Stock Quotes in this Article: DGIT, SNTA, VRX, WY, SMLP

 MADISON, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

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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.

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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.

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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.

Valeant Pharmaceuticals

One health care player that insiders are buying up a huge amount of stock in here is Valeant Pharmaceuticals (VRX), which develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics. Insiders are buying this stock into strength, since shares are up sharply by 42% so far in 2013.

Valeant Pharmaceuticals has a market cap of $26 billion and an enterprise value of $36 billion. This stock trades at a fair valuation, with a price-to-sales of 6.94 and a price-to-book of 7.22. This is not a cash-rich company, since the total cash position on its balance sheet is $413.74 million and its total debt is a whopping $10.62 billion.

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A director just bought 1.35 million shares, or about $114.99 million worth of stock, at $85 per share.

From a technical perspective, VRX 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 at $81.94 to $82 a share. Following that bottom, shares of VRX are now starting to trend higher and move within range of triggering a near-term breakout trade.

If you're bullish on VRX, then I would look for long-biased trades as long as this stock is trending above $81.94 and then once it breaks out above some near-term overhead resistance at $88.67 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.91 million shares. If that breakout triggers soon, then VRX will set up to re-test or possibly take out its 52-week high at $96.25 a share.

Summit Midstream Partners

Another energy player that insiders are loading up on here is Summit Midstream Partners (SMLP), which is engaged in owning and operating midstream energy infrastructure that is located in North America. Insiders are buying this stock into big time strength, since shares are up 73% so far in 2013.

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Summit Midstream Partners has a market cap of $1.67 billion and an enterprise value of $1.89 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 75.93 and a forward price-to-earnings of 20.17. Its estimated growth rate for this year is 47.3%, and for next year it's pegged at 26.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $2.82 million and its total debt is $214.23 million. This stock currently sports a dividend yield of 4.9%.

A director just bought 3.1 million shares, or about $97.98 million worth of stock, at $31.53 per share.

From a technical perspective, SMLP 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 last six months, with shares soaring higher from its low of $18.04 to its intraday high of $35.40 a share.

If you're in the bull camp on SMLP, then look for long-biased trades as long as this stock is trending above some key near-term support at $32.52 and then once it takes out its previous all-time high at $35.40 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 59,463 shares. If that breakout triggers soon, then SMLP will set up to enter new all-time-high territory, which is bullish price action. Some possible upside targets off that move are $40 to $43 a share.

Synta Pharmaceuticals

One bio therapeutic player that insiders are active in here is Synta Pharmaceuticals (SNTA), which is engaged in discovering, developing and commercializing small molecule drugs to extend and enhance the lives of patients with severe medical conditions such as cancer and chronic inflammatory diseases. Insiders are buying this stock into extreme weakness, since shares are off by 48% so far in 2013.

Synta Pharmaceuticals has a market cap of $317 million and an enterprise value of $232 million. This stock trades at a fair valuation, with a price-to-book of 5.35. Its estimated growth rate for this year is -12.3%, and for next year it's pegged at 4.2%. This is a cash-rich company, since the total cash position on its balance sheet is $90.39 million and its total debt is $23.64 million. After you back out the debt, this company has $66.75 million of total cash on its balance sheet.

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A director just bought 250,000 shares, or about $1.09 million worth of stock, at $4.23 per share. That same director also just bought 200,000 shares, or about $799,000 worth of stock, at $4 per share.

From a technical perspective, SNTA is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last three months, with shares plunging from its high of $10.74 to its recent low of $3.77 a share. During that downtrend, shares of SNTA have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of SNTA have now entered oversold territory, since its relative strength index is 38.85.

If you're bullish on SNTA, then look for long-biased trades as long as this stock is trending above $4 and then once it breaks out above some near-term overhead resistance at $5 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.42 million shares. If that breakout triggers soon, then SNTA will set up to re-test or possibly take out its next major overhead resistance levels at $6 to its 50-day moving average at $7.02 a share.

Weyerhaeuser

One basic materials player that insiders are snapping up a large amount of stock in here is Weyerhaeuser (WY), a real estate investment trust that grows, harvests, manufactures and sells timbers, softwood lumber, engineered lumber, structural panel, pulp among others. Insiders are buying this stock into notable weakness, since shares are off by 10.6% in the last three months.

Weyerhaeuser has a market cap of $15 billion and an enterprise value of $18 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 31.13 and a forward price-to-earnings of 18.60. Its estimated growth rate for this year is 108.6%, and for next year it's pegged at 23.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $639 million and its total debt is $4.14 billion. This stock currently sports a dividend yield of 2.9%.

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A director just bought 50,000 shares, or about $1.37 million worth of stock, at $27.50 per share.

From a technical perspective, WY is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last month and change, with shares dropping from its high of $33.24 to its recent low of $26.38 a share. During that downtrend, shares of WY have been consistently making lower highs and lower lows, which is bearish technical price action. That said, WY has started to bounce off that $26.38 low and it's now moving within range of triggering a near-term breakout trade.

If you're bullish on WY, then look for long-biased trades as long as this stock is trending above $26.38, and then once it breaks out above its 200-day moving average at $28.72 a share and then above more resistance at $29.36 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 5.95 million shares. If that breakout hits soon, then WY will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $30.03 to possible $31.50 a share.

Digital Generation

One more stock with some large insider buying is Digital Generation (DGIT), which provides digital technology services that enable the electronic delivery of advertisements, syndicated programs, and video news releases to traditional broadcasters, online publishers, and other media outlets. Insiders are buying this stock into notable weakness, since shares are down by 35% so far in 2013.

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Digital Generation has a market cap of $196 million and an enterprise value of $535 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 13.86. Its estimated growth rate for this year is 101.7%, and for next year it's pegged at 240%. This is not a cash-rich company, since the total cash position on its balance sheet is $47.33 million and its total debt is $403.12 million.

A beneficial owner just bought 467,000 shares, or about $3.03 million worth of stock, at $6.23 per share.

From a technical perspective, DGIT is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has recently started to trend back above its 50-day moving average at $6.96 a share. That move is quickly pushing shares of DGIT within range of triggering a near-term breakout trade.

If you're bullish on DGIT, then look for long-biased trades as long as this stock is trending above $6.50, and then once it breaks out above some near-term overhead resistance levels at $7.50 to $8 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 566,939 shares. If that breakout triggers soon, then DGIT will set up to re-test or possibly take out its next major overhead resistance levels at $9 to $10 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 Madison, Wis.

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

Roberto Pedone, based out of Madison, 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.