I noticed this pattern long before some small caps became multibaggers

January 23, 2026

Over the past fifteen years, an uncomfortable truth about small-cap investing has become increasingly clear to me.

The greatest wealth creators almost never announce themselves loudly.

They don’t appear first on TV tips, they’re not popular on social media, and they rarely look exciting in the first few years. More often than not, they start quietly, when most investors are distracted, impatient, or looking elsewhere for quicker gratification.

What I’ve noticed time and time again is that these stories usually don’t start with price movements or optimistic predictions, but with promoter behavior.

Particularly where promoters choose to increase their stake in their own companies by purchasing shares on the open market with their personal money.

Over the years, through countless company visits, management interactions and in-depth balance sheet investigations, this behavior began to stand out. Not because it was dramatic, but because it was consistent. Promoters who truly believed in what lay ahead didn’t feel the need to convince the market with words. They simply acted based on their beliefs.

This observation gradually evolved into what I now call the ‘ Promoter wealth signal.

A few days ago I recorded a detailed conversation where, for the first time, I explained this signal in its entirety: how it works, why it works, and where investors often misunderstand it. It was about understanding how real wealth is created in the small cap sector.

Apar Industries is an example of this. A more than twenty-fold increase in less than four years makes everything seem obvious in retrospect. But it was anything but easy.

In 2018 and 2019, Apar was hardly exciting. It was an industrial company with modest margins, limited visibility and no glamour. When the pandemic hit, shares fell sharply, falling nearly 60% from the levels at which promoters had previously bought shares.

Most investors would have lost patience, questioned their position or simply moved on. But the initiators did not do that.

Between 2018 and 2021, even during the depths of the Covid panic, the Desai family continued to buy shares on the open market. These were not symbolic gestures. These were repeated, meaningful investments in personal capital, made during a period when uncertainty was greatest.

Nearly three years after that, the shares went nowhere. Prices stagnated. There was no excitement, no validation and plenty of reasons to doubt.

And when the business catalysts finally emerged – electrification, renewables, operating leverage – the market response was swift and dramatic. The same stock that tested everyone’s patience delivered extraordinary returns.

This is where many investors misunderstand wealth creation. Most people think they missed Apar because they didn’t discover it early enough. In reality, most would never have stayed invested long enough to benefit from the outcome.

That’s why promoter buying alone isn’t enough.

By studying hundreds of such cases, I realized that meaningful wealth creation usually only happens when three elements come together. There needs to be real and consistent buying by promoters, visible business catalysts need to emerge beneath the surface, and valuations still need to provide enough comfort to allow long-term participation.

When these three align, the probability changes in the investor’s favor.

You see the same pattern in very different companies.

In the case of Ms Bectors Food Specialties, promoters continued to buy even as inflation fears and margin pressure dominated headlines. The share returned more than five times as much in just over two years.

Kovai Medical Center, a quietly run hospital company in Coimbatore that most investors ignored, saw its promoters steadily increase their stake as they built sustainable medical capabilities, and its shares grew well ahead of the broader market.

Different sectors, different conditions, but the same underlying signal. And yet most investors don’t benefit from this information.

Not because the data is hidden. Insider transactions are made public and legally available to everyone. It’s because information without interpretation is meaningless.

Promoters buy shares for many reasons, and without context, blindly following insider activity can be misleading.

Buying with insider information is therefore not a tip or shortcut. It’s a way of thinking about companies. It helps investors weather long periods of stagnation, avoid panic during corrections, and stay invested when nothing seems to be happening on the surface.

Great multibaggers rarely reward impatience. They reward alignment with conviction.

The strongest belief you will ever find in a company is when the people who understand it best continue to put their own money into it.

If you value long-term wealth creation rather than short-term excitement, this framework can actually change the way you look at stocks.

And that’s exactly what we decoded in my video, with real examples from the Indian market.

You can watch the full video below before it goes off air.

You can also read the transcript here.

Kind regards,

Richa Agarwal
Editor and research analyst, Hidden gem
Quantum Information Services Private Limited (Research Analyst)