Stock Quotes in this Article: BBY, EGBN, VVTV, WTI, CARB

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.

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.

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.

Best Buy

Insiders are buying up a large amount of stock in Best Buy (BBY), a multinational retailer of consumer electronics, computing and mobile phone products, entertainment products, appliances and related services. Insiders are buying this stock into weakness since shares are off around 17% so far in 2012.

Best Buy has a market cap of $6.57 billion and an enterprise value of $7.24 billion. This stock trades at an extremely cheap valuation, with a forward price-to-earnings of 5.12. Its estimated growth rate for the next quarter is 4.3%, and for next year it’s pegged at 3.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.39 billion and its total debt is $2.03 billion.

The CEO just bought 100,000 shares, or around $1.82 million worth of stock, at $18.24 per share.

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From a technical perspective, BBY is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the past two months, with shares dropping from a high of $27.75 to a recent low of $17.53 a share. During that sharp move lower, shares of BBY have mostly made lower highs and lower lows, which is bearish technical price action.

If you’re bullish on BBY, then I would only look for long-biased trades once this stock triggers a breakout above some near-term overhead resistance at $20 a share with high-volume. Look for volume on that move that’s near or above its three-month average volume of 8.4 million shares. If we get that move, then I would look for a quick pop towards its 50-day moving average of $21.82 or possibly its 200-day moving average of $24.08 a share. Keep in mind that in order to hit the 200-day, BBY will need to clear $22.69 with volume.

I would simply avoid BBY or look for short-biased trades if it fails to trigger that breakout, and then drops below that recent low of $17.53 a share with high-volume. A high-volume move below $17.53 will mean that BBY is trading at a new 52-week low, which is bearish price action.

As of the most recently reported quarter, Best Buy was one of the holdings at David Einhorn's Greenlight Capital.

W&T Offshore

Another name that insiders are doing some active buying in here is W&T Offshore (WTI), an independent oil and natural gas producer engaged in the acquisition, exploration and development of oil and natural gas properties primarily in the Gulf of Mexico and Texas. Insiders are buying this stock into some significant weakness since shares are off by 27% so far in 2012.

W&T Offshore has a market cap of $1.15 billion and an enterprise value of $1.89 billion. This stock trades at an extremely cheap valuation, with a trailing price-to-earnings of 7.42 and a forward price-to-earnings of 9.54. Its estimated growth rate for this year is -38.2%, and for next year it’s pegged at 10.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $8.51 million and its total debt is $684 million.

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The CEO and chairman of the board just bought 50,000 shares, or $751,500 worth of stock, at $15.03 per share. This same CEO also recently bought another 50,000 shares, or $780,000 worth of stock, at $15.60 per share.

From a technical perspective, WTI is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been stuck in a nasty downtrend for the past three months, with shares falling from $27.17 to a recent low of $14.76 a share. During that move lower, shares of WTI consistently made lower highs and lower lows, which is bearish technical price action. That said, the stock has started to move sideways in the past month between $14.76 and $16.55 a share.

If you’re in the bull camp on WTI, then I would look for long-biased trades once it triggers a near-term break out above $16.49 to $16.55 a share with high volume. Look for volume on that move that’s near or above its three-month average action of 772,781 shares. If we get that action soon, then I would look for a pop back towards its 50-day moving average of $18.85 or its 200-day moving average of $19.74 a share.

On the flipside, I would avoid WTI or look for short-biased trades if this stock fails to trigger that near-term breakout, and then takes out some previous support levels at $14.87 to $14.76 a share with high-volume.

ValueVision Media

A retail player that insiders are doing some notable buying in here is ValueVision (VVTV), an interactive retailer that markets, sells and distributes products to consumers through television, telephone, online, mobile and social media. Insiders are snapping up shares of this stock into some modest weakness since it’s off by 12% so far in 2012.

ValueVision Media has a market cap of $85 million and an enterprise value of $83 million. This stock trades at a premium valuation, with a forward price-to-earnings of 29.17. Its estimated growth rate for this year is -22.9%, and for next year it’s pegged at 110.2%. This is barley a cash-rich company, since the total cash position on its balance sheet is $42.53 million and its total debt is 38 million. When you back out the debt, ValueVision has $4.53 million in cash on its books.

The CEO just bought 100,000 shares, or around $148,500 worth of stock, at $1.56 per share.

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From a technical perspective, VVTV is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has recently dropped from its March high of $2.59 to a recent low of $1.48 a share. During that slide lower, shares of VVTV have mostly made lower highs and lower lows, which is bearish technical price action. That said, for the past month shares of VVTV have trended sideways from $1.48 to $1.84 a share. A move outside of that sideways pattern either way should setup the next major trend for VVTV.

If you‘re bullish on VVTV, I would only look for long-biased trades if this stock manages to trigger a near-term break out above $1.80 to $1.84 a share with high volume. Look for volume on that move that’s near or above its three-month average action of 316,065 shares. If we get that action, look for VVTV to re-test its 200-dy moving average of $2.20, or that March high of $2.59 a share. Keep in mind, that any high-volume move then above $2.59 should be consider very bullish, since the next significant overhead resistance is at $3.82 a share.

I would simply avoid VVTV if it fails to maintain a trend above $1.80 to $1.84, and then moves back below that near-term support at $$1.48 to $1.43 a share with heavy volume.

Carbonite

Another name that insiders are snapping up a decent amount of stock in is computer services player Carbonite (CARB), which focuses on the development and marketing of personal computer backup software that enables users to backup, access, and restores data files online. Insiders are loading up on this stock into some into some significant weakness since shares are off by 30% so far in 2012.

Carbonite has a market cap of $196 million and an enterprise value of $122 million. This stock trades at a reasonable valuation, with a price-to-sales of 2.88 and a price-to-book of 9.59. Its estimated growth rate for this year is 6%, and for next year it’s pegged at 38%. This is a cash-rich company, since the total cash position on its balance sheet is $68.10 million and its total debt is zero.

A beneficial owner just bought 100,000 shares, or around $780,000 worth of stock, at $7.80 per share.

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From a technical perspective, CARB is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for most of 2012, with shares dropping from over $11 to a recent low of $6.74 a share. During that move lower, shares of CARB have mostly made lower highs and lower lows, which is bearish technical price action. That said, the stock has found some buying interest of late near $7 to $7.38 a share.

If you’re in the bull camp on CARB, I would look only look for long-biased trades if this stock can manage to trigger a breakout above some near-term overhead resistance at $8.08, and then above its 50-day moving average of $8.91 a share with high-volume. Look for volume on that move that’s near or above its three-month average action of 192,806 shares. If we get that action, then I would add to any long position once CARB takes out some more overhead resistance at $9.17 a share. Target a run back towards its 200-day moving average of $11.01 a share.

I would simply avoid CARB or look for short-biased trades if it fails to trigger that breakout, and then drops below some near-term support at $7.38 to $6.74 a share with heavy volume. If those key support levels are taken out with volume, then CARB will enter new all-time low territory and likely continue to head lower.

Eagle Bancorp

One more stock seeing some interesting insider buying is regional banking player Eagle Bancorp (EGBN), which offers full commercial banking services to its business and professional clients as well as complete consumer banking services to individuals living and/or working in the service area. Insiders are buying this stock into modest strength since shares are up just over 10% so far in 2012.

Eagle Bancorp has a market cap of $324 million and an enterprise value of $343 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 12.75 and a forward price-to-earnings of 10.93. Its estimated growth rate for this year is 23.7%, and for next year it’s pegged at 4.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $142.15 million and its total debt is $160.88 million.

A director just bought 46,001 shares, or about $736,000 worth of stock, at $16 per share.

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From a technical perspective, EGBN is currently trading below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock has been uptrending for most of the year, with shares trading from a low of $13.87 to a recent high of $17.94 a share. During that uptrend, EGBN have mostly made higher highs and higher lows, which is bullish technical price action. That said, the stock just moved back below its 50-day moving average of $16.61 a share, and has started to move sideways between $15.91 and $16.25 a share.

If you’re bullish on EGBN, then I would look for long-biased trades once this stock breaks out above $16.25, and then above its 50-day moving average of $16.61 a share with high-volume. Look for volume that’s near or above its three-month average action of 42,776 shares. If we get that move, then I would look for EGBN to re-test and potentially take out its 52-week high of $17.94 a share.

I would simply avoid this stock or look for short-biased trades if EGBN moves below its near-term support at $15.91 to $15.81 with high-volume. If we get that move, look for EGBN to re-test and possibly take out its 200-day moving average of $14.79 a share.

To see more stocks with notable insider buying, includingCVR Energy (CVI), Blackrock (BLK) and Mead Johnson Nutrition (MJN), 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.