Stock Quotes in this Article: DRI, DVA, HNSN, SHLD, AEGR

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.

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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.

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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.

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Aegerion Pharmaceuticals

One biotechnology and drugs stock that insiders are buying up is Aegerion Pharmaceuticals (AEGR), which is focused on the development and commercialization of therapeutics to treat lipid disorders. Insiders are buying this stock into some big time strength, since shares are up a whopping 87% in the last six months.

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Aegerion Pharmaceuticals has a market cap of $693 million and an enterprise value of $614 million. This stock trades at a reasonable valuation, with a price-to-book of 8.94. Its estimated growth rate for this year is -20.6%, and for next year it’s pegged at 15%. This is a cash-rich company, since the total cash position on its balance sheet is $95.46 million and its total debt is just $10.53 million.

A beneficial owner just bought 475,000 shares, or $12.85 million worth of stock, at $26.64 to $27.66 per share.

From a technical perspective, AEGR is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strongly for the last three months, with shares soaring from its low of $13.50 to its recent high of $28.23 a share. During that uptrend, shares of AEGR have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AEGR within range of triggering a near-term breakout trade.

If you’re bullish on AEGR, then I would look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $28.23 a share with high volume. Look for a sustained move or close above $28.23 a share with volume that registers near or above its three-month average action of 567,997 shares. If that breakout hits soon, then AEGR could easily hit $30 to $35 in the near future. Traders can also buy AEGR off weakness to anticipate that breakout, as long as it doesn’t drop back below some near-term support at $25.44 a share.

Sears Holdings

Another name in the discount retail complex that insiders are loading up on here is Sears Holdings (SHLD), an integrated retailer with over 3,900 full-line and specialty retail stores in the U.S. and Canada. Insiders are buying this stock into big weakness, since shares are off by 27% in the last six months.

Sears Holdings has a market cap of $4.79 billion and an enterprise value of $8.09 billion. This stock trades at a reasonable valuation, with a price-to-sales of 0.12 and a price-to-book of 1.22. Its estimated growth rate for this year is 44.6%, and for next year it’s pegged at 20.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $622 million and its total debt is a whopping $4 billion.

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A director and beneficial owner just bought 332,048 shares, or $13.57 million worth of stock, at $40.86 to $40.97 per share.

From a technical perspective, SHLD is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been uptrending modestly for the last month, with shares moving higher from its low of $38.40 to its recent high of $45.74 a share. During that move, shares of SHLD have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares SHLD within range of triggering a near-term breakout trade.

If you’re in the bull camp on SHLD, then I would look for long-biased if this stock manages to break out above its 50-day at $46.57 a share and then its 200-day at $49.76 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 1.3 million shares. If that breakout triggers soon, then SHLD will set up to re-test or possibly take out its next major overhead resistance levels at $55 to $57.50 a share.

Darden Restaurants

Another stock that insiders are scooping up here is Darden Restaurants (DRI), which owns and operates restaurants under the trade names Red Lobster, Olive Garden, LongHorn Steakhouse, Wildfish Seafood Grille and Bahama Breeze. Insiders are buying this stock into some notable weakness, since shares are off by 18.5% in the last three months.

Darden Restaurants has a market cap of $5.84 billion and an enterprise value of $8.74 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 12.89 and a forward price-to-earnings of 12. Its estimated growth rate for this year is -5.9%, and for next year it’s pegged at 11.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $61.40 million and its total debt is a whopping $2.93 billion.

A director just bought 11,000 shares, or about $494,000 worth of stock, at $44.91 per share.

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From a technical perspective, DRI is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last month and change, with shares falling from its gap down day high near $48 to its recent low of $43.64 a share. During that move, shares of DRI have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of DRI have held above that recent low of $43.64 and its trading within range of a near-term breakout trade.

If you‘re bullish on DRI, then I would look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $46.07 to $46.96 a share and then once it takes out its gap down day high near $48 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 1,656,570 shares. If that breakout hits soon, then DRI will set up to re-fill some of that previous gap down zone from early December that started just above $52 a share.

Hansen Medical

Another stock that insiders are jumping into here is Hansen Medical (HNSN), which develops, manufactures and markets a new 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 decent strength, since shares are up 19.5% in the last three months.

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Hansen Medical has a market cap of $141.68 million and an enterprise value $143.85 million. This stock trades at a premium valuation, with a price-to-sales of 7 and a price-to-book of 27.63. Its estimated growth rate for this year is -120%, and for next year it’s pegged at 27.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $21.65 million and its total debt is $29.35 million.

A beneficial owner just bought 74,191 shares, or around $163,000 worth of stock, at $2.17 per share.

From a technical perspective, HNSN is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending for the last month, with shares moving higher from its low of $1.99 to its recent high of $2.44 a share. During that uptrend, shares of HNSN have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of HNSN within range of triggering a major breakout trade.

If you’re in the bull camp on HNSN, then I would look for long-biased trades if this stock manages to break out above some key overhead resistance levels at $2.44 to $2.55 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 327,433 shares. If that breakout triggers soon, then HNSN will set up to re-test or possibly take out its next major overhead resistance levels at $2.84 to $3.29 a share. Any high-volume move above $3.29 will then put $3.75 to $4 into focus for shares of HNSN.

DaVita HealthCare Partners

One more stock with huge insider buying is DaVita HealthCare Partners (DVA), operates kidney dialysis centers and provides related lab services mainly in dialysis centers and in contracted hospitals across the U.S. Insiders are buying this stock into modest strength, since shares are up by 12.6% in the last six months.

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DaVita HealthCare Partners has a market cap of $10.60 billion and an enterprise value of $15.90 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 20.16 and a forward price-to-earnings of 15.05. Its estimated growth rate for this year is 23.4%, and for next year it’s pegged at 19.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $388.03 million and its total debt is a whopping $5.76 billion.

A beneficial owner just bought 179,300 shares, or $19.66 million worth of stock, at $109.40 to $110.35 per share. That same beneficial owner also just bought 187,898 shares, or $20.58 million worth of stock, at $109.21 to $109.76 per share.

From a technical perspective, DVA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways for the last month and change, with shares moving between $107.99 on the downside and $112.79 on the upside. A move above the upper-end of that recent sideways trading pattern will give shares of DVA a chance to break out and head higher.

If you’re bullish on DVA, then I would look for long-biased if this stock manages to break out above some near-term overhead resistance levels at $112.79 to $114.93 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 1.1 million shares. If that breakout triggers soon, then DVA will set up to re-test or possibly take out its 52-week high of $116.50 a share. Any high-volume move above $116.50 will then give shares of DVA a chance to trend north of $120 a share.

To see more stocks with notable insider buying, including Ziprealty (ZIP), Synageva (GEVA) and Opko Health (OPK), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

-- 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 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.