Director share dealing in small-cap shares is always worth noting for the simple fact that this segment of the market can be more volatile than larger caps, so if other investors follow the lead of insiders this will have a greater impact on the subsequent share price performance. Moreover, unlike mega and mid caps where director sales can sometimes have little impact on a company's share price, it is more difficult for directors to take large positions in smaller-cap companies. So when these insiders are staking their own money, rather than just matching investments in share incentivisation schemes they have been awarded, it is well worth further investigation to find out whether there is an investment opportunity by following their lead.
That's why we publish a director dealings table every week in the magazine and online and pick out the insider trades that offer readers the best investment potential. I regularly keep an eye out for interesting director deals. For instance, I noted the chairman of service office provider Workspace (WKP) had splashed out £100,000 buying shares in his company a couple of years ago ('Hot property', 4 October 2010). On further investigation it was clear why and by the time other investors had taken note we had made a 30 per cent gain on the holding in only seven months ('A level playing field', 16 May 2011).
