Undervalued Small Caps With Insider Buying: A Global Opportunity in 2025

In the ever-evolving landscape of global equities, small-cap stocks often fly under the radar of institutional investors. Yet, 2025 has seen a surge in insider buying activity across these companies, signaling a potential inflection point for investors willing to dig deeper. Insider transactions, when combined with strong financial fundamentals, can serve as a powerful lens to identify undervalued opportunities. This analysis explores how small-cap stocks in North America, Asia, and Europe are leveraging insider confidence to navigate macroeconomic headwinds and position themselves for growth.

North America: Resilience Amidst Challenges

North American small-cap companies have demonstrated a unique blend of strategic insider confidence and operational resilience. Armada Hoffler Properties (AHH), a real estate firm, faced a $350K impairment in Q3 2025 but continued to attract insider purchases, reflecting optimism about its long-term value. Similarly, Utz Brands (UTZ), a snack food company, has relied on external borrowing to fund operations, yet insiders remain bullish, suggesting they see untapped potential in its market position.

The most striking example is Exzeo Group (XZO), an insurance company where CEO Pareshbhai Patel acquired 50,000 shares in November 2025. This move underscores management's belief in the company's ability to capitalize on regulatory shifts and market gaps. These cases highlight how insider buying can act as a counterbalance to short-term volatility, offering clues about a company's strategic direction.

Asia: Navigating Economic Shifts

Asian small-cap stocks have become focal points for investors seeking value in a region marked by divergent economic trajectories. Autosports Group (ASX:ASG) in Australia, for instance, has seen declining gross margins but has attracted insider purchases between October and November 2025. This activity suggests management anticipates a rebound in demand for its automotive services, despite near-term earnings declines.

In China, Shanghai Haohai Biological Technology (SEHK:6826) has faced falling sales and net income but maintains a robust earnings growth forecast of 21.81% annually. Insider buying here indicates confidence in its biotech pipeline, which could drive long-term value. Meanwhile, Ho Bee Land (SGX:H13) in Singapore, with a 57.41% gross profit margin, has seen insider purchases despite a projected 5.9% annual earnings decline, signaling a strategic bet on real estate recovery. Insider confidence in these companies underscores the importance of management's strategic vision.

The story is no less compelling in Australia's BWP Trust (ASX:BWP), which executed a $300 million fixed-income offering to bolster liquidity. Despite forecasts of a 10.6% annual earnings decline, insiders' continued investment highlights their belief in the trust's adaptability. These examples underscore how Asian small-caps are leveraging insider confidence to navigate structural challenges.

Europe: A Turnaround Story

European small-cap stocks have emerged as beneficiaries of looser monetary policies and a 1.60% rise in the STOXX Europe 600 Index in 2025. Kendrion, a German industrial company, turned a €7 million loss in 2024 into a €3.9 million net income in Q3 2025, supported by insider share purchases. Similarly, FirstGroup, a UK transport firm, reported improved operational efficiency, with earnings per share rising to GBP 0.099 for H1 2025, while insiders added to their holdings.

In the geotechnical sector, Fugro has demonstrated a 13.08% net income margin in mid-2024 and attracted insider confidence despite a dip in profit margins. Meanwhile, BHG Group in Sweden reported a SEK 11.2 million net income in Q3 2025, with insiders purchasing shares to signal optimism about its e-commerce expansion. These cases illustrate how European small-caps are leveraging insider actions to reinforce their turnaround narratives.

Risks and Considerations

While insider buying is a compelling indicator, it is not without risks. Many of these companies rely on external borrowing, as seen in HMC Capital (ASX:HMC), which raised A$20.3 million through insider purchases but faces liquidity constraints. Similarly, Eastnine, a European real estate firm, has strong sales growth but projects earnings declines due to debt-heavy operations. Investors must weigh these factors against insider confidence to avoid overestimating a company's potential.

Conclusion

The 2025 small-cap landscape is defined by a delicate balance of insider optimism and financial pragmatism. From North America's resilient real estate and food sectors to Asia's biotech and logistics plays and Europe's industrial and transport turnarounds, the common thread is a strategic alignment between management and shareholders. For investors, the key lies in scrutinizing both the numbers and the narrative-using insider transactions as a starting point, but not the sole determinant, for identifying high-conviction opportunities.