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Small-cap companies are usually not followed by analysts, which makes choosing the right small-cap (market cap < $500 million) more difficult. Choosing the right small companies to invest can be daunting; however, instead purchases provide a good starting point. Insiders, especially executives and directors of small companies tend to know their company very well. Tracking their stock purchase activities can generate lucrative returns.

Below is a list of notable insider purchases of small-cap stocks filed at the Securities and Exchange Commission Wednesday. Following Seeking Alpha's small-cap policy, all the stocks in the table are greater than $1 per share or $100 million market cap.

I have written a short analysis of each company's financial records. However, these are not buying and selling recommendations. It is also important to pay attention to how much the insiders buy, especially with respect to the size of their company and their regular income. I have filtered out those transactions with a total value of less than $10,000. As Peter Lynch pointed out in his book, One Up On Wall Street, insiders sell for various reasons, which is usually not very informative unless they are dumping shares like there is no tomorrow. Insiders buy for one reason: they are signaling that they have confidence in the company's future performance. Of course, insiders could be wrong. It is nevertheless a good starting point to add those stocks to watch list.

Arbor Realty Trust Inc. (ABR) is a financial company, specifically in the industry of REIT - diversified. It has a market cap of $122.46 million. According to Wednesday's SEC filing, Arbor Realty Trust has one insider who purchased a total of 10,000 shares at the total value of $50,670. The company is currently losing money operationally. Its business has to turnaround for the situation to become more positive. Over the past ten days, Arbor Realty Trust has seen significantly higher than average trading volume. In summary: The company has a decent dividend payout that provides a minimum margin of safety. A lot of caution should be used while watching new progress.

AAR Corp. (AIR) is an industrial goods company, specifically in the industry of aerospace/defense products & services. It has a market cap of $399.83 million. According to Wednesday's SEC filing, AAR has 2 insiders who purchased a total of 25,000 shares at the total value of $270,850. Multiple insider purchase occasions are usually a positive sign. Its price is only around 17.60% off its 52-week low. While the stock appears it might have bottomed. Investors should proceed with caution. This company's value seems reasonable with a sub-one PEG ratio, suggesting its growth is outpacing its valuation. I believe AAR's operating margin of 7.32% is acceptable. What to do: The company has a decent dividend payout that provides a minimum margin of safety. The company appears attractive.

American Independence Corp. (AMIC) is a financial company, specifically in the industry of accident & health insurance. It has a market cap of $34.74 million. According to Wednesday's SEC filing, American Independence has one insider who purchased a total of 7,500 shares at the total value of $35,315. I believe American Independence's operating margin of 5.47% is acceptable. Over the past ten days, American Independence has seen significantly higher than average trading volume. In conclusion: It doesn't appear to be at a point of entry yet. Watch.

Blonder Tongue Laboratories Inc. (BDR) is a technology company, specifically in the industry of communication equipment. It has a market cap of $7.33 million. According to Wednesday's SEC filing, Blonder Tongue Laboratories has one insider who purchased a total of 20,999 shares at the total value of $26,135. One concern is the company isn't profitable at this point. Low recent trading volume can be negative or positive. It can be negative because it will be difficult for people to discover this micro-cap. It can be positive because ignored stocks tend to be undervalued. The conclusion: There aren't enough positive factors to buy this company based on insider purchase alone.

CKX Lands Inc. (CKX) is a basic materials company, specifically in the industry of independent oil & gas. It has a market cap of $23.89 million. According to Wednesday's SEC filing, CKX Lands has one insider who purchased a total of 1,000 shares at the total value of $13,878. I like CKX Lands' operating margin of 72.96%, a good sign for the company's financial health. The trading volume has been consolidating recently. To conclude: The company has a decent dividend payout that provides a minimum margin of safety. It doesn't appear to be at a point of entry yet. Watch.

CytRx Corporation (CYTR) is a healthcare company, specifically in the industry of biotechnology. It has a market cap of $87.57 million. According to Wednesday's SEC filing, CytRx has one insider who purchased a total of 16,493 shares at the total value of $75,111. One concern is the company isn't profitable at this point. Thinning trading volume suggests that trading interest in the company is waning. My thoughts: There aren't enough positive factors to buy this company based on insider purchase alone.

Ambassadors Group Inc. (EPAX) is a services company, specifically in the industry of education & training services. It has a market cap of $87.88 million. According to Wednesday's SEC filing, Ambassadors Group has one insider who purchased a total of 16,117 shares at the total value of $81,423. This company's value seems too rich with a relatively high PEG ratio of 1.45. I believe Ambassadors Group's operating margin of 6.04% is acceptable. The final words: The company has a decent dividend payout that provides a minimum margin of safety. This is likely a stock very low on my watch list.

GP Strategies Corp. (GPX) is a services company, specifically in the industry of education & training services. It has a market cap of $313.08 million. According to Wednesday's SEC filing, GP Strategies has 2 insiders who purchased a total of 1,600 shares at the total value of $26,782. Multiple insider purchase occasions are usually a positive sign. Given that its price is only 7.31% lower than its 52-week high, the overall market sentiment appears positive. The well-above-one PEG ratio suggests it's somewhat overvalued. I believe GP Strategies' operating margin of 8.18% is acceptable. The recent trading volume is below average.

Norwood Financial Corp. (NWFL) is a financial company, specifically in the industry of regional - northeast banks. It has a market cap of $91.21 million. According to Wednesday's SEC filing, Norwood Financial has one insider who purchased a total of 2,000 shares at the total value of $55,780. Its stock price is about 0.43% below its 52-week high, usually a positive technical indicator on the company. Norwood Financial Corp. has a very healthy operating margin of 45.72%. The recent trading volume is below average. To summarize: The company has a decent dividend payout that provides a minimum margin of safety. This is a relatively safe play.

PROLOR Biotech, Inc. (PBTH) is a healthcare company, specifically in the industry of biotechnology. It has a market cap of $270.44 million. According to Wednesday's SEC filing, PROLOR Biotech has one insider who purchased a total of 5,000 shares at the total value of $24,045. The conclusion: There isn't enough financial evidence to back up a bullish case for this company.

Pope Resources LP (POPE) is an industrial goods company, specifically in the industry of lumber, wood production. It has a market cap of $238.22 million. According to Wednesday's SEC filing, Pope Resources LP has one insider who purchased a total of 1,909 shares at the total value of $104,758. Given that its price is only -0.10% lower than its 52-week high, the overall market sentiment appears positive. My thoughts: The company has a decent dividend payout that provides a minimum margin of safety. But I'd avoid this company at this price level.

Peerless Systems Corp. (PRLS) is a services company, specifically in the industry of computers wholesale. It has a market cap of $12.98 million. According to Wednesday's SEC filing, Peerless Systems has one insider who purchased a total of 9,748 shares at the total value of $36,554. Given that its price is only 16.33% lower than its 52-week high, the overall market sentiment appears positive. I don't like Peerless Systems' operating margin of 2.56%, a sign for the company's shaky financial health. To summarize: I do not see enough evidence for establishing a position.

SJW Corp. (SJW) is an utilities company, specifically in the industry of water utilities. It has a market cap of $437.17 million. According to Wednesday's SEC filing, SJW has one insider who purchased a total of 860 shares at the total value of $20,210. Given that its price is only 5.69% lower than its 52-week high, the overall market sentiment appears positive. The well-above-one PEG ratio suggests it's somewhat overvalued. SJW Corp. has a very healthy operating margin of 22.53%. In summary: The company has a decent dividend payout that provides a minimum margin of safety.

Harris & Harris Group, Inc. (TINY) is a financial company, specifically in the industry of diversified investments. It has a market cap of $113.15 million. According to Wednesday's SEC filing, Harris & Harris Group has one insider who purchased a total of 3,000 shares at the total value of $10,932. One concern is the company isn't profitable at this point. In summary: I do not see enough evidence for establishing a position.

Source: Small Caps Purchased By Insiders Wednesday