Stock Quotes in this Article: BXS, JBHT, SCCO, KIN, CSLT

DELAFIELD, Wis. (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.

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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.

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

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Southern Copper

One stock that insiders are loading up on a large amount of stock in here is Southern Copper (SCCO), which is engaged in the mining, exploring, smelting and refining copper and other minerals in Peru, Mexico, Argentina, Chile, and Ecuador. Insiders are buying this stock into notable strength, since shares are up by around 14% so far in 2014.

Southern Copper has a market cap of $27 billion and an enterprise value of $29 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 19 and a forward price-to-earnings of 15. Its estimated growth rate for this year is -8.3%, and for next year it's pegged at 19.9%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.63 billion and its total debt is $4.21 million. This stock currently sports a dividend yield of 1.4%.

The chairman of the board just bought 45,000 shares, or about $1.46 million worth of stock, at $32.49 per share. That same chairman of the board also just bought 155,000 shares, or $5.03 million worth of stock, at $32.46 per share.

From a technical perspective, SCCO is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $30.83 to its intraday high of $33.03 a share. That uptrend is starting to push shares of SCCO within range of triggering a major breakout trade above some key near-term overhead resistance levels.

If you're bullish on SCCO, then I would look for long-biased trades as long as this stock is trending above its 50-day at $32.16 or above that recent low of $30.83 a share and then once it breaks out above some near-term overhead resistance levels at $33.37 to $33.67 a share and then above its 52-week high at $33.90 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 1.72 million shares. If that breakout develops soon, then SCCO will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45 a share.

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Kindred Biosciences

A development stage biopharmaceutical player that insiders are jumping into here is Kindred Biosciences (KIN), which focuses on the development of therapies for pets. Insiders are buying this stock into massive weakness, since shares have fallen sharply over the last six months by a whopping 58%.

Kindred Biosciences has a market cap of $205 million and an enterprise value of $102 million. This stock trades at a reasonable valuation, with a price-to-book of 1.90. Its estimated growth rate for this year is -54.9%, and for next year it's pegged at -25.1%. This is a cash-rich company, since the total cash position on its balance sheet is $112.44 million and its total debt is zero.

A director just bought 85,244 shares, or about $895,000 worth of stock, at $10.49 to $10.51 per share. That same director just bought 47,000 shares, or about $509,000 worth of stock, at $10.79 to $10.98 per share.

From a technical perspective, KIN is currently trending below its 50-day moving average, which is bearish. This stock recently gapped down sharply from over $14 to $10 a share with heavy downside volume flows. Following that move, shares of KIN have started to bounce off that gap low of $10 a share and it's beginning to trend within range of triggering a big breakout trade above some key near-term overhead resistance.

If you're in the bull camp on KIN, then I would look for long-biased trades as long as this stock is trending above that recent low of $10 a share and then once it breaks out above some near-term overhead resistance levels at $11 to $11.10 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 140,362 shares. If that breakout materializes soon, then KIN will set up to re-fill some of its previous gap-down-day zone from August that started just above $14 a share.

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Castlight Health

One technology player that insiders are active in here is Castlight Health (CSLT), which provides cloud-based software for enterprises in the U.S. Insiders are buying this stock huge weakness, since shares are down sharply over the last six months by a whopping 65%.

Castlight Health has a market cap of $1.2 billion and an enterprise value of $908 million. This stock trades at a premium valuation, with a price-to-sales of 43.46 and a price-to-book of 5.84. Its estimated growth rate for next year it's pegged at 29.7%. This is a cash-rich company, since the total cash position on its balance sheet is $159.83 million and its total debt is zero.

A beneficial owner just bought 140,045 shares, or $1.54 million worth of stock, at $11.03 per share. That same beneficial owner also just bought 249,886 shares, or $2.85 million worth of stock, at $11.42 per share.

From a technical perspective, CSLT is currently trending above its 50-day moving average, which is bullish. This stock recently formed a double bottom chart pattern at $10.05 to $10.56 a share. Following that bottom, shares of CSLT have started to uptrend with the stock moving back above its 50-day moving average of $13.39 a share. That move has now started to push shares of CSLT within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on CSLT, then I would look for long-biased trades as long as this stock is trending above some near-term support just under $12.50 a share and then once it breaks out above some near-term overhead resistance levels at $15 to $16.50 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 volume of 436,856 shares. If that breakout gets underway soon, then CSLT will set up to re-test or possibly take out its next major overhead resistance levels at $17.90 to $19.45 a share, or even $20.40 to $22 a share.

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BancorpSouth

One regional banking player that insiders are in love with here is BancorpSouth (BXS), which provides commercial banking and financial services to individuals and small-to-medium size businesses. Insiders are buying this stock into notable weakness, since shares are off by around 16% so far in 2014.

BancorpSouth has a market cap of $2.05 billion and an enterprise value of $2.2 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 19.9 and a forward price-to-earnings of 14.3. Its estimated growth rate for this year is 30.3%, and for next year it's pegged at 15.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $276.19 million and its total debt is $529.91 million. This stock currently sports a dividend yield of 1.5%.

The president just bought 25,000 shares, or about $528,750 worth of stock, at $21.15 per share.

From a technical perspective, BXS is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently hit a low of $20.11 a share, which is well off its July high of $25.43 a share. Following that low, shares of BXS have started to uptrend with the stock making mostly higher lows and higher highs, which is bullish technical price action. That move has now started to push shares of BXS within range of triggering a near-term breakout trade.

If you're bullish on BXS, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $20.50 to $20.11 a share and then once it breaks out above some near-term overhead resistance levels at $21.78 to around $22.50 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 556,565 shares. If that breakout begins soon, then BXS will set up to re-fill some of its previous gap-down-day zone from July that started just above $23.50 a share. If that gap gets filled with volume, then BXS will set up to re-test or possibly take out its next major overhead resistance levels at $24.66 to $25.43 a share.

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JB Hunt Transport Services

One final stock with some decent insider buying is JB Hunt Transport Services (JBHT), which provides transportation and delivery services in the continental U.S., Canada, and Mexico. Insiders are buying this stock into modest strength, since shares are up by 7.3% over the last six months.

JB Hunt Transport Services has a market cap of $8.8 billion and an enterprise value of $9.6 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 26.8 and a forward price-to-earnings of 20. Its estimated growth rate for this year is 9.1%, and for next year it's pegged at 20.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $5.87 million and its total debt is $874.03 million. This stock currently sports a dividend yield of 1.1%.

A director just bought 7,800 shares, or about $595,000 worth of stock, at $76.38 per share.

From a technical perspective, JBHT is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently started to trend back above both of those key moving averages with decent upside volume flows. That spike is quickly pushing shares of JBHT within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on JBHT, then look for long-biased trades as long as this stock is trending above its 200-day at $74.90 or above more near-term support at $73.94 and then once it breaks out above some near-term overhead resistance levels at $77 to $77.41 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 828,786 shares. If that breakout hits soon, then JBHT will set up to re-test or possibly take out its next major overhead resistance levels at $79.59 to its 52-week high at $79.89 a share. Any high-volume move above those levels will then give JBHT a chance to trend north of $80 a share.

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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.