5 Stocks With Big Insider Buying

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, its large 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 it's 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. Here's a look at some stocks where insiders have been doing some big buying in per SEC filings.

Kinder Morgan

One energy player that insiders are buying up a huge amount of stock in here is Kinder Morgan (KMI), which owns interests in an energy transportation and storage company. Insiders are buying this stock into modest strength, since shares are up 2.4% so far in 2013.

Kinder Morgan has a market cap of $37.5 billion and an enterprise value of $71 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 37.94 and a forward price-to-earnings of 23.03. Its estimated growth rate for this year is 153.1%, and for next year it's pegged at 26.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.02 billion and its total debt is a whopping $35.60 billion. This stock currently sports a dividend yield of 4.2%.

The CEO and chairman of the board just bought 500,000 shares, or about $17.86 million worth of stock, at $35.74 a share.

From a technical perspective, KMI is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last two months, with shares moving lower from its July high of $40.03 a share to its recent low of $34.82 a share. During that downtrend, shares of KMI have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on KMI, then I would look for long-biased trades as long as this stock is trending above its 200-day at $36.97, and then once takes out some near-term overhead resistance levels at 50-day at $37.80 a share to more resistance at $38.29 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 4.91 million shares. If we get that move soon, then KMI will set up to re-test or possibly take out its next major overhead resistance levels at $40.03 to $41.06 a share.

Navistar International

 

Another industrial player that insiders are snapping up a large amount of stock in here is Navistar International (NAV), which is a manufacturer of commercial and military trucks buses, diesel engines, and recreational vehicles under the Monaco RV family of brands, as well as a provider of service parts for all makes of trucks and trailers. Insiders are buying this stock into big time strength, since shares are up 67% so far in 2013.

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Navistar International has a market cap of $2.9 billion and an enterprise value of $6.4 billion. This stock trades at a premium valuation, with a forward price-to-earnings of 50.50. Its estimated growth rate for this year is 7.2%, and for next year it's pegged at 107.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.09 billion and its total debt is $4.72 billion.

A director just bought 415,101 shares, or about $14.12 million worth of stock, at $33.90 per share.

From a technical perspective, NAV is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently started to break out above its sideways consolidation pattern after shares cleared $35 to $35.90 a share. That move is now pushing shares of NAV within range of triggering another near-term breakout trade.

If you're in the bull camp on NAV, then look for long-biased trades as long as this stock is trending above $35 to $34, and then once it breaks out above some near-term overhead resistance levels at $37 to its 52-week high at $38.81 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 1.21 million shares. If that breakout triggers soon, then NAV will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that move are $43 to $48 a share.

AXIS Capital

One reinsurance player that insiders are loading up on here is AXIS Capital (AXS), which provides a range of insurance and reinsurance products to insured's and reinsured worldwide operations with main locations in Bermuda, the U.S. and Europe. Insiders are buying this stock into decent strength, since shares are up 25% so far in 2013.

AXIS Capital has a market cap of $4.9 billion and an enterprise value of $5.2 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 8.94 and a forward price-to-earnings of 9.27. Its estimated growth rate for this year is 31.1%, and for next year it's pegged at 4.5%. This barely a cash-rich company, since the total cash position on its balance sheet is $1.06 billion and its total debt is $995.55 million. This stock currently sports a dividend yield of 2.4%.

The CEO just bought 176,000 shares, or about $7.47 million worth of stock, at $47.47 per share.

From a technical perspective, AXS is currently trending below its 50-day moving average and above its 200-day moving averages, which is neutral trendwise. This stock recently pulled back sharply from its July high of $48.39 a share to its recent low of $41.87 a share. Following that pullback, shares of AXS have started to find some buying interest right above its 200-day moving average of $41.44 a share. That move is starting to push shares of AXS within range of triggering a near-term breakout trade.

If you're bullish on AXS, then look for long-biased trades as long as this stock is trending above its 200-day at $41.44, and then once it breaks out above some near-term overhead resistance at $43.45 a share to its 50-day at $44.27 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 856,062 shares. If that breakout triggers soon, then AXS will set up to re-test or possibly take out its next major overhead resistance levels at $46.21 to its 52-week high at $48.39 a share.

Aircastle

One commercial leasing player that insiders are snapping up a big amount of stock in here is Aircastle (AYR), which acquires, leases and sells high-utility commercial jet aircraft to passenger and cargo airlines throughout the world. Insiders are buying this stock into major strength, since shares are up sharply by 38% so far in 2013.

Aircastle has a market cap of $1.4 billion and an enterprise value of $4.4 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 30.36 and a forward price-to-earnings of 9.30. Its estimated growth rate for this year is 118.8%, and for next year it's pegged at 6.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $430.27 million and its total debt is $3.54 billion. This stock currently sports a dividend yield of 3.9%.

A director just bought 60,000 shares, or about $1.04 million worth of stock, at $16.74 per share. This same director also just bought 30,300 shares, or about $520,000 worth of stock, at $17.19 per share.

From a technical perspective, AYR is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending modestly for the last few weeks, with shares moving higher from its low of $16.01 to its intraday high of $17.66 a share. During that uptrend, shares of AYR have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AYR within range of triggering a big breakout trade.

If you're bullish on AYR, then look for long-biased trades as long as this stock is trending above its 50-day at $16.91, and then once it breaks out above some near-term overhead resistance levels at $17.94 to its 52-week high at $18.12 a share 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 520,333 shares. If that breakout hits, then AYR will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are $20 to $25 a share.

Apache

One final name with some decent insider buying is Apache (APA), which is an independent energy company that explores, develops and produces natural gas, crude oil and natural gas liquids. Insiders are buying this stock into modest strength, since shares are up sharply by 10.8% so far in 2013.

Apache has a market cap of $33.8 billion and an enterprise value of $46.3 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 13.60 and a forward price-to-earnings of 10.94. Its estimated growth rate for this year is -13.8, and for next year it's pegged at -2.4%. This is not a cash-rich company, since the total cash position on its balance sheet is $184 million and its total debt is $12.78 billion. This stock currently sports a dividend yield of 1%.

A director just bought 10,000 shares, or about $861,000 worth of stock, at $86.13 per share.

From a technical perspective, APA is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending strong for the last month, with shares moving higher from its low of $75.07 a share to its recent high of $87.76 a share. During that uptrend, shares of APA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of APA within range of triggering a major breakout trade.

If you're bullish on APA, then look for long-biased trades as long as this stock is trending above some key near-term support at $84, and then once it breaks out above some key overhead resistance levels at $87.76 to $88.43 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 3.46 million shares. If that breakout triggers soon, then APA will set up to re-test or possibly take out its next major overhead resistance levels at $94 to $100 a share.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.