• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / U.S. Equity

Sifting Through Small-Caps

These smaller companies with recent insider buying look intriguing.
By BRET JENSEN
Sep 17, 2013 | 02:00 PM EDT
Stocks quotes in this article: OMER, NVAX, SWFT, CVGI, MCEP

Omeros (OMER) rose more than 60% yesterday on the back of some positive test results and a huge price target upward revision at Wedbush. I first mentioned this small biotech company a few weeks ago on Columnist Conversation, as it seemed to be getting buzz around some new compounds and picking up positive analyst chatter.

This follows a couple of other small-caps in my portfolio that have more than doubled over the past year, including Novavax (NVAX) and Swift Transportation (SWFT). What did all of these small-capitalization stocks have in common? They had several insider purchases prior to their big rises.

I believe insider buying is possibly a bigger positive catalyst at smaller companies than larger ones, which generally get much more extensive analyst coverage. They tend not to move as much on positive news because more is known about the company's developments and there are fewer true surprises. On the flip side, small-caps tend to make significant moves when a previously "unknown" catalyst hits the wires. Knowing what management and the directors are doing with their stock purchases becomes that much more important.

I am constantly sifting through the list of small-cap stocks with recent insider buying to find possible unappreciated gems. Here are two smaller companies with recent insider buying that look intriguing.

Commercial Vehicle Group (CVGI) is a leading global supplier of a full range of cab-related products and systems for the global commercial vehicle market. The company has a market capitalization of approximately $250 million. Two insiders have bought approximately $1.5 million in stock this month. This follows smaller purchases by another insider in August.

The company has faced a challenging 2013 and is tracking to a small profit this fiscal year on an approximate 6% decline in sales. Insiders seem to be anticipating a better environment for the company in 2014. The three analysts who cover the stock have a consensus projection calling for $0.77 in earnings per share (EPS) in 2014 on back of a low double-digit revenue gain.

The company is well diversified across product, geography and customer lines. Less than 80% of its revenues come from domestically where growth is stronger than in Europe. The company intends to increase sales overseas to 50% of overall revenue in the years ahead, mainly from faster growing emerging markets.

Mid-Con Energy Partners (MCEP) is a limited partnership that develops and produces oil and gas from its properties in Oklahoma and Colorado. It has a market capitalization of just below $500 million. An insider has purchased just under $400,000 in new shares so far in September. This follows some smaller purchases by another insider in August.

Like most stocks in high yield sectors, MCEP is down from its recent highs, due to the recent sharp rise in interest rates. Insiders might be assuming that interest rates are close to near-term plateaus and that the pullback offers a good entry point right now.

The company is experiencing rapid revenue growth with sales tracking to a 45% gain this year and analysts penciling in mid-double-digit growth for next fiscal year as well. Mid-Con offers a substantial distribution yield of 8.6%. The company came public in late 2011 and still has limited analyst coverage. The stock is priced at less than 11x forward earnings.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jensen was long OMER and NVAX.

TAGS: Investing | U.S. Equity

More from U.S. Equity

What's Next for the Markets? What the Charts and Data Reveal

Guy Ortmann
Feb 26, 2021 11:14 AM EST

The Rydex Ratio has turned neutral but insider buying remains absent.

Here's the Boeing Trade I Made Today

Timothy Collins
Feb 24, 2021 12:06 PM EST

I love this chart and I'm woefully underexposed in this area.

A Market Bounce Has the Potential to Fail

Guy Ortmann
Feb 24, 2021 10:52 AM EST

Insiders are increasing selling activity.

Following Some Quick Corrective Action, Stock-Pickers Are Back

James "Rev Shark" DePorre
Feb 24, 2021 7:08 AM EST

After the chaotic action Tuesday, I am looking for a renewed focus on stock-picking.

Preparing for the Next Market Move

James "Rev Shark" DePorre
Feb 23, 2021 1:42 PM EST

Now is the time to make sure you have maximum flexibility.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:32 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Navigating a Market Correction
  • 11:29 AM EST GARY BERMAN

    Where Does the Nasdaq Go From Here?

    Where does the Nasdaq Composite (CCMP) index go fr...
  • 12:31 PM EST GARY BERMAN

    Has the Short-Term Top Come for the XLF/Banks?

    The has triggered a long-term overbought signal ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login