Stock Quotes in this Article: CIT, MUR, SGEN, GOGO, LGP

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.

Lehigh Gas Partners

One energy player that insiders are active in here is Lehigh Gas Partners (LGP), which is engaged in the wholesale distribution of motor fuels to sub-wholesalers, independent dealers, lessee dealers and others, as well as the retail distribution of motor fuels to end customers at commission sites in the U.S. Insiders are buying this stock into modest weakness, since shares are down by just 5.9% so far in 2014.

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Lehigh Gas Partners has a market cap of $501 million and an enterprise value of $750 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 27.7 and a forward price-to-earnings of 23.8. Its estimated growth rate for this year is -5.9%, and for next year it's pegged at 1.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.35 million and its total debt is $252.16 million. This stock currently sports a dividend yield of 7.6%.

A director just bought 41,384 shares, or about $1.11 million worth of stock, at $26.89 per share.

From a technical perspective, LGP is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending for the last two months and change, with shares moving higher from its low of $25.02 to its recent high of $27.33 a share. During that uptrend, shares of LGP have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of LGP within range of triggering a major breakout trade.

If you're bullish on LGP, then I would look for long-biased trades as long as this stock is trending above its 50-day at $26.27 or above more near-term support at $25 and then once breaks out above some near-term overhead resistance levels at $27.33 to $27.46 a share and then above its all-time high at $29.18 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 49,692 shares. If that breakout triggers soon, then LGP will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $35 to $40 a share.

Murphy Oil

Another energy player that insiders are jumping into here is Murphy Oil (MUR), which is engaged in the exploration and production of oil and gas properties. Insiders are buying this stock into modest weakness, since shares are off by 4% so far in 2014.

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Murphy Oil has a market cap of $10.9 billion and an enterprise value of $13.2 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 12.4 and a forward price-to-earnings of 11.5. Its estimated growth rate for this year is 9%, and for next year it's pegged at 3.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.02 billion and its total debt is just $3.45 billion. This stock currently sports a dividend yield of 2.1%.

A director just bought 20,000 shares, or about $1.20 million worth of stock, at $60.34 per share.

From a technical perspective, MUR is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock recently formed a double bottom chart pattern at $59.11 to $59.26 a share. Following that bottom, shares of MUR have started to spike a bit higher and move within range of triggering a near-term breakout trade.

If you're in the bull camp on MUR, 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 some near-term overhead resistance at $61.78 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 1.50 million shares. If that breakout hits soon, then MUR will set up to re-test or possibly take out its next major overhead resistance levels at $65.01 to $65.50 a share to its 52-week high at $66.20 a share.

Seattle Genetics

One biotechnology player that insiders are in love with here is Seattle Genetics (SGEN), which develops and commercializes antibody-based therapies for the treatment of cancer. Insiders are buying this stock into major weakness, since shares are down by 39% over the last three months.

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Seattle Genetics has a market cap of $4 billion and an enterprise value of $3.8 billion. This stock trades at a premium valuation, with a price-to-sales of 14.67 and a price-to-book of 17.80. Its estimated growth rate for this year is -78.4%, and for next year it's pegged at 25.3%. This is a cash-rich company, since the total cash position on its balance sheet is $355.36 million and its total debt is zero.

A beneficial owner just bought 189,611 shares, or about $6.46 million worth of stock, at $34.03 to $34.08 per share.

From a technical perspective, SGEN 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 two months and change, with shares moving lower from its highs of $55.99 to its recent low of $32.61 a share. During that downtrend, shares of SGEN have been making mostly lower highs and lower lows, which is bearish technical price action.

If you're bullish on SGEN, then I would look for long-biased trades as long as this stock is trending above its recent low of $32.61 and then once it breaks out above some near-term overhead resistance levels at $35.28 to $36 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 1.18 million shares. If that breakout materializes soon, then SGEN will set up to re-test or possibly take out its next major overhead resistance levels at $38.50 to $39.54 a share, or even its 50-day moving average of $41.02 to its 200-day moving average of $42.98 a share.

Gogo

One communications services player that insiders are in love with here is Gogo (GOGO), which provides in-flight Internet connectivity and wireless in-cabin digital entertainment solutions in the U.S. and internationally. Insiders are buying this stock into major weakness, since shares are sharply lower by 39% so far in 2014.

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Gogo has a market cap of $1.2 billion and an enterprise value of $1.2 billion. This stock trades at reasonable valuation, with a price-to-sales of 3.50 and a price-to-book of 4.83. Its estimated growth rate for this year is -3.4%, and for next year it's pegged at 61.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $219.57 million and its total debt is $246.33 million.

A director just bought 100,000 shares, or about $1.28 million worth of stock, at $12.84 to $12.96 per share. The CEO also just bought 30,000 shares, or about $388,000 worth of stock, at $12.96 per share.

From a technical perspective, GOGO is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last two months, with shares moving lower from its high of $25.08 to its recent low of $11.66 a share. During that downtrend, shares of GOGO have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of GOGO have now started to bounce off that $11.66 low and it's started to break out above some key near-term overhead resistance levels at $13.72 to $14.08 a share.

If you're bullish on GOGO, then I would look for long-biased trades as long as this stock is trending $13.72 or above $13 and then once it breaks out above some near-term overhead resistance at $15.13 to its gap-down-day high of $15.46 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 volume of 3.70 million shares. If that breakout triggers soon, then GOGO will set up to re-fill some of its previous gap-down-day zone from April that started above $18 a share.

CIT Group

One final stock with some big insider buying is CIT Group (CIT), which provides commercial financing and leasing products; and a suite of savings options in the U.S. Insiders are buying this stock into notable weakness, since shares have trended lower by 16% so far in 2014.

CIT Group has a market cap of $8.4 billion and an enterprise value of $28.2 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 13.9 and a forward price-to-earnings of 11.2. Its estimated growth rate for this year is -10.3%, and for next year it's pegged at 24.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $4.36 billion and its total debt is a whopping $23.88 billion. This stock currently sports a dividend yield of 0.90%.

The CEO just bought 40,000 shares, or about $1.66 million worth of stock, at $41.54 per share.

From a technical perspective, CIT is currently trending 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 moving and gapping lower from its high of $50.11 to its recent 52-week low of $41.06 a share. During that downtrend, shares of CIT have consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of CIT have now started to rebound off that $41.06 low and it's quickly moving within range of triggering a big breakout trade.

If you're bullish on CIT, then look for long-biased trades as long as this stock is trending above $42 or above its 52-week low of $41.06 and then once it breaks out above some near-term overhead resistance at $44.16 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 1.69 million shares. If that breakout kicks off soon, then CIT will set up to re-fill some of its previous gap-down-day zone from April that started near $47 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.