The Contrarian's Edge: How Small Caps with Insider Buys Are Poised to Thrive in 2025

In a market riddled with uncertainty—trade wars, interest rate volatility, and geopolitical tensions—investors are increasingly turning to a time-tested strategy: buying undervalued stocks with robust fundamentals and insider buying activity. The logic is simple: when corporate insiders commit their own capital to shares of their company, it’s a signal of confidence in its long-term prospects. Nowhere is this clearer than in three overlooked small-cap Canadian firms: Clairvest Group (CVG), Major Drilling (MDI), and Tamarack Valley Energy (TVQ). Each boasts low price-to-earnings (P/E) ratios, sustainable revenue growth, and recent insider purchases that suggest they’re undervalued and primed for upside.

Clairvest Group: A Contrarian’s Dream with a 10.8 P/E

Clairvest, a Toronto-based investment firm, trades at a P/E of 10.8, well below the industry average of 15.5. Despite a complex portfolio—including stakes in logistics, waste management, and technology—the company’s net income rose 22.6% year-over-year to $23.9 million in Q1 2025.

What’s most compelling is insider activity: CEO Ken Rotman and other executives have quietly bought over $2.1 million in shares since late 2024. This buying coincides with strategic moves, such as the sale of non-core assets like Winters Bros. Waste Systems, which generated a 6.8x return on investment. While Clairvest’s stock is “highly illiquid,” its 1.2% dividend yield and focus on high-margin investments make it a rare value play in today’s market.

Major Drilling: Revenue Growth Amid a Net Loss—A Contrarian’s Bargain

Major Drilling’s Q1 2025 results were a study in contrasts: revenue surged 21% to $160.7 million, driven by the acquisition of Chilean miner Explomin, but margins compressed due to operational costs. Despite a net loss of $9.1 million, insiders like CFO Barry Lee Zerbin and COO Ghislain Leblanc have invested $207,000 in shares since March 2025.

The contrarian case here is clear: Major Drilling is positioned for a margin recovery. The company’s net cash position of $11.4 million and its focus on copper-rich projects in South America—where global demand is rising—suggest a turnaround is near.

Tamarack Valley Energy: Insider Buying at $2.50—A Low-Risk, High-Return Bet

Tamarack Valley Energy’s stock trades at just $2.95, near its 52-week low, yet insiders are buying aggressively. Directors and senior officers spent $4.3 million on shares in Q1 2025 alone, including a $252,000 purchase by director Rene Amirault on May 12.

Why the confidence? Tamarack’s free funds flow per share rose 100% year-over-year in Q1, and it repurchased 12.5 million shares to reduce dilution. With oil prices stabilizing near $80/barrel and the company’s Clearwater project hitting production targets, Tamarack’s P/E of 6.2—among the lowest in the Canadian oil sector—looks increasingly irrational.

The Contrarian Playbook: Why These Stocks Will Outperform

1. Low P/E = Margin of Safety: All three companies trade at P/E ratios far below their sectors, offering downside protection.
2. Insider Buying = Confidence: Executives are putting skin in the game, a rarity in turbulent markets.
3. Sustainable Growth: Clairvest’s asset sales, Major Drilling’s copper plays, and Tamarack’s production gains are tangible catalysts.

Act Now—Before the Crowd

These stocks aren’t glamorous. They’re not AI disruptors or biotech darlings. But in a market where fear drives prices lower, undervalued small caps with insider support are the ultimate contrarian plays. Investors who allocate capital now could reap rewards as these companies prove the skeptics wrong—and the market catches up.

The question isn’t whether to buy these stocks. It’s: Can you afford not to?

Disclosure: This article is for informational purposes only and not a recommendation to buy or sell securities.