Stock Quotes in this Article: ACHN, AGCO, BBEP, COSI, ENH

 Delafield, 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.

Cosi

One restaurant operator that insiders are active in here is Cosi (COSI), which sells hot and cold sandwiches, freshly-tossed salads, breakfast wraps, hot melts, flatbread pizzas, desserts and a variety of coffees. Insiders are buying this stock into extreme weakness, since shares are off by 30% so far in 2013.

Cosi has a market cap of $38 million and an enterprise value of $25 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 21.60. Its estimated growth rate for this year is 57.1%, and for next year it's pegged at 183.3%. This is a cash-rich company, since the total cash position on its balance sheet is $12.14 million and its total debt is zero.

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A beneficial owner just bought 72,780 shares, or about $154,000 worth of stock, at $2.12 per share.

From a technical perspective, COSI is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending sideways for the last month, with shares moving between $1.90 on the downside and $2.40 on the upside. Shares of COSI are now starting to move within range of triggering a near-term breakout trade above the upper end of its sideways trading chart pattern.

If you're bullish on COSI, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $2.07 or at $1.98 and then once it breaks out above some near-term overhead resistance levels at $2.22 to $2.40 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 93,968 shares. If that breakout hits soon, then COSI will set up to re-test or possibly take out its next major overhead resistance levels at $3.07 to $3.19 a share. Any high-volume move above those levels will then put $3.60 to $4 within range for shares of COSI.

 

Achillion Pharmaceuticals

A biopharmaceutical and drugs player that insiders are loading up on here is Achillion Pharmaceuticals (ACHN), which focuses on the discovery, development and commercialization of innovative treatments for infectious diseases. Insiders are buying this stock into notable weakness, since shares are off by 29% during the last six months.

Achillion Pharmaceuticals has a market cap of $612 million and an enterprise value of $455 million. Its estimated growth rate for this year is -1.6%, and for next year it's pegged at -13.8%. This is a cash-rich company, since the total cash position on its balance sheet is $144.99 million and its total debt is just $611,000.

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A beneficial owner just bought 642,509 shares, or about $4.03 million worth of stock, at $6.21 to $6.30 per share. That same beneficial owner also just bought 1.96 million shares, or about $12.61 million worth of stock, at $6.24 per share.

From a technical perspective, ACHN is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped down sharply from $8.49 to its low of $6.12 a share on heavy downside volume. Following that move, shares of ACHN have started to stabilize and trend modestly higher. That move is starting to push shares of ACHN within range of triggering a near-term breakout trade.

If you're in the bull camp on ACHN, then look for long-biased trades as long as this stock is trending above that low of $6.12 and then once it breaks out above its gap down day high of $6.72 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 1.31 million shares. If that breakout triggers soon, then ACHN will set up to re-fill some of its gap down zone that started at $8.49 a share. One possible upside target is its 50-day moving average of $7.52 a share.

Endurance Specialty

An insurance player that insiders are jumping into here is Endurance Specialty (ENH), which underwrites specialty lines of personal and commercial property and casualty insurance and reinsurance. Insiders are buying this stock into notable strength, since shares are up 30% so far in 2013.

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Endurance Specialty has a market cap of $2.23 billion and an enterprise value of $1.89 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 15.17 and a forward price-to-earnings of 10.95. Its estimated growth rate for this year is 323%, and for next year it's pegged at -10.8%. This is a cash-rich company, since the total cash position on its balance sheet is $858.61 million and its total debt is $527.53 million. After you back out the debt, this company has $331.08 million of total cash on its balance sheet. This stock currently sports a dividend yield of 2.5%.

The CEO just bought 5,085 shares, or about $258,000 worth of stock, at $50.55 to $50.98 per share.

From a technical perspective, ENH is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares soaring higher from its low of $41.23 to its recent high of $52.65 a share. During that uptrend, shares of ENH have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ENH within range of triggering a near-term breakout trade.

If you're bullish on ENH, then look for long-biased trades as long as this stock is trending above its 50-day at $50.13 and then once it breaks out above its 52-week high at $52.65 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 294,908 shares. If that breakout triggers soon, then ENH will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $65 a share.

Agco

Another stock that insiders are in love with here is Agco (AGCO), which manufactures and distributes agricultural equipment and related replacement parts. Insiders are buying this stock into modest strength, since shares are up 7% so far in 2013.

Agco has a market cap of $5.12 billion and an enterprise value of $5.79 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 9.98 and a forward price-to-earnings of 8.89. Its estimated growth rate for this year is 7.2%, and for next year it's pegged at 5.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $551.70 million and its total debt is $1.44 billion. This stock currently sports a dividend yield of 0.80%.

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A director just bought 8,300 shares, or about $414,000 worth of stock, at $49.98 per share. That same director also just bought 37,198 shares, or about $1.85 million worth of stock, at $49.87 per share.

From a technical perspective, AGCO is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been uptrending modestly for the last few trading sessions, with shares moving higher from its low of $49.63 to its recent high of $52.97 a share. That move is starting to push shares of AGCO within range of triggering a near-term breakout trade.

If you're bullish on AGCO, then look for long-biased trades as long as this stock is trending above its 200-day at $50.47 and then once it breaks out above some near-term overhead resistance levels at $52.97 a share to its 50-day at $53.80 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 942,924 shares. If that breakout hits soon, then AGCO will set up to re-test or possibly take out its next major overhead resistance levels at $55 to its 52-week high at $56.83 a share. Any high-volume move above those levels could then send shares of AGCO north of $60.

Breitburn Energy Partners

One more stock with some decent insider buying is Breitburn Energy Partners (BBEP), an oil and gas partnership engaged in acquiring, exploiting and developing oil and gas properties in the U.S. Insiders are buying this stock into major strength, since shares are up a whopping 66% so far in 2013.

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Breitburn Energy Partners has a market cap of $1.74 billion and an enterprise value of $2.35 billion. This stock trades at a cheap valuation, with a forward price-to-earnings of 16.64. Its estimated growth rate for this year is 173.2%, and for next year it's pegged at 156.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $7.61 million and its total debt is $840.70 million. This stock currently sports a dividend yield of 12.5%.

The CEO just bought 30,000 shares, or about $447,000 worth of stock, at $14.92 per share. The CFO also just bought 10,000 shares, or about $152,000 worth of stock, at $15.25 per share. And the general counsel also just bought 16,000 shares, or about $241,000 worth of stock, at $15.07 per share.

From a technical perspective, BBEP is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently sold off hard, after it plunged from its high of $20.44 to its low of $14.01 a share. That move pushed shares of BBEP into oversold territory, since its relative strength index reading dipped below 30. Shares of BBEP have started to rebound off oversold levels and are now moving within range of triggering a near-term breakout trade.

If you're bullish on BBEP, then look for long-biased trades as long as this stock is trending above $16.50 and then once it breaks out above its 50-day at $18.40 and its 200-day at $18.64 a share, and then once it clears more resistance at $18.72 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 943,064 shares. If that breakout triggers soon, then BBEP will set up to re-test or possibly take out its next major overhead resistance levels at $19.75 to $20.44 a share. Any high-volume move above those levels will then give BBEP a chance to trend north of $21 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.