Stock Quotes in this Article: CALL, COMV, GBX, SEAC, USAP

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.

SeaChange International

One stock that has seem some sizable insider buying recently is SeaChange International (SEAC), which is engaged in the delivery of multi-screen video. Insiders are hitting the bid on this stock into strength since shares are up 17% so far in 2012.

SeaChange International has a market cap of $270 million and an enterprise value of $183 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 10.34. Its estimated growth rate for this year is 26.1%, and for next year it’s pegged at 37.9%. This is a cash-rich company, since the total cash position on its balance sheet is $88.44 million and its total debt is zero.

A director just bought 150,000 shares, or $1.21 million worth of stock, at $8.12 per share.

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From a technical perspective, SEAC is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently found some big buying support at around $6.80, and since then it has run-up to its current price of $8.27 a share. That move has pushed SEAC within range of triggering a near-term breakout trade.

If you’re bullish on SEAC, I would look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $8.45 to $8.50 a share with high volume. Look for volume on that move that’s near or well above its three-month average volume of 154,354 shares. If we get that action soon, then watch for SEAC to trigger an even bigger breakout over $8.88 a share. If SEAC can manage to take out all of those levels with volume, then look for a move towards $10 to $11 a share in the near future.

I would avoid any long trades in SEAC if this stock fails to trigger that breakout, and then drops back below some near-term support $7.70 to $7.58 (its 50-day) a share with heavy volume. A move below those levels with volume will set this stock up for much lower prices in the near-term.

Comverge

Another name that insiders are loading up on here is intelligent energy management provider Comverge (COMV). Insiders are snapping up shares in COMV into some big-time strength since the stock is up over 40% so far in 2012.

Comverge has a market cap of $44 million and an enterprise value of $48 million. This stock trades at a rich valuation, with a forward price-to-earnings of 58.67. Its estimated growth rate for this year is 32.7%, and for next year it’s pegged at 108.60%. This is not a cash-rich company, since the total cash position on its balance sheet is $23.64 million and its total debt is $26.25 million.

A beneficial owner just bought 430,100 shares, or $744,000 worth of stock, at $1.73 per share.

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From a technical perspective, COMV is currently trading right below its 200-day moving average and above its 50-day moving average, which is neutral trendwise. This stock ran up big since the start of 2012 from $1.11 to a recent high of $1.99 a share. During that run, the stock made mostly higher lows and higher highs, which is bullish technical price action. That said, COMV just ran into overhead resistance near $1.95 to $1.99 a share, and it has broken back below its 200-day moving average.

If you’re a bull on COMV, then I would look for long-biased trades once it breaks back above its 200-day moving average of $1.82 with strong volume. Look for volume on that move that’s near or well above its three-month average action of 249,760 shares. If we get that action soon, then I would add to any long positions once CMOV breaks out above $1.95 to $1.99 a share with high-volume. Target a run up to its next major overhead resistance level at $2.50 if that breakout triggers soon.

I would simply avoid any long trades in COMV if the stock fails to get back above its 200-day and take out $1.95 to $1.99 a share with high-volume. If you buy this stock off weakness, then keep in mind that the nearest major support level is at $1.70 to $1.59 (its50-day) a share. Any high-volume moves below those levels should be considered very bearish in the short-term.

MagicJack VocalTec

A computer services stock that insiders love right now is MagicJack VocalTec (CALL), a provider of carrier-class voice over Internet protocol and convergence solutions for fixed and wireless communication service providers. Insiders are buying this stock into some impressive strength, with shares up over 63% so far in 2012.

MagicJack VocalTec has a market cap of $470 million and an enterprise value of $432 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 13.58. Its estimated growth rate for the next quarter is 100%, and for next year it’s pegged at 29.9%. This is a cash-rich company, since the total cash position on its balance sheet is $36.89 million and its total debt is just $5 million.

A director just bought 22,000 shares, or $507,000 worth of stock, at $22.86 per share.

From a technical perspective, CALL 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 six months, with shares soaring from a low of $10 to a recent high off $28.22 a share. During that uptrend, the stock has consistently made higher lows and higher highs, which is bullish technical price action. That said, the stock has pulled back off its recent high of $28.22 and is not sitting right above its 50-day moving average of $22 a share.

If you‘re a bullish on CALL, I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $25.30 a share with high-volume. Look for volume on that move that’s near or well above its three-month average action of 432,876 shares. If we get that action soon, I would then add to any long positions once CALL takes out its 52-week high of $28.22 a share with volume.

If you buy this stock off weakness in an effort to anticipate the breakout, then keep in mind that the nearest major support levels are the 50-day at $22 and then $19.60 to $18 a share. In order to increase the probability of CALL breaking out soon, then it’s probably important that $19.60 holds up as support.

I also featured MagicJack early this week in "7 Stocks Rising on Big Volume."

Universal Stainless

An iron and steel player that insiders are jumping into here is Universal Stainless (USAP), which, together with its wholly owned subsidiaries, manufactures and markets semi-finished and finished specialty steel products, including stainless steel, tool steel and certain other alloyed steels. Insiders are buying shares into some decent strength since the stock is up 17% so far in 2012.

Universal Stainless has a market cap of $299 million and an enterprise value of $395 million. This stock trades at a cheap valuation, with a trailing price-to-earnings 17.14 and a forward price-to-earnings of 8.69. Its estimated growth rate for this year is 43.3%, and for next year it’s pegged at 34.8%. This is far from a cash-rich company, since the total cash position on its balance sheet is just $274,000, and its total debt is $94.65 million.

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A beneficial owner just bought 33,339 shares, or $1.39 million worth of stock, at $41.90 to $42.19 per share. The same beneficial owner also just bought 18,638 shares, or $817,000 worth of stock, at $43.36 to $44.46 per share.

From a technical perspective, USAP is currently trading below above both its 50-day and 200-day moving averages, which is bullish. This stock has been trading range bound for the past month and change, between $45 on the upside and around $40 on the downside. A move outside of that range will most likely setup the next major trend for USAP.

If you’re a bull on USAP, I would look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $44.74 to $45.03 a share with high-volume. Look for volume on that move that’s near or well above its three-month average action of 50,277 shares. If we get that action soon, then target a run towards its next major near-term resistance levels at $50 to $52.70 a share.

Since this stock has failed at the upper-end of its recent range, that breakout might not be in the cards for awhile. If you want to buy USAP off of weakness, then I would let this pullback towards its 50-day moving average of $39.88, and make sure it holds that level. Basically, look to get long near the lower-end of the range as long as the 50-day does not get violated with high-volume.

Greenbrier Companies

In the railroads complex, insiders are doing some active buying is Greenbrier Companies (GBX), which engages in the design, manufacture, and marketing of railroad freight car equipment in North America and Europe. Insiders might have spotted some deep value here since this stock is off by 24% so far in 2012.

Greenbrier Companies has a market cap of $491 million and an enterprise value of $980 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 13.45 and a forward price-to-earnings of 6.58. Its estimated growth rate for this year is 402.3%, and for next year it’s pegged at 26.7%. This is far from a cash-rich company, since the total cash position on its balance sheet is $40.67 million and its total debt is $529.90 million.

A director just bought 25,000 shares, or $451,000 worth of stock, at $17.45 to $18.47 per share.

From a technical perspective, GBX is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock formed a triple-top earlier this year between $26.66, $26.09 and $26.28 a share. After forming that topping pattern, the stock sold off to its recent low of $16.40 a share. Since hitting that low, shares of GBX have rebounded to its current price of $18.43 a share.

If you’re bullish on GBX, I would only look for long-biased trades once this stock breaks out above some near-term overhead resistance at $18.82 a share with high-volume. Look for volume on that move that’s near or well above its three-month average action of 570,338 shares. If we get that action soon, look for GBX to make a run at $19.91 (200-day) to $22.11 (50-day) a share.

Traders should avoid GBX from the long side if it drops below that recent low of $16.40 a share with high-volume. A high-volume move below that level will mean that the recent downtrend for GBX is far from over, and the stock wants to move even lower. If you’re looking to buy off weakness and anticipate the breakout, then a closer near-term support level that traders could key off of is around $18 a share.

To see more stocks with notable insider buying like Acuity Brands (AYI), Opko Health (OPK) and Sunrise Senior Living (SRZ), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

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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.