Stock Quotes in this Article: CONN, CPE, GMO, NAV, SNTA

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, it's 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 five stocks whose insiders have been doing some big buying per SEC filings.

Synta Pharmaceuticals

One biotechnology player that insiders are jumping into big here is Synta Pharmaceuticals (SNTA), which focuses on the discovery, development and commercialization of small molecule drugs for treating severe medical conditions, including cancer and chronic inflammatory diseases. Insiders are buying this stock into major weakness, since shares are down by 39% so far in 2014.

Synta Pharmaceuticals has a market cap of $342 million and an enterprise value of $273 million. This stock trades at a premium valuation, with a price-to-book of 7.10. Its estimated growth rate for this year is 8.7%, and for next year it's pegged at -6%. This is a cash-rich company, since the total cash position on its balance sheet is $91.48 million and its total debt is $23.40 million.

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A director just bought 1,250,000 shares, or about $5.01 million worth of stock, at $4.01 per share.

From a technical perspective, SNTA is currently trending well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last month and change, with shares falling sharply from its high of $7.22 to its recent low of $3.91 a share. During that downtrend, shares of SNTA have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of SNTA have recently formed a double bottom chart pattern at $3.91 to $3.93 a share. If that bottom can hold, then SNTA could be setting up for a near-term breakout trade.

If you're bullish on SNTA, then I would look for long-biased trades as long as this stock is trending above those double bottom support zones or above some past support at $3.70 and then once breaks out above some near-term overhead resistance at $4.25 to just above $4.50 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 2.58 million shares. If that breakout materializes soon, then SNTA will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $5.18 to its 200-day moving average of $5.56 a share.

Conns

Another stock that insiders are loading up on here is Conns (CONN), which is engaged in the specialty retail of durable consumer products in the U.S. Insiders are buying this stock into massive weakness, since shares have fallen sharply so far in 2014 by 42%.

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Conns has a market cap of $1.6 billion and an enterprise value of $1.9 billion This stock trades at a cheap valuation, with a trailing price-to-earnings of 17.7 and a forward price-to-earnings of 10.4. Its estimated growth rate for this year is 37%, and for next year it's pegged at 23.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $5.73 million and its total debt is $536.05 million.

A beneficial owner just bought 152,746 shares, or about $5.99 million worth of stock, at $39.23 per share. Another beneficial owner also just bought 106,034 shares, or about $4.18 million worth of stock, at $39.50 per share.

From a technical perspective, CONN is currently trending above its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last two months, with shares moving higher from its low of $31.17 to its intraday high of $45.99 a share. During that uptrend, shares of CONN have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on CONN, then I would look for long-biased trades as long as this stock is trending above its 50-day at $40.41 and then once it breaks out above its intraday high of $45.99 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 2 million shares. If that breakout hits soon, then CONN will set up to re-fill some of its previous gap-down-day zone from February that started at $58.34 a share.

General Moly

One rare earth materials player that insiders are in love with here is General Moly (GMO), which explores for, develops and mines molybdenum properties primarily in the U.S. Insiders are buying this stock into notable weakness, since shares are off by 33% so far in 2014.

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General Moly has a market cap of $100 million and an enterprise value of $60 million. This stock trades at a reasonable valuation, with a price-to-book of 0.74. Its estimated growth rate for this year is 58.3%, and for next year it's pegged at -140%. This is a cash-rich company, since the total cash position on its balance sheet is $22.31 million and its total debt is just $801,000.

The CEO just bought 140,000 shares, or about $128,000 worth of stock, at 92 cents per share. A vice president also just bought 100,000 shares, or about $96,000 worth of stock, at 97 cents per share.

From a technical perspective, GMO is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock hit a new 52-week low recently at 82 cents per share. Since hitting that low, shares of GMO have started to rebound sharply higher to its current price at around $1.10 a share. That rebound is now pushing shares of GMO within range of triggering a near-term breakout trade.

If you're bullish on GMO, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $1 or at 90 cents per share and then once it breaks out above some near-term overhead resistance levels at its 50-day moving average of $1.11 to more resistance at $1.12 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 379,742 shares. If that breakout triggers soon, then GMO will set up to re-test or possibly take out its next major overhead resistance levels at $1.30 to $1.40 a share. Any high-volume move above those levels will then give GMO a chance to tag its 200-day moving average at $1.45 to $1.54 a share.

Navistar International

One industrial player that insiders are snapping up a huge amount of stock in here is Navistar International (NAV), which manufactures and sells commercial and military trucks, diesel engines and school and commercial buses; and provides service parts for trucks and diesel engines worldwide. Insiders are buying this stock into notable weakness, since shares are off by 9.5% so far in 2014.

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Navistar International has a market cap of $2.8 billion and an enterprise value of $6.4 billion. This stock trades at cheap valuation, with a forward price-to-earnings of 18.4. Its estimated growth rate for this year is 64.2%, and for next year it's pegged at 149%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.10 billion and its total debt is $4.86 billion.

A beneficial owner just bought 1,027,789 shares, or about $34.20 million worth of stock, at $33.28 per share. A director also just bought 911,774 shares, or about $30.20 million worth of stock, at $33.13 per share.

From a technical perspective, NAV is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern at $31.51 to $31.72 a share. Following that bottom, shares of NAV have started to uptrend and move within range of triggering a near-term breakout trade.

If you're bullish on NAV, then I would look for long-biased trades as long as this stock is trending above those double bottom support levels and then once it breaks out above its 50-day at $34.79 and its 200-day at $35.79 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 volume of 1.36 million shares. If that breakout starts soon, then NAV will set up to re-test or possibly take out its next major overhead resistance levels at $39.50 to $42 a share.

Callon Petroleum

One final stock with some with some decent insider buying is Callon Petroleum (CPE), which is engaged in the acquisition, exploration, development and production of oil and gas properties in the Permian Basin in West Texas. Insiders are buying this stock into major strength, since shares are up sharply by 41% so far in 2014.

Callon Petroleum has a market cap of $371 million and an enterprise value of $426 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 17.67. Its estimated growth rate for the next quarter is 450%, and for next year it's pegged at 64.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $3.01 million and its total debt is $75.75 million.

A vice president just bought 14,616 shares, or about $121,000 worth of stock, at $8.30 per share.
From a technical perspective, CPE 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 four months and change, with shares moving higher from its low of $5.70 to its intraday high of $9.30 a share. During that uptrend, shares of CPE have been consistently making higher lows and higher highs, which is bullish technical price action.

If you're bullish on CPE, then look for long-biased trades as long as this stock is trending above some key near-term support levels at $8.15 to $8 and then once it breaks out above its 52-week high at $9.30 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 587,418 shares. If that breakout triggers soon, then CPE will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $12 to $13 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.