Insiders at these companies have been scooping up shares of their own stock lately.
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.
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.
Stocks with notable insider activity is something that I tweet about on a regular basis. These are also the exact type of stocks that I love to trade and alert in real-time.
At the end of the day, it's 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 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.
ConocoPhillips
One energy player that insiders are active in here is ConocoPhillips (COP) , which explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids worldwide. Insiders are buying this stock into big strength, since shares have trended up sharply by 22.8% over the last six months.
A director just bought 12,500 shares, or about $497,000 worth of stock at $39.74 per share. From a technical perspective, ConocoPhillips is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last two months and change, with shares moving lower off its high of $48.16 a share to its recent low of $38.80 a share. During that downtrend, shares of ConocoPhillips have been making mostly lower highs and lower lows, which is bearish technical price action.
If you're bullish on ConocoPhillips, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $40 or at $38.80 a share and then once it breaks out above some near-term overhead resistance levels at $41.93 to its 50-day moving average of $42.55 a share and then above its 200-day moving average of $43.08 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 8.17 million shares. If that breakout triggers soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $44.16 to $45.37, or even $46 to $48 a share.
Southwest Airlines
Another regional airlines player that insiders are jumping into here is Southwest Airlines (LUV) , which operates passenger airlines that provide scheduled air transportation services in the U.S. and near-international markets. Insiders are buying this stock into modest strength, since shares have risen by 6.2% over the last six months.
Southwest Airlines has a market cap of $23.2 billion and an enterprise value of $23.1 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 9.9 and a forward price-to-earnings of 9.5. Its estimated growth rate for this year 9.4%, and for next year it's pegged at 2.3%. This is barely a cash-rich company, since the total cash position on its balance sheet is $3.42 billion and its total debt is $3.35 billion. This stock currently sports a dividend yield of 1%.
The CEO just bought 28,100 shares, or about $1 million worth of stock, at $35.55 to $35.59 per share.
From a technical perspective, Southwest Airlines is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently gapped-down sharply lower from around $43 a share to under $37.50 a share with heavy downside volume flows. Following that move, shares of Southwest Airlines went on to print a new low at $35.42 a share.
If you're bullish on Southwest Airlines then I would look for long-biased trades as long as this stock is trending above its recent low of $34.52 a share and then once it breaks out above some near-term overhead resistance levels at $38.08 to its 20-day moving average of $38.57 a share and then above $39.50 to its 50-day moving average of $39.81 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 7.30 million shares. If that breakout hits soon, then this stock will set up to re-fill some of its previous gap-down-day zone that started at $43 a share.
Chubb
One financial player that insiders are jumping into here is Chubb (CB) , which provides property and casualty insurance and reinsurance products worldwide. Insiders are buying this stock into notable strength, since shares are up by 16.1% over the last six months.
From a technical perspective, Chubb is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending over the last six months, with shares moving higher off its low of $108 a share to its recent high of $131 a share. During that uptrend, shares of Chubb have been making mostly higher lows and higher highs, which is bullish technical price action.
If you're in the bull camp on Chubb, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $125 or at $122.70 a share and then once it breaks out above some near-term overhead resistance levels at its 20-day moving average of $127.27 a share to $127.48 a share with volume that hits near or above its three-month average action of 1.40 million shares. If that breakout materializes soon, then this stock will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $131 a share. Any high-volume move above $131 will then give this stock a chance to tag $135 to $140 a share.
Penske Automotive Group
One consumer goods and services player that insiders are loading up on here isPenske Automotive Group (PAG) , which operates as a transportation services company. Insiders are buying this stock into big strength, since shares have ripped higher by 28% over the last six months.
Penske Automotive Group has a market cap of $3.4 billion and an enterprise value of $7.9 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 10.6 and a forward price-to-earnings of 9.5. Its estimated growth rate for this year is 6%, and for next year it's pegged at 7.5%. This is not a cash-rich company, since the total cash position on its balance sheet is $97.50 million and its total debt is $4.69 million. This stock currently sports a dividend yield of 2.8%.
The CEO just bought 220,632 shares, or about $8.68 million worth of stock, at $38.64 to $39.98 per share.
If you're bullish on Penske Automotive Group, then I would look for long-biased trades as long as this stock is trending above its 20-day moving average of $37.16 a share and then once it breaks out above some near-term overhead resistance at $40.46 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 758,947 shares. If that breakout develops soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $45 to $46, or even $48 to $50 a share.
Virtu Financial
My final stock with some decent insider buying is financial player Virtu Financial (VIRT) , which provides market making and liquidity services to the financial markets worldwide. Insiders are buying this stock into notable weakness, since shares have fallen by 15% over the last six months.
Virtu Financial a market cap of $640 million and an enterprise value of -$225 million. This stock trades at reasonable valuation, with a trailing price-to-earnings of 15.8 and a forward price-to-earnings of 13.7. Its estimated growth rate for this year is -23.7%, and for next year it's pegged at 18.4%. This is a cash-rich company, since the total cash position on its balance sheet is $2.38 billion and its total debt is $1.52 billion. This stock currently sports a dividend yield of 5.6%.
From a technical perspective, Virtu Financial is currently trending below above both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last five months, with shares moving lower off its high of $23.64 a share to its new 52-week low of $15.88 a share. During that downtrend, shares of Virtu Financial have been making mostly lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to rebound a bit off that $15.88 low, and it's beginning to trend within range of triggering a near-term breakout trade.
If you're bullish on Virtu Financial, then I would look for long-biased trades as long as this stock is trending above its new 52-week low of $15.88 a share and then once it breaks out above its 20-day moving average of $17.10 a share to $17.27 a share and then above its 50-day moving average of $17.51 a share with volume that hits near or above its three-month average action of 330,808 shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $18.16 to $18.60, o even $19 to $20 a share.
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