Market Overview

Three Small Cap Companies with Heavy Insider Buying

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Small cap companies, which have market capitalizations near or less than $2 billion, typically receive less news coverage than larger companies. This lack of news coverage creates a greater information asymmetry between investors and management.

Investors cannot easily obtain thorough news coverage about small cap companies, but members of senior management get an inside view of companies' day to day activities. As a result of this information asymmetry, shareholders might want to pay special attention to insider transactions by management of small cap companies.

Insiders have been buying shares of these three small cap companies:

Agree Realty Corporation (NYSE: ADC): Richard Agree, this real estate investment trust's CEO, purchased approximately 10,000 shares over the past week for a total cost close to $207,800. Real estate investment trusts are realty holding companies that trade on stock exchanges.

Joey Agree, the company's COO, recently spoke to Benzinga in an interview. Shares of Agree Realty are trading around 7.5% lower since its April 26 earnings release met the consensus earnings per share expectation of the two analysts who cover the stock.

Furiex Pharmaceuticals (NASDAQ: FURX): Fredric Eshelman, director of this drug development company, has purchased around 110,850 shares since May 18, with these recent purchases costing approximately $1,880,400.

Shares of Furiex are trading around 18.5% higher year to date, after recovering from a late April dip of more than 30%.

Vocus, Inc. (NASDAQ: VOCS): Richard Rudman, CEO of this cloud-based public relations software company, purchased around 65,000 shares on May 24 at an average price of $14.97 per share. This average price brings the cost of this purchase to around $973,050.

Shares of Vocus declined close to 41% during the days surrounding the company's disappointing Q4 earnings release in late February, but have since recovered somewhat, bolstered by Vocus' Q1 earnings release early this month. Vocus' shares are now trading nearly 32% lower year to date.

If management believes in these three companies, should you too?

Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.

Posted-In: Long Ideas News Small Cap Analysis Small Cap Insider Trades Trading Ideas Best of Benzinga

 

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