- Insider buying is a carefully watched metric for investing in small-cap stocks.
- Insider buying in medium- to large-cap companies doesn't tell you as much as for small-cap companies.
- In small companies, employees have a better picture of possible stock performance.
Insider buying is a very carefully-watched metric for anyone interested in buying small-cap stocks, defined as companies with a market cap of at most $2 billion-$3 billion.
On the one hand, insider selling can happen for all kind of reasons, many of which don't have much to do with the company in question. Sometimes people just need to rustle up some extra cash.
Insider buying, on the other hand, is a much more telling metric, as there's really only one reason why you'd buy a whole bunch of your own company's stock: you expect it to go up.
But you also have to be very careful when using insider buying as a metric to analyze stocks. For instance, the size of the company can make a big difference: the longer the chain of command, the less any one executive will know about the company's other operations.
When the company is smaller there's a better chance the purchaser in question has more accurate information about the company's future prospects. So with that in mind, we rounded up four small-cap stocks under 10 dollars with insider buying.
1. Cumulus Media Inc. (NASDAQ:CMLS): Engages in the acquisition, operation, and development of commercial radio stations in the United States. Market cap at $1.44B, most recent closing price at $6.60.
Over the last six months, insiders were net buyers of 1,472,842 shares, which represents about 1.15% of the company's 127.89M share float.
2. Lionbridge Technologies Inc. (NASDAQ:LIOX): Provides language, development, and testing services. Market cap at $387.19M, most recent closing price at $5.99.
Over the last six months, insiders were net buyers of 1,249,383 shares, which represents about 2.7% of the company's 46.23M share float.
3. Resolute Energy Corporation (NYSE:REN): Engages in the acquisition, exploration, exploitation, and development of oil and gas properties primarily in onshore properties in the United States. Market cap at $654.53M, most recent closing price at $8.40.
Over the last six months, insiders were net buyers of 781,700 shares, which represents about 1.6% of the company's 48.71M share float.
4. SandRidge Energy, Inc. (NYSE:SD): Operates as an independent natural gas and oil company in the United States. Market cap at $3.52B, most recent closing price at $7.12.
Over the last six months, insiders were net buyers of 4,172,040 shares, which represents about 1.36% of the company's 306.14M share float.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Kapitall is a team of analysts. This article was written by James Dennin, one of our writers. We did not receive compensation for this article, and we have no business relationship with any company whose stock is mentioned in this article.