Insiders Are Buying These Three Small Caps, Should You?

Insider activity can be a hint that good things are happening within a company. Find out which 3 Canadian companies insiders were buying last week.

The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

We outsiders, working primarily from publicly available financial information, don’t always have the full picture of what’s going on in a company.  No matter how much digging we do.

One group that has a more complete picture than us are known as insiders.  This collection typically consists of company management, directors, and/or financiers.

If we find a company through our own struggles that appears interesting, and then we uncover that insiders have recently bought, presumably based on more information than we have, it could be a solid indication that we might be on to something.

These three companies topped the list of insider purchases over the past 7 days in the Canadian market:

Espial Group (TSX:ESP)

Based in Ottawa, Espial carries a market cap of $10 million and has been alive since 1997.  The company is helping to transform television into an internet based, anywhere, anytime service.  Its software enable a wide range of services that include Live TV, Video-On-Demand, Personal Video Recorder, Electronic Program Guide, Interactive Browsing, Web TV, and Timeshift TV.

Even though it’s been around since 1997, this is still a very young company.  Its four largest shareholders, accounting for almost 62% of the shares outstanding, are venture capital related firms.  The fifth largest shareholder however is an individual and it was he who purchased 700,000 shares last week at $0.85.  His name is Michael Wekerle, a Bay Street legend.

Mr. Wekerle is associated with a company named Difference Capital (TSXV:DCF), a merchant bank and Espial’s fourth largest shareholder.  Difference Capital purchased 650,000 shares as well last week.  Combined, Wekerle and Difference now own 18.6% of the company.  Wekerle owns 7% on his own.

Elgin Mining (TSX:ELG)

Elgin operates a gold mine in Sweden and is attempting to rejuvenate two past producing gold mines in Nunavut.  The company also has an ownership stake and working interest options in several other developing gold projects in the U.S. and Mexico.

Elgin’s CEO picked up 500,000 shares at $0.48 last week.  This took his share count in the company to 1,996,500 and ownership stake to 1.35%.

Over the past 12 months, Elgin was actually free cash flow positive, a trait many gold miners, junior and senior, would love to share.  The company generated free cash of $0.07 per share.  With a stock price of $0.51, Elgin trades at a very attractive free cash flow yield of 13.7%.

Not only does this company generate free cash, the balance sheet looks good too.  With just $700k in total debt, leverage at Elgin is not an issue.

Insiders buying, free cash flow positive, and a clean balance sheet.  Not a bad starting trio, if you’re feeling speculative.

Crocotta Energy (TSX:CTA)

Crocotta is a junior oil and gas company headquartered in Calgary that Thomas Claugus just initiated a personal position of 419,500 shares in.  Claugus founded Atlanta-based hedge fund GMT Capital in 1990.  His personal position pales in comparison to the more than 9 million shares that GMT has recently accumulated.  This amounts to 10.4% of Crocotta.

Crocotta is currently producing about 9,000 boe/d, which is up four fold from its beginning production in 2010.  The company is after oil and liquids rich gas at its Edson and Montney projects.  Crocotta is not generating free cash but seemingly has the financial flexibility to continue developing these promising assets.  At least Claugus seemingly believes they are promising.

The Foolish Bottom Line

What’s right for insiders may not be right for Fools as financial circumstances and risk tolerance are entirely personal.  Always do your own due diligence, understand the risks/rewards, and if you like what you see, at least you’ll know you’re not alone.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler does not own shares in any of the companies mentioned in this report at this time.  The Motley Fool has no positions in the stocks mentioned above.

Should you invest $1,000 in Global X Enhanced Nasdaq-100 Covered Call Etf right now?

Before you buy stock in Global X Enhanced Nasdaq-100 Covered Call Etf, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Global X Enhanced Nasdaq-100 Covered Call Etf wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

a man relaxes with his feet on a pile of books
Investing

Got $7,000? How I’d Spread It Across 5 Blue-Chip Stocks for an Investing Foundation

Spreading $7,000 across these five blue-chip stocks provides a solid foundation for long-term financial success.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

How I’d Allocate $10,000 to AI Stocks in Today’s Market

Shopify (TSX:SHOP) is one of Canada's most compelling AI stocks.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Retirement

Top Canadian Value Stocks I’d Hold in My TFSA for the Next Decade

These Canadian value stocks have significant growth potential and will enhance your TFSA portfolio’s return in the long run.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »