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Do you like to follow the buying trends of smart money investors such as hedge fund managers and company insiders? These investors are considered to be in a strong informational position, so their trades are very interesting to the rest of the market.

Institutional investors such as hedge fund managers and mutual fund managers have access to sophisticated research and have a lot of experience in finance, whereas company insiders such as members of the board and upper management presumably know more about their company than anyone else.

To illustrate using their buying data, we ran a screen on the small-cap sector for stocks that have been outperforming the market, with quarterly performance above 20%. We then screened these names for significant net institutional purchases over the last quarter, making up at least 5% of share float. We also screened for stocks seeing significant net insider purchases over the last six months, making up at least 1% of share float.

Since there aren't many insiders at most companies, insider purchases representing 1% of share float is a significant show of confidence.

Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think these companies will outperform like the smart money expects? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases over the last six months as a percent of share float.

1. Furiex Pharmaceuticals, Inc. (FURX): Engages in the compound partnering business in the United States and Europe. Market cap at $212.23M. Price at $21.13. Performance over the last quarter at 32.65%. Net institutional purchases in the current quarter at 441.5K shares, which represents about 7.% of the company's float of 6.31M shares. Over the last six months, insiders were net buyers of 650,808 shares, which represents about 10.31% of the company's 6.31M share float.

2. Pacira Pharmaceuticals Inc. (PCRX): Engages in the development, commercialization and manufacture of pharmaceutical products for hospitals and ambulatory surgery centers. Market cap at $257.15M. Price at $9.70. Performance over the last quarter at 27.30%. Net institutional purchases in the current quarter at 6.6M shares, which represents about 49.81% of the company's float of 13.25M shares. Over the last six months, insiders were net buyers of 689,481 shares, which represents about 5.2% of the company's 13.25M share float.

3. Guaranty Bancorp (GBNK): Operates as the bank holding company for Guaranty Bank and Trust Company that provides various banking products and services to consumers and small and medium-sized businesses. Market cap at $202.73M. Price at $1.94. Performance over the last quarter at 28.19%. Net institutional purchases in the current quarter at 17.7M shares, which represents about 25.07% of the company's float of 70.61M shares. Over the last six months, insiders were net buyers of 746,787 shares, which represents about 1.06% of the company's 70.61M share float.

*Insider data sourced from Yahoo Finance, Institutional data sourced from Fidelity, all other data sourced from Finviz.

Source: 3 Outperforming Small Caps Bought Up By Insiders And Hedge Funds