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Small cap companies (market cap < $2 billion) are usually not followed by analysts and there are thousands of them. This makes selecting the best small caps to invest like finding a needle in a haystack. Insider purchases however, provide a good starting point, since insiders, especially executives and directors of small companies tend to know their companies 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 today. 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.

Cost Plus Inc. (CPWM) is a department stores company. It has a market cap of $495.30 million. According to today's SEC filing, Cost Plus has 2 insiders who purchased a total of 74,193,044 shares at the total value of $16,322,469. Multiple insider purchase occasions are usually a positive sign. Its stock price is 0.59% below 52-week high, a plus on the technical side. Its P/E ratio of 26.16 is on the expensive side. The PEG ratio is way above one, something to be cautious about. Cost Plus has an enterprise value / EBITDA ratio of 11.80. Its profit margin was 2.02% over the past year, low but typical for this line of business. The company had a net income of $20.88 million, EBITDA of $53.52 million, and gross profit of $309.62 million on revenue of $978.69 million. The trading volume has been consolidating recently. Because of its rich valuation, I'd avoid this company at this price level.

Cyberonics Inc. (CYBX) is a medical appliances & equipment company. It has a market cap of $1.23 billion. According to today's SEC filing, Cyberonics has one insider who purchased a total of 29,500 shares at the total value of $409,460. Its price shows near term strength, close to 52-week high (only 2.07% lower). Although its P/E ratio of 34.66 is on the expensive side, its sub-one PEG ratio suggests it's somewhat undervalued. Its profit margin was 16.51% over the past year. I like Cyberonics' operating margin of 28.15%, a good sign for the company's financial health. The company had a net income of $36.08 million on revenue of $218.50 million. Both its revenue and earnings grew in double digits over the latest quarter, by 12.70% and 43.50%, respectively. The company has no debt. This month, 2.63 million shares are being shorted. Comparing to 2.44 million shares shorted over the previous month, the shared short has increased by 7%. The short ratio of Cyberonics is 11.90, accounting for 12.90% of floating shares. This company is fairly appealing given the combination insider purchase, decent growth, good profit margin, and strength in stock price.

Firstbank Corporation (FBMI) is a Midwest bank. It has a market cap of $77.70 million. The company pays a dividend of 0.40%. According to today's SEC filing, Firstbank has 3 insiders who purchased a total of 1,021 shares at the total value of $960,777. Multiple insider purchase occasions are usually a positive sign. Its price shows near term strength, close to 52-week high (only 9.09% lower). Its price/book ratio is 0.63. Such a low price/book ratio often suggests the market is discounting the asset value of the company, making it potentially undervalued. Its profit margin of 12.84% and operating margin of 27.03% are both very healthy. Moreover, both its revenue and earnings grew in double digits over the latest quarter, by 17.50% and 98.90%, respectively. This company looks appealing.

Hampton Roads Bankshares Inc. (HMPR) is a mid-Atlantic bank. It has a market cap of $37.70 million. According to today's SEC filing, Hampton Roads Bankshares has 2 insiders who purchased a total of 37,718,178 shares at the total value of $26,402,723. Multiple insider purchase occasions are usually a positive sign. Its price shows near term weakness, close to 52-week low. The company is selling below book value (price/book = 0.42), something worth further investigation. The company is currently losing money operationally. Trading is fairly active with this company lately, reflected in elevated volume. This month, 1.24 million shares are being shorted. Comparing to 1.18 million shares shorted over the previous month, the shared short has increased by 5%. The short ratio of Hampton Roads Bankshares is 13.30, accounting for 9.50% of floating shares. This stock is OK for your watch list, but not particularly appealing based on its overall financial records.

Overland Storage Inc. (OVRL) is a data storage devices company. It has a market cap of $51.90 million. According to today's SEC filing, Overland Storage has one insider who purchased a total of 50,000 shares at the total value of $82,500. The company is currently losing money operationally. Its business has to turnaround for the situation to become more positive. The company had an EBITDA of $-15.37 million on a revenue of $61.90 million. The company has $13.77 million cash on its balance sheet. Its debt burden is $3.50 million. It may need to raise cash soon. Trading is fairly active with this company lately, reflected in elevated volume. I may put it on my watch list, but definitely not on top of the list.

VSE Corp. (VSEC) is a technical services company. It has a market cap of $125.80 million. The company pays a dividend of 1.30%. According to today's SEC filing, VSE has 2 insiders who purchased a total of 5,000 shares at the total value of $118,600. Multiple insider purchase occasions are usually a positive sign. At a P/E ratio of 5.34, the stock appears fairly cheap in valuation. The PEG ratio is much lower than one. Its price/book ratio is 0.85. VSE has an enterprise value / EBITDA ratio of 5.44. Since EV/EBITDA ratio already considers the debt burden, the valuation is quite cheap. The company had a net income of $23.05 million on revenue of $611.69 million. Its revenue declined by 4.60%, and its net income improved by 59.80% during the most recent quarter. Its debt burden is very high at $206.13 million. This can be crushing. The short ratio of VSE is 11.70, accounting for 5.20% of floating shares. The company appears attractive in valuation but its leverage risk has to be considered.

Source: Small Cap Insider Buys Today