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.
BJ's Restaurants
One restaurant operator that insiders are loading up on here is BJ's Restaurants (BJRI), which offer pizzas, beers, appetizers, entrees, pastas, sandwiches, salads and desserts. Insiders are buying this stock into strength, since shares are up 12% over the last six months.
BJ's Restaurants has a market cap of $926 million and an enterprise value of $904 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 44 and a forward price-to-earnings of 36. Its estimated growth rate for this year is -19%, and for next year it's pegged at 39%. This is a cash-rich company, since the total cash position on its balance sheet is $30.98 million and its total debt is zero.
A officer just bought 89,072 shares, or about $2.91 million worth of stock, at $32.70 per share. That same officer also just bought 242,713 shares, or about $8 million worth of stock, at $32.99 per share.
From a technical perspective, BJRI is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock is spiking higher here right above its 200-day moving average of $31.08 a share. That move is starting to push shares of BJRI within range of triggering a big breakout trade.
If you're bullish on BJRI, then I would look for long-biased trades as long as this stock is trending above its 50-day at $30.45 and then once breaks out above some near-term overhead resistance levels at $33.44 to $35.35 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 641,837 shares. If that breakout kicks off soon, then BJRI will set up to re-test or possibly take out its next major overhead resistance level at $40.99 a share.
Ameresco
A renewable energy player that insiders are active in here is Ameresco (AMRC), which develops, designs, engineers and installs projects that reduce the energy and operations and maintenance costs of facilities. Insiders are buying this stock into major weakness, since shares are down by 25% so far in 2014.
Ameresco has a market cap of $328 million and an enterprise value of $481 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 143 and a forward price-to-earnings of 25. Its estimated growth rate for this year is 260%, and for next year it's pegged at 55.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $17.17 million and its total debt is $164.76 million.
The CEO just bought 96,675 shares, or about $719,000 worth of stock, at $7.22 per share.
From a technical perspective, AMRC 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, with shares moving lower from its high of $10.62 to its recent low of $7 a share. During that downtrend, shares of AMRC have been consistently making lower highs and lower lows, which is bearish technical price action.
If you're in the bull camp on AMRC, then I would look for long-biased trades as long as this stock is trending above its recent low at $7 and then once it breaks out above some near-term overhead resistance levels at $7.75 to $8.17 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 156,382 shares. If that breakout hits soon, then AMRC will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day of $8.88 a share to its 200-day at $9.29 a share.
Opko Health
One biopharmaceutical and diagnostics player that insiders are in love with here is Opko Health (OPK), which is engaged in the discovery, development and commercialization of novel and proprietary technologies. Insiders are buying this stock into notable strength, since shares are up around 13% so far in 2014.
Opko Health has a market cap of $3.9 billion and an enterprise value of $3.8 million. This stock trades at a premium valuation, with a price-to-sales of 40.64 and a price-to-book of 4.47. Its estimated growth rate for this year is -18.8%, and for next year it's pegged at 5.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $185.80 million and its total debt is $227.74 million.
The CEO just bought 26,900 shares, or about $247,000 worth of stock, at $9.20 per share. The same CEO also just bought 28,000 shares, or about $264,000 worth of stock, at $9.45 per share.
From a technical perspective, OPK is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock is spiking modestly higher here right above both its 50-day and 200-day moving averages. This spike is starting to push shares of OPK within range of triggering a big breakout trade above some near-term overhead resistance levels.
If you're bullish on OPK, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $9.03 or at $8.81 and then once it breaks out above some near-term overhead resistance levels $9.83 to $10.25 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 3.02 million shares. If that breakout triggers soon, then OPK will set up to re-test or possibly take out its next major overhead resistance levels at $11.65 to $12.95 a share.
Calamos Asset Management
One asset management player that insiders are active in here is Calamos Asset Management (CLMS), which provides investment advisory services to individuals, including high-net-worth individuals, and institutions. Insiders are buying this stock into major strength, since shares are up by 32% over the last six months.
Calamos Asset Management has a market cap of $260 million and an enterprise value of $-192 million. This stock trades at premium valuation, with a trailing price-to-earnings of 13 and a forward price-to-earnings of 20. Its estimated growth rate for this year is -39%, and for next year it's pegged at 10.7%. This is a cash-rich company, since the total cash position on its balance sheet is $545 million and its total debt is $92.11. This stock currently sports a dividend yield of 4%.
The CEO just bought 21,051 shares, or about $262,000 worth of stock, at $12.49 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 trending sideways for the last month and change, with shares moving between $12.42 on the downside and $13.69 on the upside. Shares of CLMS are starting to bounce a bit higher of the lower-end of its range, which also sits right above its 50-day moving average at $12.18 a share.
If you're bullish on CLMS, then I would look for long-biased trades as long as this stock is trending above its 50-day at $12.18 and then once it breaks out above some near-term overhead resistance levels at $13.18 to $13.47 a share and then once it clears its 52-week high at $13.69 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 146,187 shares. If that breakout hits soon, then CLMS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $16 to $18 a share.
Aircastle
One final stock with some large insider buying is Aircastle (AYR), which acquires, leases and sells commercial jet aircraft to airlines worldwide. Insiders are buying this stock into notable strength, since shares are up 10% over the last six months.
Aircastle has a market cap of $1.5 billion and an enterprise value of $4.7 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 47 and a forward price-to-earnings of 9.9. Its estimated growth rate for this year is 210%, and for next year it's pegged at 54%. This is not a cash-rich company, since the total cash position on its balance sheet is $654.61 million and its total debt is a whopping $3.88 billion. This stock currently sports a dividend yield of 4.2%.
A director just bought 30,000 shares, or about $561,000 worth of stock, at $18.70 per share.
From a technical perspective, AYR is currently trending below both tits 50-day and 200-day moving averages, which is bearish. This stock recently formed a double bottom chart pattern at $18.51 to $18.53 a share. Following that bottom, shares of AYR have started to spike higher and flirt with its 50-day moving average at $19.03 a share. That move is starting to push shares of AYR within range of triggering a near-term breakout trade.
If you're bullish on AYR, then 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 levels at $19.63 to $20.12 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 402,666 shares. If that breakout gets underway soon, then AYR will set up to re-test or possibly take out its 52-week high at $21.35 a share. Any high-volume move above that level will then give AYR a chance to tag $23 to $25 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.
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