Stock Quotes in this Article: BLK, CYTR, HNSN, JBL, THC

WINDERMERE, Fla. (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.

>>5 Hated Stocks Poised to Pop on Earnings

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.

>>Dow 55,000? It's Closer Than You Think

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 several stocks that insiders have been doing some big buying in per SEC filings.

BlackRock

One stock that insiders are loading up here is BlackRock (BLK), an independent investment management firm. Insiders are buying this stock into some modest strength, since shares are up around 6% so far in 2012.

BlackRock has a market cap of $32 billion and an enterprise value of $36 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 14.67 forward price-to-earnings of 12.64. Its estimated growth rate for this year is 13%, and for next year it’s pegged 11.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $25.95 billion and its total debt is $29.87 billion.

>>5 Big Trades From the Financial Sector

A director just bought 300,000 shares, or about $57.07 million worth of stock, at $189.01 to $192 per share.

From a technical perspective, BLK is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending very strong for the past four months, with shares soaring from $162.46 to its recent high of $192.08 a share. During that uptrend, shares of BLK have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed BLK within range of triggering a near-term breakout trade.

If you’re bullish on BLK, then I would look for long-biased trades once this stock manages to take out some near-term overhead resistance levels at $191.99 to $192.08 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 668,398 shares.

Hansen Medical

Another stock that insiders are jumping into here is Hansen Medical (HNSN), which develops, manufactures and markets a generation of medical robotics designed for accurate positioning, manipulation and stable control of catheters and catheter-based technologies. Insiders are buying this stock into some notable weakness, since shares are down by over 30% so far in 2012.

>>4 Stocks Under $10 Showing Strength in a Weak Market

Hansen Medical has a market cap of $106.18 million and an enterprise value of $103.60. This stock trades at a premium valuation, with a price-to-sales of 5.26 and a price-to-book of 8.94. Its estimated growth rate for this year is -130%, and for next year it’s pegged at 26.1%. This is barely a cash-rich company, since the total cash position on its balance sheet is $29.4 million and its total debt is $29.28 million.

A beneficial owner just bought 155,155 shares, or about $283,000 worth of stock, at $1.80 to $1.89 per share.

From a technical perspective, HNSN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways for the last two months, with shares moving between $2.17 on the upside and $1.64 on the downside. A move outside of that range will likely setup the next major trend for HNSN.

If you’re in the bull camp on HNSN, then I would look for long-biased as long as it’s trending above $1.64, and then once it manages to break out above some near-term overhead resistance levels at $2 to $2.17 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 324,240 shares. If that breakout triggers soon, the HNSN will setup to re-test or possibly take out its next major overhead resistance levels at $2.40 to $2.84 a share.

CytRx

A biotechnology stock that insiders are very active in here is CytRx (CYTR), whose oncology pipeline includes three programs in clinical development for cancer indications. Insiders are buying this stock into some extreme weakness, since shares are down by over 30% in the last three months.

CytRx has a market cap of $50.89 million and an enterprise value of $23.97 million. This stock trades at a steep valuation, with a price-to-sales of 508.94 and a price-to-book of 29.63. Its estimated growth rate for this year is -116.9%, 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 $26.93 million and its total debt is zero.

>>5 Stocks Hedge Funds Love -- and So Should You

A beneficial owner just bought 1.2 million shares, or about $3 million worth of stock, at $2.50 per share. This same beneficial owner also just bought 180,000 shares, or about $451,000 worth of stock, at $2.51 per share.

From a technical perspective, CYTR is currently trading well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last four months, with shares dropping from $5.50 to its recent low of $2.33 a share. During that downtrend, shares of CYTR have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of CYTR have now entered extremely oversold territory since its current relative strength index is 16.30. Oversold can always get more oversold, but it’s also a condition where you can look for a sharp bounce higher.

If you‘re bullish on CYTR, then I would look for long-biased trades once it manages to take out some near-term overhead resistance at $2.50 to $2.53 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 157,505 shares. If that breakout triggers soon, then CYTR could re-fill some of its previous gap down zone that started just above $3 a share. It’s possible that off an oversold bounce, CYTR could tag $3.33 to $3.70 a share.

Tenet Healthcare

Another stock that insiders are finding attractive here is Tenet Healthcare (THC), an investor-owned health care services company whose subsidiaries and affiliates own and operate acute care hospitals, ambulatory surgery centers, diagnostic imaging centers and related health care facilities. Insiders are buying this stock into some modest strength, since shares are up by around 13% so far in 2012.

>>4 Health Care Stocks Rising on Big Volume

Tenet Healthcare has a market cap of $2.43 billion and an enterprise value $7.09 billion. This stock trades at a reasonable valuation, with a forward price-to-earnings of 8.79. Its estimated growth rate for this year is 57.4%, and for next year it’s pegged at 13.7%. This is far from a cash-rich company, since the total cash position on its balance sheet is $82 million and its total debt is $4.75 billion.

A beneficial owner just bought 200,000 shares, or about $4.7 million worth of stock, at $23.53 per share.

From a technical perspective, THC is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last three months, with shares soaring from a low of $17.24 to its recent high of $26.96 a share. During that uptrend, shares of THC have been mostly making higher lows and higher highs, which is bullish technical price action. That said, the stock has sold off from that high of $26.96 in the last month to right around its 50-day at $23.02 a share.

If you’re in the bull camp on THC, then I would look for long-biased as long as this stock is trending above its 50-day at $23.02 a share with strong upside volume flows. I would consider any upside volume day that registers near or above its three-month average volume of 2.1 million shares as bullish. If THC can sustain that trend, then this stock will setup to re-test or possibly take out its next major overhead resistance levels at $24.84 to $26.96 a share in the near future.

Jabil Circuit

One more stock to consider with some decent insider buying is Jabil Circuit (JBL) , which provides electronic design, production, product management and aftermarket services to companies in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, solar, storage and telecommunications industries. Insiders are buying this stock into some notable weakness, since shares are down by just over 20% in the last six months.

>>3 Tech Stocks Hedge Funds Are Buying

Jabil Circuit has a market cap of $3.52 billion and an enterprise value of $3.97 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 9.14 and a forward price-to-earnings of 5.84. Its estimated growth rate for this year is 6.2%, and for next year it’s pegged at 14.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.22 billion and its total debt is $1.68 billion.

A director just bought 13,000 shares, or around $222,000 worth of stock, at $17.16 to $17.19 per share.

From a technical perspective, JBL is currently trading well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last two months, with shares plunging from a high of $23.95 to its recent low of $16.82 a share. During that downtrend, shares of JBL have been consistently making lower highs and lower lows, which is bearish technical price action. That said, JBL may be starting to mark a bottom since the stock has started to find some buying interest at $16.82 to $16.84 a share.

If you’re bullish on JBL, then I would look for long-biased trades as long as it’s trending above $16.82, and then once it breaks out above some near-term overhead resistance at $17.87 a share with high volume. Look for a sustained move or close above $17.87 with volume that hits near or above its three-month average action of 3,248,820 shares. If JBL triggers that breakout soon, then look for this stock to setup to re-test or possibly take out its next major overhead resistance levels at $18.50 to $19 a share, or possible even $20 to $20.50 a share.

To see more stocks with notable insider buying like VMware (VMW), Engility (EGL) and Sonus Networks (SONS), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.


RELATED LINKS:







Follow Stockpickr on Twitter and become a fan on Facebook.

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

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.