Small Cap Stocks For the Value Investor
Some analysts believe that the recent pullback in small-cap stocks offers a good entry point for the value investor, while others think that many of these stocks are still overpriced. It can be helpful to look at the market behavior of more sophisticated traders as a way of resolving this debate. Short sellers, for example, are among the most sophisticated investors.
Stocks with a large decrease in short interest are often companies that offer significant upside potential. American Superconductor (AMSC) is one such company in the diversified Electronics Industry. Over the last six months, insiders have been net buyers, and shares shorted have decreased as well. AMAG Pharmaceuticals (AMAG) is another company in the diagnostic substances industry where insiders have been buying up shares and short sellers have been decreasing their positions.