12 Small-Cap Stocks With Insider Buying

Published on March 9, 2023 at 3:00 pm by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 small-cap stocks with insider buying. If you want to see more stocks in this selection, check out 5 Small-Cap Stocks With Insider Buying.

Insider buying refers to a company’s officers, directors, or major shareholders purchasing shares of their own company’s stock. Insider purchases can send a positive signal to the market that insiders believe the company’s stock is undervalued and has potential for future growth. They also align the interests of the company’s management and shareholders. Insider buying can increase transparency and accountability by providing information about the company’s financial health and growth potential. This information can help investors make more informed decisions about whether to invest in the company’s stock.

According to a report from Argus Research in June 2022, corporate insiders seemed to recognize the value of their stocks, as per high trading activity at the time. Vickers Stock Research data was cited by Argus, which noted that insiders purchased shares of their respective companies in large numbers during June’s significant stock market decline. The report stated that the data indicates that corporate insiders were either buying their own company’s stock at the same frequency as they were selling it, or they were buying more than they were selling. This surge in insider buying resulted in a sell-to-buy ratio of almost 1.0 in the eight-week period, which the report described as a “very healthy” level. Typically, insiders tend to sell their shares 2-2.5 times more frequently than they purchase them. Argus further explained:

“While there are many reasons to think stocks could fall further, current insider sentiment is not one of them. Insiders apparently see across-the-board value in stocks as they are ‘keeping the faith.’”

Investors should pay attention to the positive signal sent by corporate insiders, especially in light of the current economic climate. With inflation at a 40-year high, interest rates increasing rapidly, and the possibility of a recession looming, insider buying can provide reassurance to investors about the potential health and stability of their investments. Some of the companies which experienced significant insider buying in 2022 include Occidental Petroleum Corporation (NYSE:OXY), Analog Devices, Inc. (NASDAQ:ADI), and Sysco Corporation (NYSE:SYY). However, in this article, we discuss the top small-cap stocks with insider buying.

Our Methodology

We used a stock screener to filter for small-cap stocks, which have market caps between $300 million to $2 billion. Then we filtered for companies with insider transactions of more than 20%. This metric represents six-month percentage change in total insider ownership. We preferred stocks with insider purchases in the last six months. The resultant dataset was ranked according to market cap in the descending order, and we selected the top small-cap firms with insider purchases during 2022 onwards. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the fourth quarter of 2022. 12 Small-Cap Stocks With Insider Buying

Photo by Adam Nowakowski on Unsplash

Small-Cap Stocks With Insider Buying

12. MillerKnoll, Inc. (NASDAQ:MLKN)

Number of Hedge Fund Holders: 15

MillerKnoll, Inc. (NASDAQ:MLKN) designs, manufactures, and distributes interior furnishings worldwide. On October 3, 2022, a director at MillerKnoll, Inc. (NASDAQ:MLKN) purchased 60,606 shares of the company valued at $16.88 each. As of March 10, 2023, the stock is priced at $22.63, which indicates a return of 34% since the director purchased the company shares.

On March 1, MillerKnoll, Inc. (NASDAQ:MLKN) declared a $0.1875 per share quarterly dividend, in line with previous. The dividend is payable on April 15, to shareholders of record on March 4.

According to Insider Monkey’s Q4 data, 15 hedge funds were bullish on MillerKnoll, Inc. (NASDAQ:MLKN), and Nantahala Capital Management held the largest stake in the company.

In addition to Occidental Petroleum Corporation (NYSE:OXY), Analog Devices, Inc. (NASDAQ:ADI), and Sysco Corporation (NYSE:SYY), insider purchases occurred at MillerKnoll, Inc. (NASDAQ:MLKN) in 2022.

Vulcan Value Partners made the following comment about MillerKnoll, Inc. (NASDAQ:MLKN) in its Q3 2022 investor letter:

“MillerKnoll, Inc. (NASDAQ:MLKN) is facing what we estimate to be short-term challenges that have negatively impacted its stock price. The company grew revenue 12% organically in the quarter. It has approximately a $900 million order backlog, and over the last two years, MillerKnoll has implemented favorable pricing within that backlog. As they continue to work through the backlog and ship to customers, we are starting to see the benefits of the price increases accrue to the gross margin line. Unfortunately, the full benefit of net price realization is being tempered by continued commodity and transportation inflation. While MillerKnoll remains profitable, those profits, at least in the most recent quarter, did not translate into positive cash flow given the company’s investment in working capital. As we go into a tougher economic environment, we feel confident in the company as we believe it to be a well-managed business with well-known brands trading at a discount to our estimate of value.”

11. JBG SMITH Properties (NYSE:JBGS)

Number of Hedge Fund Holders: 14

JBG SMITH Properties (NYSE:JBGS) owns, manages, finances, and constructs a diverse set of mixed-use real estate assets with significant growth potential in and near Washington, DC. In 2022, JBG SMITH Properties (NYSE:JBGS) directors acquired about 15,000 shares of the company during May and August, priced between $23.15 and $24.67. On August 23, a director acquired 50,000 shares valued at $23.15 per unit. As of March 10, each share is priced at $15.88, indicating a negative return of 45.7% since the director purchased the company shares.

On March 3, JBG SMITH Properties (NYSE:JBGS) reported that the initial stage of construction for Amazon’s new “National Landing” headquarters is proceeding as planned and is set to open in the summer of 2023 without any interruptions or delays. Amazon’s new Met Park offices will provide room for as many as 14,000 Amazon employees, including the 8,000 current Amazon workers. JBG SMITH Properties (NYSE:JBGS) has indicated that it is still collaborating with Amazon on the next stage of the project, which will consist of three office structures and The Helix and will occupy 3.3 million square feet.

According to Insider Monkey’s Q4 data, JBG SMITH Properties (NYSE:JBGS) was part of 14 hedge fund portfolios, compared to 12 in the prior quarter. John Khoury’s Long Pond Capital is the biggest position holder in the company, with 8.5 million shares worth $161.7 million.

Here is what Aristotle Capital Management Small Cap Equity has to say about JBG SMITH Properties (NYSE:JBGS) in its Q1 2022 investor letter:

“JBG SMITH Properties (NYSE:JBGS), a Washington DC-based owner, operator and developer of residential, office, retail and mixed-use real estate properties, was added to the portfolio. We initiated a position, as we believe the firm’s healthy multi-year development pipeline anchored by Amazon’s new headquarters (Amazon HQ2) should benefit from improved economic activity in the area as businesses increasingly return to the office.”

10. Nuvalent, Inc. (NASDAQ:NUVL)

Number of Hedge Fund Holders: 18

Nuvalent, Inc. (NASDAQ:NUVL) is a Massachusetts-based clinical stage biopharmaceutical company that develops therapies for patients with cancer. On November 3, 2022, a director purchased 149,253 shares of Nuvalent, Inc. (NASDAQ:NUVL), priced at $33.50 each. As of March 10, the stock trades at $27.67, indicating a negative return of 17.4% since the director purchased the company shares.

On January 18, Wedbush analyst David Nierengarten initiated coverage of Nuvalent, Inc. (NASDAQ:NUVL) with an Outperform rating and a $39 price target. The analyst believes that Nuvalent’s shares are currently undervalued. He thinks that the company’s portfolio of selective, brain-penetrant TKIs has the potential to be the best-in-class due to their ability to target mutations that previous generation drugs cannot. This belief was confirmed by the initial Phase 1 ARROS-1 data from lead candidate NVL-520, a selective ROS1 inhibitor, which demonstrated excellent activity in TKI pre-treated ROS1 positive NSCLC, making it the best-in-class, according to the analyst.

According to Insider Monkey’s Q4 data, 18 hedge funds were bullish on Nuvalent, Inc. (NASDAQ:NUVL), up from 15 funds in the preceding quarter. Deerfield Management held the biggest position in the company.

9. Minerals Technologies Inc. (NYSE:MTX)

Number of Hedge Fund Holders: 14

Minerals Technologies Inc. (NYSE:MTX) is a New York-based company that develops, produces, and commercializes specialty mineral, mineral-based, and synthetic mineral products, as well as supporting systems and services. On March 6, 2023, a director at Minerals Technologies Inc. (NYSE:MTX) acquired 822 shares of the company, priced at $60.82 each. As of March 10, the stock trades at $58.93, indicating a negative return of 3.10% since the director purchased the company shares.

On January 25, Minerals Technologies Inc. (NYSE:MTX) declared a quarterly dividend of $0.05 per share, in line with previous. The dividend is distributable on March 9, to shareholders of record as of February 16.

Investment advisory Sidoti downgraded Minerals Technologies Inc. (NYSE:MTX) to Neutral from Buy with a $70 price target on February 3. Analyst Steve Ferazani issued the ratings update.

According to Insider Monkey’s Q4 data, 14 hedge funds reported owning stakes in Minerals Technologies Inc. (NYSE:MTX), compared to 16 funds in the earlier quarter. Mario Gabelli’s GAMCO Investors is the largest stakeholder of the company, with 213,400 shares valued at nearly $13 million.

Carillon Tower Advisers made the following comment about Minerals Technologies Inc. (NYSE:MTX) in its Q3 2022 investor letter:

“Minerals Technologies Inc. (NYSE:MTX) produces performance-enhancing minerals for manufacturers of paper, steel, polymers, and other materials that are used in a variety of consumer and industrial products. The company experienced double digit revenue growth in all segments in the prior quarter, but cost inflation and unfavorable currency fluctuations pressured margins.”

8. Kymera Therapeutics, Inc. (NASDAQ:KYMR)

Number of Hedge Fund Holders: 15

Kymera Therapeutics, Inc. (NASDAQ:KYMR) is a Massachusetts-based biopharmaceutical company that aims to find and create new types of small molecule therapies that can target and break down specific disease-causing proteins by utilizing the body’s natural protein degradation process. There have been frequent insider purchases at Kymera Therapeutics, Inc. (NASDAQ:KYMR) in 2022 and 2023, making it one of the best small-cap stocks with insider buying. On January 12, 2023, a director purchased 15,912 shares of the company, priced at $31.24 each. As of March 10, the stock trades at $30.94, indicating a negative return of 1% since the director purchased the company shares.

As of December 31, 2022, Kymera Therapeutics, Inc. (NASDAQ:KYMR) had approximately $559.5 million in cash, cash equivalents, and investments. Kymera Therapeutics, Inc. (NASDAQ:KYMR) anticipates that its current cash and cash equivalents will sustain the company’s operations until the latter half of 2025. This period is expected to include the completion of Phase 2 testing for KT-474 and initial proof-of-concept testing for KT-413, KT-333, and KT-253. Kymera also plans to seek out opportunities to enhance growth and broaden its pipeline, technologies, and clinical applications during this time.

On December 15, B. Riley analyst Kalpit Patel raised the firm’s price target on Kymera Therapeutics, Inc. (NASDAQ:KYMR) to $37 from $35 and maintained a Neutral rating on the shares after the company announced data assessing KT-474 in patients with hidradenitis suppurativa and atopic dermatitis.

According to Insider Monkey’s fourth quarter database, 15 hedge funds were long Kymera Therapeutics, Inc. (NASDAQ:KYMR), compared to 19 funds in the prior quarter. Mark Lampert’s Biotechnology Value Fund / BVF Inc is the largest stakeholder of the company, with 4.7 million shares worth $117 million.

7. The Bancorp, Inc. (NASDAQ:TBBK)

Number of Hedge Fund Holders: 17

The Bancorp, Inc. (NASDAQ:TBBK) was incorporated in 1999 and is headquartered in Sioux Falls, Delaware. It operates as the financial holding company for The Bancorp Bank that provides banking products and services in the United States. On February 23, 2023, a director acquired 1400 shares of The Bancorp, Inc. (NASDAQ:TBBK), priced at $34.65 per share. As of March 10, the stock is trading at $31.01, indicating a negative return of 10.5% since the director purchased the company shares.

On January 26, The Bancorp, Inc. (NASDAQ:TBBK) reported Q4 GAAP earnings per share of $0.71 and a revenue of $102.5 million, outperforming Wall Street estimates by $0.01 and $29.78 million, respectively. Revenue over the period climbed 27.5% on a year-over-year basis.

Piper Sandler analyst Frank Schiraldi maintained an Overweight rating on The Bancorp, Inc. (NASDAQ:TBBK) but lowered the firm’s price target on the shares to $29 from $31 on October 12. In a research note to investors, the analyst stated that bank-as-a-service (BaaS) companies are still providing profitable investment prospects in the banking sector. Despite traditional banks being unpopular due to the possibility of a recessionary period, Schiraldi anticipates significant growth trends in BaaS due to high demand for debit partnership and natural asset sensitivity.

According to Insider Monkey’s fourth quarter database, 17 hedge funds were long The Bancorp, Inc. (NASDAQ:TBBK), compared to 15 funds in the prior quarter. Connor Haley’s Alta Fox Capital Management is the largest stakeholder of the company, with 276,900 shares worth $7.85 million.

6. Criteo S.A. (NASDAQ:CRTO)

Number of Hedge Fund Holders: 17

Criteo S.A. (NASDAQ:CRTO) is a technology company that offers marketing and monetization services on the open Internet. On November 7, 2022, a director at Criteo S.A. (NASDAQ:CRTO) purchased 495 shares of the company valued at $23.86 each. As of March 10, 2023, the stock trades at $30.61, indicating a return of 28.2% since the director purchased the company shares.

Matthew Thornton, an analyst at Truist, increased the firm’s price target on Criteo S.A. (NASDAQ:CRTO) from $35 to $40 and maintained a Buy rating on the stock on February 14, following its Q4 earnings report. The analyst incorporated the recent news from Reuters that Criteo S.A. (NASDAQ:CRTO) is exploring a potential sale into the firm’s financial model. Truist remains optimistic about Criteo due to its potential for mergers and acquisitions and its continued share buybacks during a promising phase of product development.

According to Insider Monkey’s fourth quarter database, 17 hedge funds were bullish on Criteo S.A. (NASDAQ:CRTO), compared to 15 funds in the earlier quarter. Michael Platt and William Reeves’ BlueCrest Capital Mgmt. is the largest stakeholder of the company, with 2.26 million shares worth $58.8 million.

In addition to Occidental Petroleum Corporation (NYSE:OXY), Analog Devices, Inc. (NASDAQ:ADI), and Sysco Corporation (NYSE:SYY), insider purchases occurred at Criteo S.A. (NASDAQ:CRTO) in 2022.

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