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Smart Money: 6 Small-Cap Stocks Seeing Insider Buying

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Seems like it's always the large-cap companies getting all the buzz -- it's always the big businesses like Apple and Google the making all the headlines. But for all the hype surrounding these behemoths, they're consistently bested by their small-cap counterparts on the stock market.

It's tough to say why small caps have a history of outperforming large-cap stocks. Obviously they're riskier -- so they need to generate higher returns to compensate investors for that added risk.

But there could also be some merit to the theory that an undervalued stock has a smaller market cap than would otherwise be the case, and also has a lower price-to-book ratio, putting it closer to the value end of the growth-value spectrum.

But at any rate, the results don't lie: Joel Greenblatt's "Magic Formula Investing" strategy, consistently outperforming the market year after year, arguably gets its voodoo from the inclusion of small caps. Plus, there's greater potential for rapid growth with small-cap companies. And since institutional investors are often prohibited from buying large portions of their outstanding shares, small caps offer individuals the opportunity to outsmart the smart money.

We thought this would make a great universe to start from for today's screen and wondered, which small caps have seen insider buying over the past weeks? We figure, company management knows these businesses better than anyone -- so it's not a bad idea to put stock in their trades, so to speak. (Click here to access free, interactive tools to analyze these ideas.)

Here's our list of six small-cap companies seeing insider buying over recent weeks. If you're interested in exploring small-cap ideas, use this list as a starting point for your own analysis.

Insider transactions sourced from AOL Money. The list has been sorted alphabetically.



Market Cap (in Millions)

Insider Transactions

Enterprise Financial Services (Nasdaq: EFSC  )

Regional Bank


Michael Decola (Director) bought $16,900 worth of stock on 9/14, while John Tracy (Director) bought $12,383 worth of stock on 9/10

Winthrop Realty Trust (NYSE: FUR  )

Diversified REIT


Michael Ashner (CEO) bought $2.43M worth of stock on 9/27

Gladstone Investment (Nasdaq: GAIN  )

Diversified Investments


Terry Lee Brubaker (COO) bought $29,154 worth of stock on 9/30

Lakeland Bancorp (Nasdaq: LBAI  )

Regional Bank


Stephen Tilton (Director) bought $119,734 worth of stock on 10/22

OceanFirst Financial (Nasdaq: OCFC  )

Savings & Loans


Angelo Catania (Director) bought $24,200 worth of stock on 10/27, while Vito Nardelli (President) bought $13,771 worth of stock on 10/25

Twin Disc (Nasdaq: TWIN  )

Diversified Machinery


Malcolm Moore (Director) bought $76,125 worth of stock on 11/3, while Henri-Claude Fabry (Officer) bought $23,568 worth of stock on 10/25

Interactive Chart: Press Play to compare annual returns for all the stocks mentioned above.

Disclosure: Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

Google is a Motley Fool Inside Value choice. Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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10/20/2016 4:00 PM
EFSC $32.40 Down -0.20 -0.61%
Enterprise Financi… CAPS Rating: No stars
FUR $0.00 Down +0.00 +0.00%
Winthrop Realty Tr… CAPS Rating: ***
GAIN $8.79 Up +0.06 +0.69%
Gladstone Investme… CAPS Rating: ****
LBAI $13.65 Down -0.05 -0.36%
Lakeland Bancorp CAPS Rating: No stars
OCFC $19.24 Down -0.01 -0.05%
OceanFirst Financi… CAPS Rating: No stars
TWIN $11.60 Up +0.04 +0.35%
Twin Disc CAPS Rating: **