What Are The Best Penny Stocks To Buy Right Now?
November is winding down, but that hasn’t stopped the flow of funds into penny stocks. Even with the stock market down today, traders and investors are hunting for new opportunities to buy the dip, trade the trend, or simply make money from stocks. How can you determine which are the best and which should be avoided entirely?
There are plenty of penny stocks trading strategies to use in 2022, and they all depend on what you’re comfortable with regarding risk. Are you high-frequency trading, swing trading, or trying to find penny stocks to invest in?
Depending on how you approach the market, in general, will determine what types of stock appeal to you enough to add them to your watch list. One strategy that we’ve seen used by multiple types of traders is a strategy called Follow The Money.
– Buy Penny Stocks Like Hedge Funds Do: A How-To Guide
What Is “Follow The Money” Trading?
The easiest way to find big-money bets on penny stocks (or stocks, in general) is to look at the SEC filings. Here are a few of the most frequently referenced when it comes to these types of transactions:
Form 4 Filing
According to the Securities And Exchange Commission, Form 4 is a “statement of changes in beneficial ownership.”
It must get filed with the commission whenever a material change happens in the holdings of a company’s insiders.
Schedule 13D, Schedule 13G, and Schedule 13F Filings
These Schedules involve parties reporting ownership of stock over 5% of a particular equity class in a company. The SEC defines Schedules 13D and 13G as beneficial ownership reports: “The term ‘beneficial owner’ is defined under SEC rules. It includes anyone who shares voting or investment power directly or indirectly (the power to sell the security).”
These filings would be highlighted by traders looking for “Whale” trades as they generally connect to significant funds or investment trusts.
- A Schedule 13D gets filed by an “active investor” who owns more than 20% of a company’s outstanding shares.
- A 13G pertains to “passive investors” owning less than 20% of a company’s outstanding shares. Once a “passive investor” reaches over 20% of the OS, they must start filing 13D statements. These are important because we’ll see which large funds or investors are taking a more significant position in a company. These typically lift sentiment for a given company.
- Schedule 13F filings are where things get fun. 13Fs are quarterly reports required to be filed by institutional investment managers with at least $100 million in assets under management.
Read more about filings here: Penny Stocks & Due Diligence: Understanding Important SEC Filings.
Penny Stocks To Buy According To Insiders & Hedge Funds
In this article, we look at penny stocks to buy according to recent purchases from insiders and funds. While no single indicator or piece of alternative data should be the sole reason to add something to your watch list, having a view of the whole “chessboard” can help you make better decisions on what to avoid or watch a little closer.
Tenaya Therapeutics Inc. (TNYA)
Tenaya Therapeutics has found some footing around its 50-day moving average for the last few weeks. Though it has been a level of resistance, TNYA stock has stuck close to it while retesting it multiple times in November. Much of the recent momentum came after shares reached 52-week lows of $1.73. That coincided with other catalysts like a $75 million financing round and some less-than-favorable earnings for the third quarter.
Fast-forward to this week, and Tenaya announced a new milestone that includes an FDA designation for one of its pipeline treatments. It received Orphan Drug Designation for its TN-401 in treating cardiomyopathy. Tenaya now expects to submit TN-401 IND application to the FDA in 2023. Preclinical data was presented at industry meetings supporting the treatment’s potential.
As far as insiders go, TNYA stock has gotten bought up by both funds and company directors. The latest purchases came from Eli Casdin via his Casdin Capital, LLC. The firm paid $2.60 per share for nearly 2.5 million shares of TNYA stock. With pending regulatory submissions anticipated for next year and this latest Orphan Drug news, it will be interesting to see if the penny stock can turn itself around by year-end.
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NRX Pharmaceuticals (NRXP)
Another one of the biotech penny stocks to watch with insider activity is NRX Pharmaceuticals. Shares have quietly churned higher for several months, with much of the momentum stemming from a summer update announcing a new company CEO.
Its lead candidate is NRX-101 targeting patients with bipolar depression and suicidal ideation. The Phase 3 platform is in trials under an FDA Special Protocol Agreement and Breakthrough Therapy Designation. Earlier this year, NRX announced the release of the first batches of NRX-101 manufactured in the US, and plans to initiate a phase 3 trial in bipolar depression are expected to begin soon. There are also plans to report top-line clinical data from a Phase 2 trial of NRX-101in bipolar depression with sub-acute suicidality next quarter.
With this backdrop, analysts have grown slightly bullish on the name. Ascendiant Capital, for example, set its forecast over 200% higher than current trading levels. So is it a surprise that insiders have followed suit?
November has been an active month for insider trading. That includes both buying and selling. The latest action came from purchases made by Director Chaim Hurvitz and CFO Seth Van Vorhees. Hurvitz’s trades were the largest after paying $1.03 per share on average and a total of 500,000 shares.
Venus Concept Inc. (VERO)
Medical aesthetic technology company Venus Concept specializes in medical aesthetic technology for non- and minimally-invasive procedures, including hair restoration. It has made a strong about-face during the last few sessions. The latest move came after it closed a $6.72 million financing round priced at $0.20 per share.
CEO Rajiv De Silva explained, “This financing provides Venus Concept with additional capital to advance our operating initiatives, key R&D priorities, and the ongoing comprehensive assessment of the Company, which is currently underway. This assessment is focused on achieving a profitable and sustainable growth profile for the Company. We expect to commence implementation of the transformation plan resulting from the assessment during the first quarter of 2023. We intend to update the investment community on our progress as part of our fourth-quarter earnings call in March 2023.”
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What do insiders think about VERO stock? Several funds, including Masters Capital Management and Healthquest Partners, have filed new documents showing increased stakes in the company. Masters now has a 9.32% position in VERO stock, while HealthQuest Partners II reported a 15.77% stake in its most recently amended 13D filing.
List Of Penny Stocks To Buy According To Insiders & Funds
- Tenaya Therapeutics Inc. (NASDAQ: TNYA)
- NRX Pharmaceuticals (NASDAQ: NRXP)
- Venus Concept Inc. (NASDAQ: VERO)
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