Stock Quotes in this Article: END, VPRT, WINA, CLVS, ENPH

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.

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

Clovis Oncology

Insiders have been doing some decent buying in development-stage biopharmaceutical player Clovis Oncology (CLVS). Insiders are loading up on this stock into strength since shares are up over 33% so far in 2012.

Clovis Oncology has a market cap of $484 million and an enterprise value of $329 million. Its estimated growth rate for this year is 78.4%, and for next year it’s pegged at -37.2%. This is a cash-rich company, since the total cash position on its balance sheet is $140.25 million and its total debt is zero.

A director just bought 25,000 shares, or $500,000 worth of stock, at $20.00 per share. This company also just announced a secondary offering of 3.75 million shares of common stock priced at $20 per share.

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From a technical perspective, CLVS is currently trading below its 50-day moving average, which is bearish. This stock IPOed back in November of last year, and since then it’s soared from a low of $11.45 to a recent high of $27.55 a share. After hitting that high, the stock has dropped sharply with high-volume back below its 50-day to a recent low of $17.85.

If you’re a bull on CLVS, I would only look for long-biased trades once this stock breaks out above some near-term overhead resistance at $19.20 to $20.50 a share with high volume. Look for volume on that move that’s near or well above its three-month average action of 110,405 shares. It’s worth pointing out that volume on Wednesday was 140,290 shares and the stock finished near its daily high of $19 a share. If we get that action soon, then this stock has a great chance to make a quick run at its 50-day moving average of $23.08 or possibly higher.

I would avoid any long trades in CLVS if this stock drops back below its recent low of $17.85 with volume. The downside could be big if CLVS loses that level since the next major support zone won’t come into play until around $15 to $13 a share.

Endeavour International

Another name that insiders are loading up on is independent oil and gas player Endeavour International (END). Insiders are buying this stock into some solid strength since shares are up over 33% so far in 2012.

Endeavour International has a market cap of $436 million and an enterprise value of $779 million. This stock trades at an extremely cheap valuation, with a forward price-to-earnings of 3. Its estimated growth rate for this year is 256%, and for next year it’s pegged at 76.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $106.04 million and its total debt is $467.38 million. After you back out the cash, Endeavour has $361.34 million in debt on its books.

A beneficial owner just bought 106,514 shares, or $1.29 million worth of stock, at $12.09 per share.

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From a technical perspective, END is currently trading right below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock has found some solid buying support for the past month and change each time it’s traded below $11 a share. That support zone is creating a solid base for this stock to potentially launch off of and move significantly higher.

If you like the look of END here, then I would look for long-biased trades once this stock breaks back above its 50-day moving average of $11.81 a share with high-volume. Look for volume on that move that’s near or well above its three-month average action of 565,745 shares. If we get that action soon, I would then add to any long positions once END takes out some near-term overhead resistance at $12.38 to $13.48 a share with high-volume. A sustained high-volume move and close over $12.38 to $13.48 a share should set this stock up for a big run back towards $14 to $16.43.

I would simply avoid any long trades in END if the stock fails to move and close back above its 50-day at $11.81, and then drops below some near-term support at $10.94 to $10.77 a share with high-volume. A high-volume drop back below those levels will invalidate the base and set this stock up to possibly fail at its 200-day moving average of $9.95 a share.

Enphase Energy

Insiders are also doing some big time buying in semiconductor player Enphase Energy (ENPH), which designs, develops and sells microinverter systems for the solar photovoltaic industry. Insiders are buying into some modest weakness here since shares are off by around 8% so far in 2012.

Enphase Energy has a market cap of $280 million and an enterprise value of $260 million. This stock trades at a reasonable valuation, with a price-to-sales of 1.86. This is a cash-rich company, since the total cash position on its balance sheet is $51.52 million and its total debt is $33.88 million. After you back out the debt, Enphase Energy has $17.37 million in cash on its books.

Third Point hedge fund manager Daniel Loeb, who is also a beneficial owner and director at ENPH just bought 919,890 shares, or $7.38 million worth of stock, at $8.02 per share.

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Another beneficial owner also just bought 2.3 million shares, or $13.75 million worth of stock, at $6 per share as part of a private placement.

This stock recently IPOed, so at this time there’s very little technical information to decipher. What we can see on the chart here is that ENPH has been trading within a range since coming public between $8.24 on the upside and $6.62 on the downside.

If you‘re a bullish on ENPH, I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $7.89 to $8.20 a share with high volume. Look for volume that’s near or above 500,000 shares, which is the second-highest volume day since the stock came public. If we get a sustained move and close above those levels, then this stock should start a march towards $10 or higher.

Keep in mind that whenever an IPO makes a new high it tends to continue its trend higher for some time. The reason for this is because the stock has no more overhead resistance to contend with. Due to that fact, I would only look to play ENPH off a high-volume breakout versus buying this off weakness. Buying ENPH off weakness is risky because if it makes a new low there’s no previous support for the stock.

Winmark

One specialty retail player whose insiders are snapping up a decent amount of stock is Winamrk (WINA), a franchisor of four value-oriented retail store concepts that buys, sells trades and consigns merchandise. Insiders are buying shares into some modest weakness since the stock is off by around 7% so far in 2012.

Winmark has a market cap of $269 million and an enterprise value of $258 million. This stock trades at a fair valuation, with a trailing price-to-earnings 19.76. This is a cash-rich company, since the total cash position on its balance sheet is $10.06 million and its total debt is just $20,800.

The chairman of the board and CEO just bought 6,000 shares, or $329,000 worth of stock, at $54.85 per share.

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From a technical perspective, WINA is currently trading below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock formed a double top chart pattern back in February at $67.48 to $67.42 a share. After forming that top, the stock has plunged towards its current price of $53.15 a share.

If you’re a bull on WINA, I would only consider long-biased trades if this stock can manage to trade above Wednesday’s high of $54.41 with high-volume. Look for volume on that move that’s near or well above its three-month average action of 15,656 shares. If we get that action, then look for this stock to make a run at $56 to $58 a share in the near-term. I would only look for a more extended up move if WINA gets back above its 50-day moving average of $60.22 and above some near-term resistance at $60.90 with volume.

I would avoid long trades in WINA all together if it takes out Wednesday’s low of $52.57 with volume. If WINA takes out that low, then it sets the stock up to potentially fail at its 200-day moving average of $49.99. Keep in mind that the trend right now is down for WINA, so this stock is vulnerable for more downside if can’t hold onto its recent gains.

VistaPrint

In the printing services complex, insiders are loading up on a large amount of stock in VistaPrint (VPRT), which operates as an online provider of marketing products and services to micro businesses worldwide. Insiders are buying into some solid strength here since the stock is up over 20% so far in 2012.

VistaPrint has a market cap of $1.37 billion and an enterprise value of $1.41 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 20.32 and a forward price-to-earnings of 18.15. Its estimated growth rate for this year is -23%, and for next year it’s pegged at 15.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $67.47 million and its total debt is $146.50 million. After you back out the cash, VistaPrint has $79.03 million in debt on its books.

A beneficial owner just bought 100,000 shares, or around $3.95 million worth of stock, at $38.67 per share.

From a technical perspective, VPRT is currently trading below its 50-day moving average and above its 200-day moving average, which is neutral trendwise. This stock has been struggling during the past two months whenever it’s traded above $40 a share. Each time it’s traded over $40 the stock has run into sellers, and it’s now started to make lower highs. Lower highs are a bearish technical pattern and it shows that sellers are dumping the stock into any strength.

If you’re bullish on VPRT, I would only look for long-biased trades once this stock breaks out above $38.05 and its 50-day moving average of $39.20 a share with high-volume. Look for volume on a move above those levels that hits near or well above its three-month average action of 513,258 shares. If we get that action soon, look for VPRT to run back into the $40s.I would only look for an extended up move if $41.92 was taken out with volume.

Traders should avoid this stock entirely from the long side if VPRT drops back below its near-term support at $35.88 and then back below its 200-day moving average of $34.29 with volume. A high-volume move below those levels could set this stock up for some serious downside.

To see more stocks with notable insider buying, including Great Wolf Resorts (WOLF), Opko Health (OPK) and Sunrise Senior Living (SRZ), 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.