Insider activity is often worth observing. While such activity is not a pure indicator of when to buy or sell a stock, it is a good starting point upon which to perform analysis or a method of validating analysis already performed. Insider activity might provide an accurate profile of business prospects, based on the insiders' knowledge of the company and industry.
This list is of four small-cap technology companies that have experienced noticeable net stock purchases by insiders over the last six months, and into 2011. Insiders such as officers, directors, and beneficial owners must report their trades to the SEC within two business days. No matter the reason, insider activity is important news that the market and press should acknowledge.
American Superconductor Corporation (NASDAQ:AMSC)
- Industry: Diversified Electronics - Technology
- Market Cap: $387 million
- Insider Activity: Insiders purchased over 3% of the company’s float.
- Note: AMSC has lost about 70% of its market value over the last six months
Exar Corp. (NASDAQ:EXAR)
- Industry: Semiconductor – Integrated Circuits
- Market Cap: $278.2 million
- Insider Activity: Insiders purchased over 2.1 million shares, or over 5% of the float.
- Note: Soros Fund Management owns 14.86% of the outstanding shares.
GeoEye, Inc. (NASDAQ:GEOY)
- Industry: Information & Delivery Services
- Market Cap: $747 million
- Insider Activity: Insiders purchased over 800,000 shares, or approximately 4% of the float.
MoSys, Inc. (NASDAQ:MOSY)
- Industry: Semiconductor – integrated circuits
- Market Cap: $206 million
- Insider Activity: Insiders purchased over 500,000 shares or about 1.7% of the float.
- Note: Short interest is about 7.5%
Take these insider buys with a grain of salt. While many insiders seem to know what they are doing, many have lost money and also might even consider their insider purchase highly speculative. Additionally, several of these companies have significant short positions, indicating that many individuals in the market strongly disagree with the insider sentiment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.