Stock Quotes in this Article: ABMD, CLMS, FAST, GM, MDLZ

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.

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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.

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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 some stocks where insiders have been doing some big buying in per SEC filings.

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Abiomed

One stock that insiders are buying here is Abiomed (ABMD), a provider of mechanical circulatory support devices. Insiders are buying this stock into strength, since shares are up 16% so far in 2013.

Abiomed has a market cap of $594 million and an enterprise value of $484 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 48.04 and a forward price-to-earnings of 34.15. Its estimated growth rate for this year is 750%, and for next year it’s pegged at 35.3%. This is a cash-rich company, since the total cash position on its balance sheet is $85.74 million and its total debt is zero.

A director just bought 100,000 shares, or about $1.49 million worth of stock, at $14.70 to $15.20 per share.

From a technical perspective, ABMD is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending strong for the last month and change, with shares soaring from its low of $11.96 to its intraday high of $16.12 a share. During that uptrend, shares of ABMD have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ABMD within range of triggering a major breakout trade.

If you’re bullish on ABMD, then I would look for long-biased trades as long as it’s trending above its 50-day at $13.60, and then once it manages to break out above its gap down day high from last October at around $16 a share with high volume. Look for a sustained move or close above $16 a share with volume that hits near or above its three-month average action of 897,742 shares. If that breakout hits, then ABMD will set up to re-fill some of its previous gap down zone that started at $20 a share.

Calamos Asset Management

Another stock that insiders are loading up on here is Calamos Asset Management (CLMS), which provides investment advisory services to individuals and institutional investors through open-end funds, closed-end funds, separate accounts, offshore funds and partnerships. Insiders are buying this stock into decent strength, since shares are up 13% in the last three months.

Calamos Asset Management has a market cap of $224 million and an enterprise value of -$184 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 12.53 and a forward price-to-earnings of 14.91. Its estimated growth rate for this year is -19.3%, and for next year it’s pegged at 4.2%. This is a cash-rich company, since the total cash position on its balance sheet is $498.68 million and its total debt is just $92.11 million.

The CEO just bought 133,653 shares, or about $1.46 million worth of stock, at $10.82 to $11 per share. This same CEO also just bought 114,957 shares, or about $1.21 million worth of stock, at $10.47 to $10.76 per share.

From a technical perspective, CLMS 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 month and change, with shares moving higher from its low of $9.48 to its intraday high of $11.09 a share. During that uptrend, shares of CLMS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now started to push shares of CLMS into breakout territory above some past overhead resistance levels at $10.84 to $10.93 a share.

If you’re in the bull camp on CLMS, then look for long-biased as long as it’s trending above those breakout levels at $10.84 to $10.93 a share with strong upside volume flows. Look for a sustained move or close above those breakout levels with volume that registers near or above its three-month average action of 183,289 shares. If CLMS can maintain that trend, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $11.82 to $12.50 a share.

General Motors

One stock that insiders are jumping into here is General Motors (GM), which develops, produces and markets cars, trucks and parts worldwide. Insiders are buying this stock into some notable strength, since shares are up 28% during the last six months.

General Motors has a market cap of $37 billion and an enterprise value of $25 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 9.32 and a forward price-to-earnings of 6.24. Its estimated growth rate for this year is 5.2%, and for next year it’s pegged at 27.9%. This is a cash-rich company, since the total cash position on its balance sheet is $26.12 billion and its total debt is $16.05 billion.

The CEO just bought 25,000 shares, or about $662,000 worth of stock, at $26.50 per share.

From a technical perspective, GM is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been downtrending for the last two months, with shares falling from its high of $30.68 to its recent low of $29.16 a share. During that move, shares of GM have been mostly making lower highs and lower lows, which is bearish technical price action. That said, shares of GM have started to rebound off that $26.19 low and its now moving within range of triggering a near-term breakout trade.

Traders who are bullish on GM should now look for long-biased trades as long as it’s trending above that recent low of $26.19 and then once it manages to break out above its 50-day moving average of $28.26 a share and takes out more near-term overhead resistance at $29.36 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 10.81 million shares. If that breakout triggers soon, then GM will set up to re-test or possibly take out its 52-week high of $30.68 a share. Any high-volume move above $30.68 will then put $32.08 to $33.47 into range for shares of GM.

Mondelez International

A food processing player that insiders are falling in love with here is Mondelez International (MDLZ), which manufactures confectionery products. Insiders are buying this stock into modest strength, since shares are up 7% so far in 2013.

Mondelez International has a market cap of $48 billion and an enterprise value $62 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 16.13 and a forward price-to-earnings of 15.51. Its estimated growth rate for this year is 12.2%, and for next year it’s pegged at 12.8%. This is not a cash-rich company, since the total cash position on its balance sheet is $4.48 billion and its total debt is $19.42 billion.

A director just bought 38,000 shares, or about $1.02 million worth of stock, at $26.90 per share.

From a technical perspective, MDLZ is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has just started to spike back above its 50-day moving average of $27.04 a share and it’s filling some of its previous gap down zone from a few weeks ago that started at $27.75 a share. If that gap gets filled soon, then MDLZ will start to move into range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in MDLZ as long as it’s trending above its 50-day at $27.04, and then once it sustains a move or close above some near-term overhead resistance levels at $28.32 to $28.48 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 12.59 million shares. If that breakout triggers soon, then MDLZ will set up to trend potentially well north of $30 a share.

Fastenal

One more stock to consider with some decent insider buying is Fastenal (FAST), which is in the wholesale distribution of industrial and construction supplies in North America. Insiders are buying this stock into solid strength, since shares are up 27% during the last three months.

Fastenal has a market cap of $15.4 billion and an enterprise value of $15.02 billion. This stock trades at a premium valuation, with a trailing price-to-earnings of 36.60 and a forward price-to-earnings of 27.20. Its estimated growth rate for this year is 15.5%, and for next year it’s pegged at 16.5%. This is a cash-rich company, since the total cash position on its balance sheet is $79.96 million and its total debt is zero.

A director just bought 10,000 shares, or about $528,000 worth of stock, at $52.87 per share.

From a technical perspective, FAST 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 three months and change, with shares soaring higher from its low of $39.45 to its recent high of $53.38 a share. During that uptrend, shares of FAST have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of FAST within range of triggering a near-term breakout trade.

If you’re bullish on FAST, then look for long-biased as long as it’s trending above some key near-term support at $50.64, and then once it breaks out above some key overhead resistance at $53.38 to $53.60 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 2.02 million shares. If that breakout triggers soon, then FAST will set up to potentially trend towards $60 a share or higher.

To see more stocks with notable insider buying, 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 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.