We recently published a list of 10 Small–Cap Stocks Insiders Are Buying Recently. In this article, we are going to take a look at where Financial Institutions, Inc. (NASDAQ:FISI) stands against other small–cap stocks insiders are buying recently.
Why should we be interested in stocks with smaller market capitalizations? Small-cap stocks usually operate in other industries than large-cap companies, meaning they will help investors diversify their portfolios. Also, the share price of small-cap stocks is often lower, which makes them more affordable. Some small-cap investors focus on finding young companies with strong growth potential, which can lead to high returns once they transition to large-cap stocks. While small-cap stocks often carry higher risks and are more prone to market volatility, they also offer investors more room for growth.
How to pick good small-cap stocks to invest in currently? While there’s no single simple or complicated rule that investors can follow to achieve secure results, there are some strategies that can help. One strategy is to keep track of insider trading activity. Insiders or, in other words, people at high positions within companies, such as CEOs, CFOs, directors and other executives have unparalleled insights into the company’s strategic moves, plans, and initiatives. A CEO’s investment in a company’s stock can sometimes signal strong confidence in the company’s future.
Insider trading activity should be assessed within the broader context of the company’s fundamentals, industry trends and overall market conditions, because behind insider moves can be various other motives. Heavy insider trading activity doesn’t necessarily mean the company is poised for growth. That’s why due diligence is of utmost importance before making any investment. Investors should also take into account and meticulously analyze underlying reasons for insider transactions. However, insider trading activity in combination with other relevant factors can offer valuable insights into a company’s capabilities, helping investors make more informed investment decisions.
To come up with the 10 small-cap stocks insiders are buying recently, we only considered stocks with a market capitalization of between $250 million to $2 billion. We first used Insider Monkey’s insider trading screener and searched for stocks with at least two insiders buying shares in the last three months.
With each stock we note the number of recent insider purchases and the company’s current market capitalization. But why is it important to follow insider activity? Our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds, focusing on insider trading and stock picks from hedge fund investor newsletters and conferences. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Financial Institutions, Inc. (NASDAQ:FISI)
Number of Insiders Buying: 15
Market Capitalization: $529.43 million
Financial Institutions, Inc. (NASDAQ:FISI) is a financial holding company with approximately $6.1 billion in assets as of December 31, 2024, offering banking and wealth management products and services. Its subsidiary Five Star Bank provides consumer and commercial banking and lending services.
On December 11th, Financial Institutions (NASDAQ:FISI) announced the pricing of its previously announced underwritten public offering of 4,000,000 shares of its common stock at a public offering price of $25.00 per share. Two days after as many as 15 insiders, including the President and CEO, and CFO, acquired around $835,000 worth of Financial Institutions’ shares at a price of $25 per share. The stock is now trading at $27.88 per share, having gained 2.16% year-to-date.
When management of a company takes part in the priced share offering, it can suggest that it has valuable insights into the company’s strategic plans and that it believes in its potential.
According to StockAnalysis, four analysts have a consensus “Buy” rating on Financial Institutions’ stock, with a price target of $29.75 for an upside of 6.71%. Over the past 12 months, the company’s shares gained 42.90%.
Overall, FISI ranks 1st on our list of small–cap stocks insiders are buying recently. While we acknowledge the potential of FISI, 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 FISI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
