We recently published a list of 12 Stocks with Heavy Insider Buying in 2025. In this article, we are going to take a look at where CompoSecure, Inc. (NASDAQ:CMPO) stands against other stocks with heavy insider buying in 2025.
Insider trading is often seen as an important indicator of management’s confidence in their company’s future. For decades, top investors and analysts have endorsed this idea, arguing that insiders purchase shares of their own companies for one primary reason – if they firmly believe the stock price will increase significantly and grow the value of their investment. This idea stems from the fact that insiders, such as high ranked executives and directors, possess confidential information and data that helps them draw insights into the company’s outlook and growth trajectory well before outside investors are able to. As a result, empirical research on the topic tends to agree that insider buying coincides with troughs in stock prices, and vice versa, insider selling coincides with peak valuations.
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The US stock market has experienced two years of explosive growth, following the 2022 bear market fueled by rising inflation and interest rates. For most of 2023, the stock market appreciation was primarily driven by a small subset of companies fueled by AI-related tailwinds, which led to rising concentration levels, all while on an equal-weighted basis, the performance was staying flat. The following year brought a broader acceleration in growth, with many other sectors catching up and driving a new all-time high into early 2025. We can now firmly say that the bear market of 2023-2024 has been broad, leading to apparently expensive valuations across the entire market. It is certainly not easy to be an investor in the US market right now, as peak valuations make most of the companies appear expensive, all while new threats and risks loom from all directions.
The new US administration has brought a major change in trajectory, something which hasn’t been seen in decades. Many of their new policies are a short-term (at least) threat to several industries and sectors, ranging from Medicare/Medicaid reimbursements and ending with Government consulting, engineering, and technology contractors. A more recent development, which arises as a result of the new Government policies, is a potential slowdown in commercial and residential construction – the freshly imposed tariffs are a major headwind for builders, as they make building materials significantly more expensive, all while the heightened scrutiny on immigration can potentially cause labor shortages in this field, which again makes building more expensive. The key takeaway is that plenty of new risks arise every day, which, coupled with still near peak valuations, makes it difficult for investors to decide which stocks to invest in.
With that being said, we believe insider buying could provide unique insights into what more informed investors (management itself) believe will happen with the stock price of their company. Sudden developments often bring overreactions from investors, which create opportunities for more informed investors to act. In this context, closely watching insider buying could provide a strong signal that the market overreacted to some negative developments. Also, we believe that the larger the amount of stock an insider is buying, the stronger the insider’s conviction in the future of the company. That’s why we decided to particularly track companies that have shown heavy insider buying in the last couple of months.
Our Methodology
We used Insider Monkey’s insider trading stock screener to find companies with at least two insiders buying shares worth at least $500,000 in the last six months. We believe that multiple insiders buying significant amounts of stock represents a higher chance that insiders have high confidence in the company. For all the companies we also include the number of hedge funds that own the stock, according to Insider Monkey’s database of Q4 2024. The stocks are ranked according to hedge funds having stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close up of a metal composite product, emphasizing its strength in design.
CompoSecure, Inc. (NASDAQ:CMPO)
Number of Hedge Fund Holders: 46
CompoSecure, Inc. (NASDAQ:CMPO) is a leading manufacturer and designer of complex metal, composite, and proprietary financial transaction cards. The company has established itself as a technology partner to market leaders, fintechs, and consumers, enabling trust for millions of people around the globe. CMPO specializes in innovative payment card technology and metal cards with Arculus security and authentication capabilities, delivering unique, premium branded experiences and ensuring trust at the point of transaction. The company’s main operations revolve around creating highly differentiated and customized quality financial payment products for banks and other payment card issuers, and its customer base primarily consists of leading international and domestic banks.
CompoSecure, Inc. (NASDAQ:CMPO) delivered strong Q3 2024 results with an 11% increase in net sales to $107.1 million and a 13% increase in adjusted EBITDA to $40 million. The company demonstrated robust international growth, which more than doubled compared to the prior year, driven by momentum from new products. A significant milestone was achieved with the signing of a 2-year contract extension with Capital One, demonstrating customer trust in their ability to deliver differentiated products. The company revised its 2024 guidance, with net sales expected to range between $418 million to $424 million and adjusted EBITDA between $148 million and $151 million. The Resolute Holdings transaction completed in September is expected to deliver approximately $20 million more in free cash flow annually by eliminating tax distributions.
Under the leadership of new Executive Chairman Dave Cote, CompoSecure, Inc. (NASDAQ:CMPO) is focusing on building a high-performance culture, driving efficiency through the CompoSecure Operating System, reinvigorating organic growth, and diversifying through accretive M&A. Looking ahead to 2025, while the company faces some headwinds from increased competition and rising labor costs, it maintains strong tailwinds including solid backlog, positive customer sentiment, and opportunities in fraud reduction through Arculus Authenticate. The heavy insider buying in the last six months is a confirmation of the strong tailwinds lying ahead for CMPO.
Overall, CMPO ranks 1st on our list of stocks with heavy insider buying in 2025. While we acknowledge the potential of CMPO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CMPO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
