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Why do insider purchase matters for small companies? Because small companies often have no analysts following them. This means choosing the right micro-cap (market cap < $300 million) can be very profitable. In fact, the Russell 2000 index outperformed the S&P 500 significantly over the past ten years: Russell 2000 index returns were 66% vs. the S&P 500 (25%).

Choosing the right small companies to invest in can be daunting: Where should you start? Insiders, especially executives and directors of small companies tend to know their company very well. Tracking their stock purchase activities is a very good point to start for lucrative returns.

Below is a list of notable insider purchases of micro-cap stocks (market cap <$300 million) during the past week, filed at the Securities and Exchange Commission. Following Seeking Alpha's micro-cap policy, all the stocks in the table are greater than $1 per share or have at least a $100 million market cap.

I have written a short analysis of each company's financial records. However, these are not buy and sell 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 $20,000.

On this week's list, the most positive company based on the financial records is First Advantage Bancorp.

BPZ Resources, Inc. (NYSE:BPZ) is a basic materials company, specifically in the industry of oil & gas drilling & exploration. It has a market cap of $292.25 million. Over the past week, BPZ Resources has one insider who purchased a total of 25,000 shares at the total value of $56,200. The company is currently losing money operationally. Its business has to turn around for the situation to become more positive. What to do: Despite insider purchase, I'm not very positive about BPZ's prospects.

First Advantage Bancorp. (OTCQB:FABK) is a financial company, specifically in the industry of regional - southeast banks. It has a market cap of $53.18 million. Over the past week, First Advantage Bancorp. has five insiders who purchased a total of 1,884 shares at a total value of $25,526. Multiple insider purchases are usually a positive sign. The stock price has been within a fairly narrow range over the past twelve months. I like First Advantage Bancorp.'s operating margin of 25.14%, a good sign for the company's financial health. Over the past 10 days, First Advantage Bancorp. has seen significantly higher than average trading volume. In summary: The company appears attractive.

GenMark Diagnostics, Inc. (NASDAQ:GNMK) is a healthcare company, specifically in the industry of medical appliances & equipment. It has a market cap of $91.72 million. Over the past week, GenMark Diagnostics has eight insiders who purchased a total of 205,715 shares at the total value of $864,003. Multiple insider purchase occasions are usually a positive sign. The company is currently losing money operationally. Its business has to turn around for the situation to become more positive. Over the past ten days, GenMark Diagnostics has seen significantly higher than average trading volume. To conclude: This stock is OK for your watch list, but not particularly appealing based on its overall financial records.

Handy & Harman Ltd. (NASDAQ:HNH) is an industrial goods company, specifically in the industry of industrial equipment & components. It has a market cap of $177.01 million. Over the past week, Handy & Harman Ltd. has one insider who purchased a total of 8,930 shares at the total value of $116,063. My thoughts: I would not buy the stock at this point.

Orchard Supply Hardware Stores Corporation (OSH) is a services company, specifically in the industry of home improvement stores. It has a market cap of $100.00 million. Over the past week, Orchard Supply Hardware Stores has one insider who purchased a total of 218,967 shares at the total value of $339,398. In summary: There isn't enough financial evidence to back up a bullish case for this company.

Palomar Medical Technologies Inc. (NASDAQ:PMTI) is a healthcare company, specifically in the industry of medical appliances & equipment. It has a market cap of $166.00 million. Over the past week, Palomar Medical Technologies has one insider who purchased a total of 82,100 shares at the total value of $330,938. One concern is the company isn't profitable at this point. In conclusion: I would not buy the stock at this point.

Rockwell Medical Technologies Inc. (NASDAQ:RMTI) is a healthcare company, specifically in the industry of medical appliances & equipment. It has a market cap of $194.18 million. Over the past week, Rockwell Medical Technologies has one insider who purchased a total of 5,000 shares at the total value of $42,650. The company is currently losing money operationally. Its business has to turn around for the situation to become more positive. The verdict: Despite insider purchase, I'm not very positive about the company's prospect.

Source: 7 Notable Micro Cap Insider Buys This Week