5 Stocks With Huge Insider Buying

Tickers in this article: DAKT MNKD SDIX SNTA WPRT

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.

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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.
Westport Innovations

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An auto and truck parks player that insiders are loading up in here is Westport Innovations , a provider of engine and fuel system technologies utilizing gaseous fuels. This stock hasn't done much so far in 2012, with shares virtually flat on the year.

Westport Innovations has a market cap of $1.84 billion and an enterprise value of $1.59 billion. This stock trades at a rich valuation, with a price-to-sales of 5.84 and a price-to-book of 4.32. Its estimated growth rate for this year is -0.80%, and for next year it's pegged at 43.3%. This is a cash-rich company, since the total cash position on its balance sheet is $333.33 million, and its total debt is $88.33 million.

A beneficial owner just bought 100,000 shares, or around $3.69 million worth of stock, at $36.62 per share.

From a technical perspective, WPRT is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock was recently destroyed by the bears, after it plunged from its March high of $50.19 to a low of $21.93 a share. During that massive downtrend, shares of WPRT consistently made lower highs and lower lows, which is bearish technical price action.

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That said, WPRT just formed a double-bottom chart pattern at around $22.33 to $21.93 a share. The stock has now soared to a recent high of $38.50 a share but subsequently pulled back right to its 200-day moving average of $33.32 a share.

If you're bullish on WPRT, then I would look for long-biased trades once this stock breaks out above some near-term overhead resistance at $38.50 to $38.66 a share with high-volume. Look for volume on that move that registers near or above its three-month average action of 2.5 million shares. If we get that action soon, then WPRT could make a run at $45 to $50 a share. Keep in mind you could get long WPRT as long as it's trending above its 200-day moving average of $33.22 and simply anticipate that breakout.

I would avoid WPRT or look for short-baized trades if it drops back below its 200-day moving average of $33.32 a share with high-volume. A high-volume move below that level could set this stock up to re-test and possibly take out its 50-day moving average of $29.35 a share. Any high-volume move below its 50-day and then some previous support at $28 could send this stock dramatically lower. MannKind

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A stock in the biotechnology and drugs complex that insiders are snapping up is MannKind , which is focused on the discovery, development and commercialization of therapeutic products for diseases such as diabetes and cancer. Insiders are buying this stock into some modest strength, since shares are up about 5% so far in 2012.

MannKind has a market cap of $414.5 million and an enterprise value of $852 million. Its estimated growth rate for this year is 26.5%, and for next year it's pegged at 52.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $56.71 million, and its total debt is $494.40 million.

The CEO and chairman of the board just bought 31,250,000 shares, or about $77.18 million worth of stock, at $2.47 per share.

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From a technical perspective, MNKD is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock bottomed back in June after buying interest came in at around $1.65 to $1.70 a share. Following that bottom, shares of MNKD rallied hard to its recent high of $2.91 a share. During that rally, shares of MNKD were making higher lows and higher highs, which is bullish technical price action.

If you're in the bull camp on MNKD, then I would look for long-biased trades as long as this stock is trending above its 200-day moving average of $2.55 with strong upside volume flows. Look for volume that's tracking in close to or above its three-month average action of 2 million shares. If MNKD can manage to hold that trend, then this stock has a great chance of trading back towards its next significant overhead resistance level at $3.48 a share.

On the flipside, I would avoid MNKD if it moves back below its 200-day at $2.55 with high-volume. If this stock were to take out its 200-day with volume, then we could get a re-test of its 50-day moving average of $2.01 a share. Daktronics

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An electronic instruments player that insiders are warming up to here is Daktronics , a supplier of electronic scoreboards, large electronic display systems and related marketing services, digital messaging solutions, software and services for sporting, commercial and transportation applications. Insiders are buying this stock into some decent weakness, with shares of by around 20% so far in 2012.

Daktronics has a market cap of $321 million and an enterprise value of $268 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 38.25 and a forward price-to-earnings of 17.39. Its estimated growth rate for this year is 55%, and for next year it's pegged at 41.9%. This is a cash-rich company, since the total cash position on its balance sheet is $54.68 million, and its total debt is just $1.46 million.

The chairman of the board just bought 10,000 shares, or about $72,000 worth of stock, at $7.02 per share.

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From a technical perspective, DAKT is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock had been stuck in a nasty downtrend for most of 2012, with shares dropping from over $11 a share to a recent low of $6.21 a share. During that sharp move lower, shares of DAKT have consistently made lower highs and lower lows, which is bearish technical price action. That said, DAKT recently found some high-volume buying interest at around $6.20 to $6.50 a share, and it has subsequently rallied back above its 50-day at $7.04 a share.

If you're bullish on DAKT, then I would look for long-biased trades as long as this stock is trending above its 50-day at $7.04 a share with strong upside volume flows. Look for volume that's tracking in near or above its three-month average volume of 125,998 shares. If you get long above the 50-day, then I would add to any positions once DAKT takes out its 200-day moving average of $8.76 a share with high volume.

On the flipside, I would avoid DAKT or look for short-baized trades if this stock drops back below its 50-day moving average of $7.04 with high volume. A high-volume move back below $7.04 could setup DAKT to re-test and possibly take out its June low of $6.21 a share. That move would push DAKT into new 52-week low territory, which is bearish price action. Strategic Diagnostics

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Another name that insiders are finding attractive here is biotechnology and drugs player Strategic Diagnostics , which develops, commercializes and markets proprietary products, services, and solutions for human health and wellness to the pharmaceutical, biotechnology, diagnostics and food safety markets. Insiders are finding some deep value here, since this stock is down by around 25% so far in 2012.

Strategic Diagnostics has a market cap of $28.31 and an enterprise value of $18.72 million. This stock trades at a cheap valuation, with a price-to-sales of 1.22 and a price-to-book of 1.49. This is a cash-rich company, since the total cash position on its balance sheet is $9.8 million and its total debt is just $200,000.

A beneficial owner just bought 804,500 shares, or around $949,000 worth of stock, at $1.18 per share.

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From a technical perspective, SDIX is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock recently plunged from around $1.85 to its 52-week low of 95 cents per share. During that downtrend, shares of SDIX consistently made lower highs and lower lows, which is bearish technical price action. That said, shares of SDIX recently found some high-volume buying interest at around $1.20 a share.

If you're in the bull camp on SDIX, I would look for long-biased trades if this stock can manage to trigger a near-term breakout above some overhead resistance at $1.38 to $1.39 a share with high-volume. Look for volume on that move that registers near or above its three-month average action of 41,150 shares. If we get that action, then SDIX could take out its 50-day moving average at $1.50, and then possibly take out its 200-day at $1.76 a share. The next major overhead resistance levels that could get hit if its 50-day and 200-day get taken out are at $2.13 to $2.44 a share.

On the flipside, I would avoid SDIX if it fails to trigger that breakout, or if you want to get even more rigid just avoid this stock unless its trending above its 50-day and 200-day moving averages with strong upside volume flows. If you play the breakout, I wouldn't give this stock too much room since its coming right out of that recent downtrend. Synta Pharmaceuticals

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The last name to look at with some monster insider buying is biotechnology and drugs player Synta Pharmaceuticals , which is focused on discovering, developing, and commercializing small molecule drugs to severe the medical conditions of the patients with cancer and inflammatory diseases. Insiders are buying this stock into strength, since shares are up around 40% so far in 2012.

Synta Pharmaceuticals has a market cap of $377.92 million and an enterprise value of $337.02 million. This stock trades at a premium valuation, with a price-to-sales of 57.36 and a price-to-book of 11.19. Its estimated growth rate for this year is -5%, and for next year it's pegged at 1%. This is a cash-rich company, since the total cash position on its balance sheet is $57.39 million and its total debt is $16.49 million.

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A director and beneficial owner just bought 59,528 shares, or about $4.99 million worth of stock, at $5.45 per share. Another director also just bought 150,000 shares, or about $801,000 worth of stock, at $5.35 per share.

From a technical perspective, SNTA is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently made a monster run off its May low of $3.71 to a 52-week high of $8.50 a share. After making that share run higher, the stock went on to gap down big with heavy volume to a low of $4.40 a share. Following that gap-down, the stock has made an amazing snapback rally in just a few weeks with shares ripping to the upside to its recent high of $7 a share.

If you're bullish on SNTA, then I would look for long-biased trades once this stock triggers a near-term breakout above some overhead resistance at $7 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 805,016 shares. If we get that move soon, then SNTA will setup to re-test and possibly take out its 52-week high of $8.50 a share. Whenever I see a stock fill a huge gap-down that quickly with volume, it's usually very bullish activity.

I would simply avoid SNTA if it fails to trigger that breakout, and then moves back below some major near-term support at $6 a share with high-volume. A high-volume move below $6 could setup SNTA to re-test its 50-day moving average of $5.17 a share. Bulls on SNTA can revisit this stock back near the 50-day for possibly long entries if we fail to get that breakout soon.

To see more stocks with notable insider buying, including Vistaprint , Urologix and Anthera Pharmaceuticals , check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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Tickers in this article: DAKT MNKD SDIX SNTA WPRT