Insiders Bet Big: Three Undervalued Small-Caps Poised for a Turnaround in February 2026

As January 2026 drew to a close, the U.S. equity markets presented a tale of two tiers. While major indices like the S&P 500 managed modest gains, small-cap stocks, as measured by the S&P 600, faced heightened volatility. Pressured by fluctuating interest rates and commodity prices, this segment has investors searching for resilient opportunities. In such an environment, one of the most telling signals often comes from within: when company executives and directors open their own wallets to buy shares.

"Insider transactions are never a guarantee, but they are a powerful data point," notes Michael Thorne, a portfolio manager at Cedar Rock Capital. "It suggests those with the deepest understanding of the business see a disconnect between the current price and intrinsic value, especially in overlooked small-caps."

We've sifted through the data to spotlight three undervalued small-cap companies where insider activity and fundamental developments are creating a compelling narrative for February 2026 and beyond.

Tompkins Financial (NYSE: TMP): A Regional Bank's Earnings Surge

With a market cap just over $1 billion, Tompkins Financial stunned markets with a fourth-quarter net income leap to $96.25 million, a stark recovery from the previous year's $19.66 million. This banking and wealth management firm saw insiders actively purchasing shares between October and December 2025, concurrently with a $1.6 million share buyback.

Simply Wall St Value Rating: ★★★★★☆ | PE: 7.1x

However, analysts project an average annual earnings decline of 18.5% over the next three years, casting a shadow on the recent triumph. "The Q4 numbers are impressive, but the forward guidance is concerning," argues Lisa Chen, a sharp-tongued financial blogger at 'The Skeptical Investor'. "This looks like a classic 'one-hit wonder' fueled by short-term tailwinds. Insiders buying on a sugar high doesn't change the structural challenges facing regional banks."

Byline Bancorp (NYSE: BY): Strategic Confidence in Growth

This $810 million market cap bank holding company is telling a consistent growth story. Byline reported a solid rise in Q4 net interest income to $101.26 million and increased net income to $34.52 million. Management's confidence is underscored by a 20% dividend hike and a substantial $23.73 million share repurchase program completed by December 2025.

Simply Wall St Value Rating: ★★★★★☆ | PE: 11.2x

With earnings projected to grow at 5% annually, Byline presents a steadier profile. David Rivera, a retired accountant and retail investor, comments, "For income-focused investors in the small-cap space, Byline's combination of buybacks, a growing dividend, and steady projections is a rare find. It feels like a disciplined play."

Herbalife Ltd. (NYSE: HLF): Navigating Challenges with New Energy

Global nutrition company Herbalife, trading at a deep-value PE of 5.6x, continues to navigate a complex path. While Q3 2025 sales rose to $1.27 billion, net income saw a slight dip. A key bright spot is the aggressive expansion of its 'Liftoff' energy drink line, directly targeting a global market projected to reach $41.4 billion by 2033, leveraging its vast network of nutrition clubs.

Simply Wall St Value Rating: ★★★★★☆

Insiders were net buyers from November 2025 through January 2026, suggesting faith in the turnaround plan. "Herbalife is a high-risk, high-potential story," observes Michael Thorne. "The energy drink push is a smart pivot, but execution is everything. The insider buying indicates they believe the current price doesn't reflect the potential of this new vertical."

This analysis is based on historical data and analyst forecasts using an unbiased methodology. It is not intended as financial advice and does not constitute a recommendation to buy or sell any security. It does not consider individual investment objectives or financial circumstances. Our long-term analysis is driven by fundamental data and may not incorporate the latest price-sensitive announcements. Simply Wall St holds no position in the mentioned stocks.

Have feedback? Concerned about the content? Get in touch with us directly at [email protected]