Stock Quotes in this Article: EMMS, FIS, FOLD, FSYS, NSPH

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.

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.

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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.

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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.

Nanosphere

One medical equipment and supplies player that insiders are loading up on here is Nanosphere (NSPH), which develops, manufactures and markets an advanced molecular diagnostics platform, the Verigene System, which enables simple, low cost, and highly sensitive genomic and protein testing on a single platform. Insiders are loading up on this stock into strength, since shares are huge by over 90% so far in 2012.

Nanosphere has a market cap of $125.90 million and an enterprise value of $94.14 million. This stock trades at a premium valuation, with a price-to-sales of 39.44 and a price-to-book of 3.30. Its estimated growth rate for this year is 22.3%, and for next year it’s pegged at 23.3%. This is a cash-rich company, since the total cash position on its balance sheet is $31.76 million, and its total debt is zero.

A director and beneficial owner just bough 1 million shares, or $2.4 million worth of stock, at $2.40 per share.

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From a technical perspective, NSPH is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently triggered a major breakout when it cleared some overhead resistance at $2.07 to $2.21 with monster volume. Following that breakout, shares of NSPH went on to hit a high of $3.57 a share. Since hitting that high, the stock has pulled back to a recent low of $2.55 a share.

If you’re bullish on NSPH, then I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $3 to $3.20 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 792,902 shares. If we get that move soon, then NSPH will have an excellent chance of re-testing and taking out its previous high of $3.57 a share. This stock could easily tag $4.50 to $5 a share if clear $3.57 soon with volume.

I would avoid NSPH or look for short-baized trades if it fails to trigger that breakout, and then drops back below that major near-term support level at $2.55 a share with high volume. If we get that action, then NSPH is likely to re-test and possibly drop below its 50-day moving average of $2.22 a share.

Emmis Communications

Another name in the broadcasting and cable TV complex that insiders are warming up to here is Emmis Communications (EMMS), which owns and operates radio and magazine entities in large and medium sized markets throughout the U.S. It also owns and operates national radio networks in Slovakia and Bulgaria. Insiders are buying this stock into some monster strength here, since shares are up over 200% so far in 2012.

Emmis Communications has a market cap of $77.6 million and an enterprise value of $323.94 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 3.48. This is not a cash-rich company, since the total cash position on its balance sheet is $10.49 million and its total debt is $256.83 million.

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The CEO and beneficial owner just bought 116,866 shares, or about $229,900 worth of stock, at $1.95 to $1.98 per share. Another beneficial owner also just bought 126,743 shares, or about $249,000 worth of stock, at $1.96 per share.

From a technical perspective, EMMS is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the past six months, with shares soaring from a low of 67 cents per share to a recent high of $2.14 a share. During that uptrend, shares of EMMS have been consistently making higher lows and higher highs, which is bullish technical price action. That move is now pushing EMMS within range of near-term breakout trade.

If you’re in the bull camp on EMMS, then I would look for long-biased trades once this stock triggers a major breakout trade above some overhead resistance levels at $2.14 to $2.18 a share with high volume. Look for volume on that breakout that registers near or above its three-month average volume of 370,198 shares. If we get that action soon, then EMMS will have a great chance of re-testing and possibly taking out its 2010 high of $2.45 a share.

One could look to buy EMMS off weakness since it’s in such a strong uptrend. Any pullback towards $1.85 to $1.70 a share could be seen as a solid buying opportunity, and then I would simply use a stop just below its 50-day moving average of $1.65 a share. If that pullback doesn’t come, then look to load EMMS off strength once it starts to clear those breakout levels with high volume.

Fuel Systems Solutions

An auto and truck parts player that insiders are in love with right here is Fuel Systems Solutions (FSYS), which designs, manufactures and supplies alternative fuel components and systems for use in the transportation and industrial markets. Insiders are buying up this stock into some decent weakness, since shares are off by over 20% in the last three months.

Fuel Systems Solutions has a market cap of $324.64 million and an enterprise value of $258.62 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 90.11 and a forward price-to-earnings of 17.63. Its estimated growth rate for this year is 53.8%, and for next year it’s pegged at 130%. This is a cash-rich company, since the total cash position on its balance sheet is $75.03 million and its total debt is $8.99 million.

A beneficial owner just bought 69,800 shares, or around $1.10 million worth of stock, at $15.57 per share.

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From a technical perspective, FSYS is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock sold off hard in May from over $24.16 to a recent low of $14.02 a share. Since tagging that low, shares of FSYS have started to trade range bound between $14.55 and $18.35 a share. This stock has also started to make higher lows for the past two months, which could mean that we’re about to see a change in trend towards bullish for FSYS.

If you‘re bullish on FSYS, then I would look for long-biased trades once this stock manages to take out some near-term overhead resistance at $17.06 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 351,166 shares. If we get that action soon, then FSYS will have a great chance of re-testing and possibly taking out its next overhead resistance level at $18.35 a share, and then its 200-day moving average of $19.99 a share.

On the flipside, I would avoid FSYS or look for short-baized trades if the stock fails to trigger that breakout soon, and then pushes back below its 50-day moving average of $15.78 a share with heavy volume. If we get that action, then FSYS could setup to trend back towards its recent lows of $14.85 to $14.02 a share.

Amicus Therapeutics

Another name that insiders find very attractive here is biotechnology and drugs player Amicus Therapeutics (FOLD), which is focused on the discovery, development and commercialization of orally administered, small molecule drugs known as pharmacological chaperones for treating a range of diseases, including lysosomal storage diseases and diseases of neurodegeneration. Insiders are sniffing out some value here, since the stock has dropped over 20% in the last six months.

Amicus Therapeutics has a market cap of $230 million and an enterprise value of $124 million. This stock trades at a reasonable valuation, with a price-to-sales of 9.92 and a price-to-book of 2.85. Its estimated growth rate for this year is 15.6%, and for next year it’s pegged at -5.6%. This is a cash-rich company, since the total cash position on its balance sheet is $108.20 million and its total debt is $1.73 million.

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A beneficial owner just bought 2,949,581 shares, or around $18.58 million worth of stock, at $6.30 per share.

From a technical perspective, FOLD is currently trading below its 50-day moving average and just above its 200-day moving average, which is neutral trendwise. This stock has sold off hard over the last few trading sessions, with shares plunging from $6.89 to a recent low of $4.87 a share. That selloff has been accompanied with heavy selling volume, which is bearish technical action. That said, shares of FOLD have so far been defended right near its 200-day moving average of $4.77 a share.

If you’re in the bull camp on FOLD, I would look for long-biased trades if this stock can manage to hold a trend above its 200-day at $4.77 a share with strong upside volume flows. I would consider any upside volume day that registers near or above its three-month average action of 222,562 shares as bullish. If FOLD can manage to hold a trend above its 200-day, then I would look to add to any positions once it sustains a move or close back above its 50-day at $5.29 a share with heavy volume. If we get that action, then target a pop towards $6 or possibly a bit higher.

On the flipside, I would avoid FOLD or look for short-biased trades if it fails to get back above its 50-day, and then takes out its 200-day at $4.77 a share with heavy volume. If we get that action, then FOLD will likely re-test its June low of $4.25 a share, or possibly even take that level out.

Amicus shows up on a list of 22 Biopharma Stocks With Breakout Potential in 2012.

Fidelity National Information Services

One more stock to consider with some interesting insider buying is financial services player Fidelity National Information Services (FIS), a global provider of banking and payments technologies. Insiders are buying this stock into some decent strength here, since shares are up around 20% so far in 2012.

Fidelity National Information Services has a market cap of $9.37 billion and an enterprise value of $13.7 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 19.6 and a forward price-to-earnings of 11.5. Its estimated growth rate for this year is 14%, and for next year it’s pegged at 9.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $533.80 million, and its total debt is a whopping $4.86 billion. This stock sports a dividend yield of 2.5%.

A director just bought 15,000 shares, or about $485,700 worth of stock, at $32.39 per share.

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From a technical perspective, FIS is currently trading above its 200-day moving average and below its 50-day moving averages which is neutral trendwise. This stock ran into some selling pressure recently at around $34.85 a share, and subsequently it has dropped back below its 50-day moving average of $32.88 with heavy volume. Shares of FIS have some near-term support zones at around $31.61 to $30.77 a share.

If you’re bullish on FIS, then I would look for long-biased trades once this stock moves back above its 50-day moving average of $32.88 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 1,644,760 shares. If we get that move soon, then look for FIS to possibly re-test or take out its recent high of $34.85 a share.

I would simply avoid FIS or look for short-biased trades if it fails to trigger that move back above its 50-day, and then takes out those major support zones at $31.61 to $30.77 a share with heavy volume. If we get that action, then FIS will setup to re-test and possibly take out its 200-day moving average of $29.59 a share.

To see more stocks with notable insider buying, including Hudson Global (HSON), Opko Health (OPK) and Puma Biotechnology (PBYI), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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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.