Why Insider Buying in Undervalued Small Caps Signals High-Conviction Opportunities in 2025

When insiders—especially executives and board members—pour their own money into a stock, it’s a signal worth heeding. In 2025, three global small-cap stocks—Harmonic Inc. (HLIT), Kogan.com (KGN.AX), and Zibuyu Group (2420.HK)—are generating buzz among value investors due to aggressive insider buying, compelling fundamentals, and growth catalysts that suggest near-term undervaluation and long-term upside. Let’s break down why these names could outperform the market.

Harmonic: A Tech Play with a Clear Upgrade Path

Harmonic Inc., a leader in video and broadband infrastructure, has seen insiders purchase 4,000 shares in Q3 2025, signaling confidence in its strategic direction [1]. The stock trades at a reasonable P/E of 12.75, well below its 10-year average of 20.12 [2], making it a rare blend of value and growth potential.

The catalyst? DOCSIS 4.0 adoption. In Q2 2025, Harmonic reported $138 million in revenue, beating expectations, and guided for $75–85 million in broadband revenue for Q3 [3]. CEO Nimrod Ben-Natan has emphasized that while 2025 upgrades are modest, the rollout of DOCSIS 4.0—a next-gen broadband standard—will drive demand in 2026. This creates a "buy the rumor, sell the news" scenario for 2025, as investors price in future growth today.

Kogan.com: A High-Risk, High-Reward Retail Play

Kogan.com, the Australian e-commerce giant, has seen massive insider buying in 2025. CEO Ruslan Kogan purchased 3.01 million shares at $3.01 apiece in February, while an independent director added 64,545 shares at $2.67 in August [4]. These purchases suggest insiders see value in a stock that’s trading at a negative P/E of -10.15 due to a $0.39-per-share loss in FY25 [5].

But here’s the twist: Kogan’s losses are temporary. The company reported a 6.2% revenue increase to $488.1 million in FY25, driven by a 15.1% rise in gross sales [6]. Its share buyback program—$11.16 million spent in FY25—also reduces shares outstanding, potentially boosting future EPS. While the high P/E ratio (233.5x) reflects speculative expectations, the insider activity and strategic reinvestment in logistics and tech suggest a turnaround is in motion.

Zibuyu Group: A Value Play with Operational Gains

Zibuyu Group, a Chinese e-commerce and logistics firm, offers a more traditional value story. Its P/E of 10.8x is 30% below its 3-year average and significantly cheaper than its 14.6x peer average [7]. Insiders, including founder YU Feng, have been inactive in recent months, but the company’s financial moves are telling: it redirected $19.2 million in IPO proceeds to Amazon advertising and branding, aiming to boost sales and efficiency [8].

The results? Zibuyu’s H1 2025 profit rose 30–40%, driven by improved gross margins (74.90%) and a 4.53% net profit margin [9]. Analysts estimate its fair value at HK$6.11, implying a 40% upside from its current price. With a debt-to-equity ratio of 30.35% and $1.25 billion in assets, Zibuyu’s balance sheet is robust enough to fund growth without overleveraging.

The Bottom Line: Why These Stocks Matter

Small-cap stocks often get overlooked by institutional investors, but insider buying—especially when it’s concentrated and recurring—can reveal hidden gems. Harmonic’s tech-driven growth, Kogan’s strategic reinvestment, and Zibuyu’s operational efficiency all point to companies where management is betting on their own future.

For value investors, the key is to separate short-term noise from long-term potential. While Kogan’s losses and Zibuyu’s lack of insider activity may raise eyebrows, the fundamentals and insider actions for all three stocks suggest they’re being priced for pessimism, not optimism.

Source:
[1] Harmonic Inc. (HLIT) recent insider transactions [https://nz.finance.yahoo.com/quote/HLIT/insider-transactions/]
[2] Harmonic PE Ratio 2010-2025 | HLIT [https://www.macrotrends.net/stocks/charts/HLIT/harmonic/pe-ratio]
[3] Harmonic Announces Second Quarter 2025 Results [https://investor.harmonicinc.com/news-releases/news-release-details/harmonic-announces-second-quarter-2025-results]
[4] Kogan.com Ltd (KGN.AX) recent insider transactions [https://nz.finance.yahoo.com/quote/KGN.AX/insider-transactions/]
[5] PE Ratio - Kogan.com Ltd [https://www.wisesheets.io/pe-ratio/KGN.AX]
[6] Kogan.com Reports Strong FY25 Financial Performance with Strategic Growth Initiatives [https://www.tipranks.com/news/company-announcements/kogan-com-reports-strong-fy25-financial-performance-with-strategic-growth-initiatives]
[7] PE Ratio - Zibuyu Group Limited [https://www.wisesheets.io/pe-ratio/2420.HK]
[8] Zibuyu Group Limited Redirects IPO Proceeds to Boost Sales and Branding [https://www.tipranks.com/news/company-announcements/zibuyu-group-limited-redirects-ipo-proceeds-to-boost-sales-and-branding]
[9] BRIEF: Zibuyu's profit rises more than 30% in first half of 2025 [https://thebambooworks.com/brief-zibuyus-profit-rises-more-than-30-in-first-half-of-2025/]