Stock Quotes in this Article: AIG, DELL, SBGI, WLT, NLSN

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 several stocks whose insiders have been doing some big buying per SEC filings.

Dell

Insiders are buying up a lot of stock in Dell (DELL), a technology company offering mobility products, desktop personal computers, software and peripherals, servers and networking products, storage and services. Insiders are buying into strength since shares of Dell are up 19% in 2012.

Dell has a market cap of $30 billion and an enterprise value of $25 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 9.26 and with a forward price-to-earnings of 7.98. Its estimated growth rate for this year is -0.90%, and for next year it’s pegged at 3.3%. This is a cash-rich company, since the total cash position on its balance sheet is $14.82 billion and its total debt is $9.25 billion. After you back out the debt, Dell has $5.57 billion of cash on its balance sheet.

The president just bought 100,000 shares, or $1.74 million worth of stock, at $17.10 to $17.40 per share.

From a technical perspective, Dell 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 month and change, running up from $14.50 to a recent high of $18.36 a share. After hitting that high, the stock gapped down recently to a low of $16.86, but it has since then stabilized over $17 a share.

If you’re bullish on Dell, I would look for long-biased trades once this stock breaks out above $17.50 to $18.36 with volume. Look for volume on a move above those levels that’s near or above its three-month average action of 17.7 million shares.

If that breakout doesn’t trigger soon, then you can look for long entry points off a pullback toward some previous support zones at $16 to $15.50 a share.

Dell, one of the top holdings at David Einhorn's Greenlight Capital, shows up on a list of 10 Top Value Stocks With Big Gains in 2012.

Nielsen

Another name that insiders are loading up on is global information and measurement player Nielsen (NLSN), which delivers media and marketing information and analytics on a global and local basis. This stock has pretty much done nothing in 2012, with shares trading virtually flat on the year.

Nielson has a market cap of $10.6 billion and an enterprise value of $17 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 121.56 and a forward price-to-earnings 14.55. Its estimated growth rate for this year is 8.1%, and for next year it’s pegged at 16.7%. This is far from a cash-rich company, since the total cash position on its balance sheet is $319 million and its total debt is $6.79 billion.

A director just bought 152,755 shares, or $4.25 million worth of stock, at $27.84 per share.

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From a technical perspective, NLSN is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been trading range bound for the past six months, between $31.45 on the upside and $26.57 on the downside. A high-volume move outside of that range will setup NLSN for its next big trend.

If you’re bullish on NLSN, then I would look for long-biased trades off a move above some near-term overhead resistance levels at $29.57 to $30.50 with volume. Look for volume on a move above those levels that’s near or well above its three-month average action of 748,388 shares. I would simply avoid any long trades on this stock in the near-term if it drops below its 50-day moving averageof $28.92 and its 200-day of $29.09.

Look for longer-term entry points near some big support levels at $26.50 to $24 a share, if its 50-day and 200-day get taken out soon with volume.

Nielsen is one of the top holdings at Eric Mindich's Eton Park Capital , which maintained a 12 million-share position in the stock in the fourth quarter.

Sinclair Broadcast Group

Insiders are doing some notable buying in Sinclair Broadcast Group (SBGI), a diversified television broadcasting company, which owns or provides certain programming, operating or sales services to the television stations. This stock has done next to nothing so far in 2012, with shares up just 1.5%.

Sinclair Broadcast Group has a market cap of $925 million and an enterprise value of $2.12 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 12.11 and with a forward price-to-earnings of 10.59. Its estimated growth rate for this year is 52.6%, and for next year it’s pegged at -27%. This is far from a cash-rich company, since the total cash position on its balance sheet is $12.97 million and its total debt is $1.21 billion.

A director and beneficial owner just bought 85,000 shares, or $984,000 worth of stock, at $11.58 per share.

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From a technical perspective, SBGI is currently trading above its 200-day moving average and right below its 50-day moving average, which is neutral trendwise. This stock had been uptrending strong for the past six months, soaring from around $6.50 to its recent high of $13.19 a share. That said, shares of SBGI have now entered a short-term downtrend off that high of $13.19. Since hitting that high, the stock has started to slide lower back below its 50-day making lower highs and lower lows.

If you‘re a bullish on SBGI, then I would wait for this short-term downtrend to cease before buying any shares. One way to identify that is to look for a high-volume move back above its 50-day at $12 and above some near-term resistance at $12.18 a share. Look for volume on a move above those levels that registers close to or above its three-month average action of 422,585 shares. If that moves doesn’t happen soon, then you can look for long entry points off previous support levels at $11.31 or near $10 a share.

American International Group

One insurance property and casualty player whose insiders are snapping up a decent amount of stock in is American International Group (AIG), an international insurance organization, serving customers in more than 130 countries. Insiders are buying into strength here since shares of AIG are up over 28% so far in 2012.

American International Group has a market cap of $56 billion and an enterprise value of $82 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 3.14 and with a forward price-to-earnings of 10.67. Its estimated growth rate for this year is 156.9%, and for next year it’s pegged at 6.1%. This is far from a cash-rich company, since the total cash position on its balance sheet is $48.54 billion and its total debt is $75.85 billion. When you back out its cash, AIG has a whopping $27.21 billion in debt on its balance sheet.

A director just bought 15,000 shares, or $421,000 worth of stock, at $28.06 to $28.08 per share.

From a technical perspective, AIG is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock has been in a monster uptrend for the past three months, rising from around $20 to its current price of close to $30 a share. This monster move has pushed shares of AIG into overbought territory since its current relative strength index (RSI) reading is now 78.79.

If you’re bullish AIG, I would look for short-term long biased trades once it breaks out above some overhead resistance at $30.09 to $30.34 with high-volume. Look for volume on that move that registers near or well above its three-month average volume of 5,295,120 shares. For a longer-term entry point, I would look for long-biased trades off a pullback near some previous support levels at $28 to $26 a share.

AIG shows up in the portfolio of Bruce Berkowitz's Fairholme Capital Management, with a 92 million-share position as of the most recently reported quarter.

Walter Energy

In the coal complex, insiders are buying up a decent amount of stock in Walter Energy (WLT), a producer and exporter of metallurgical coal for the global steel industry and also produces steam coal, coal bed methane gas (natural gas), metallurgical coke and other related products. Insiders are buying into some mild strength here since shares of Walter Energy are up just over 6% so far in 2012.

Walter Energy has a market cap of $4 billion and an enterprise value of $6.25 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 11.29 and a forward price-to-earnings of 8.77. Its estimated growth rate for this year is -4.2%, and for next year it’s pegged at 34.2%. This is far from a cash-rich company, since the total cash position on its balance sheet is $128.43 million and its total debt is a whopping $2.33 billion.

The vice president and general counsel just bought 15,000 shares, or $982,000 worth of stock, at $65.52 per share.

From a technical perspective, WLT is currently below both its 50-day and 200-day moving averages, which is bearish. This stock has been trending lower ever since it hit its February high of $76.81 a share. There’s some near-term support that WLT is trading within range of at $64.06, and there’s more support down at $56.58 and $53.22 a share.

If you’re bullish on WLT, I would look for long-biased trades once this stock moves back above its 50-day moving average of $65.57 on high-volume. Look for volume on a move and close above that level that’s near or above its three-month average action of 2,639,700 shares. If WLT doesn’t make that move soon, then look for buyers to step in near those previous support zones at $64.06 or $56.58 a share.

To see more stocks with notable insider buying, including Superior Energy Services (SPN), TASER International (TASR) and SXC Health Solutions (SXCI), 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.