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3 Undervalued Global Small Caps with Strategic Insider Buying Amidst Easing Inflation

Charles HayesSaturday, May 24, 2025 11:56 am ET

14min read

As inflation pressures ease and global markets recalibrate, savvy investors are turning to small-cap stocks offering both discounted valuations and the confidence of insider buying. In this volatile environment, three companies—Macfarlane Group (MACF), Nexus Industrial REIT (NXR), and Bytes Technology Group (9NY)—stand out for their compelling fundamentals, robust sector tailwinds, and signals of insider conviction. Here's why these undervalued gems are poised to outperform.

1. Nexus Industrial REIT (NXR): Insider Buying Signals Confidence in Industrial Demand

Why It's Undervalued:
Nexus Industrial REIT is trading at a P/E of 12.5x and an EV/EBITDA of 11.2x, below its five-year average. This discount overlooks its strong fundamentals: a 8.6% rise in Net Operating Income (NOI) in Q1 2025, driven by robust leasing activity in key markets like Ontario and Calgary. The REIT's transition to a “pure-play industrial” platform further strengthens its appeal in a post-pandemic world where e-commerce and supply-chain resilience dominate.

Insider Sentiment:
The most compelling signal is the Q2 2025 insider buying by Edwin E. McLaughlin, a 10% shareholder, who acquired 35,200 Trust Units worth $225,000 at prices between $6.14 and $6.61. This move, made during the quarter, reflects confidence in Nexus's development pipeline—projects like its $6.6 million annual NOI-boosting Calgary facility—and its ability to capitalize on easing inflation.

Data shows NXR outperforming the industrial REIT index by 4% YTD.

2. Bytes Technology Group (9NY): Cloud/AI Growth and Persistent Insider Conviction

Why It's Undervalued:
Bytes Technology's valuation is starkly disconnected from its growth: it trades at a P/E of 9.8x, despite a 15.2% jump in FY25 gross invoiced income to £2bn, fueled by soaring demand for cloud and AI solutions. The company's 4% UK market share in software sales leaves ample room for expansion, particularly as enterprises accelerate digital transformation.

Insider Sentiment:
While Q2 2025 saw no new insider buys, the trend remains strong: CEO Sam Mudd and Non-Executive Director Anna Vikström Persson have been consistent buyers since 2024, collectively investing £118,000 in open-market purchases. These informative buys—unlike routine sales by CFO Andrew Holden—signal executives' belief in the company's cloud/AI growth trajectory.

Revenue surged from £1.7bn in 2023 to £2bn in 2025, outpacing UK tech sector growth.

3. Macfarlane Group (MACF): Undervalued Logistics Leader with Strategic Buybacks

Why It's Undervalued:
Despite no recent insider buying, Macfarlane's P/B of 1.1x and P/E of 10.5x reflect a market undervaluing its logistics expertise and acquisition-driven growth. The company's acquisition of The Pitreavie Group in early 2025 expanded its warehousing capacity, while a £4m share buyback program underscores management's confidence.

The Case for Buying:
While insider activity has been limited—Group Finance Director Ivor Gray's Q1 sale of shares appears isolated—the broader story is one of operational strength. With organic revenue growth of 7% in FY25 and a 9.1% dividend yield, Macfarlane offers a rare combination of income and growth at a deep discount.

MACF trades at a 20% discount to its logistics peers' average P/E of 13x.

Why Now? Easing Inflation and Sector-Specific Tailwinds

Industrial REITs (NXR): Easing inflation reduces borrowing costs for developers, while supply-chain stability boosts occupancy.
Tech (9NY): Post-inflation, businesses prioritize cost-effective cloud solutions, favoring Bytes' scalable offerings.
Logistics (MACF): A recovering economy and pent-up demand for warehousing services will lift margins as Macfarlane's buyback reduces shares outstanding.

Action Items for Investors

Nexus Industrial REIT (NXR): Buy on dips below $6.50, targeting its £6.6m NOI-boosting projects and insider-backed growth.
Bytes Technology Group (9NY): Accumulate ahead of its May 2025 earnings report, with cloud/AI demand acting as a growth catalyst.
Macfarlane Group (MACF): Look for a pullback to £100/share, leveraging its buyback and dividend yield.

In a market seeking value and conviction, these three small caps offer both. With insider activity, robust fundamentals, and macro tailwinds aligning, now is the time to act.

Disclosures: The author holds no positions in the mentioned securities.

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