million. This stock trades at a fair valuation, with a price-to-sales of 0.18 and a price-to-book of 0.75. Its estimated growth rate for this year is -762.5, and for next year it's pegged at 92.5%. This is a cash-rich company since the total cash position on its balance sheet is $12.63 million and its total debt is zero.

The CEO just bought 200,000 shares, or about $731,000 worth of stock, at $3.66 per share.

From a technical perspective, Tuesday Morning is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been down trending over the last two months and change, with shares falling sharply off of its high of $6 a share to its new 52-week low of $3.55 a share. During that downtrend, shares of Tuesday Morning have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on Tuesday Morning, then I would look for long-biased trades as long as this stock is trending above its new 52-week low of $3.55 a share and then once it breaks out above some near-term overhead resistance levels at $4 to its 20-day moving average of $4.06 a share and then above more key resistance at $4.20 a share with volume that hits near or above its three-month average action of 524,066 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 $4.50 to its 50-day moving average of $4.83, or even $5.25 to $5.70 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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