You might not think that some of Wall Street’s most prominent investors own penny stocks. If you didn’t read our article this week, you’ve got a big surprise. Spoiler alert: some of the stock market’s biggest investors and funds hold shares of stocks under $5. Thanks to the pandemic sell-off and stock market crash in 2022, that wasn’t by choice in most cases.
Nevertheless, these investors seem to favor the underlying companies, and for retail investors, that has become a vote of confidence in the stock market. Einhorn, Lynch, Cohen & Dalio are just a few of the names holding penny stocks on their list. What’s more, some of these investors, like Peter Lynch, seem to want to keep their penny stocks to themselves.
He has said that he tries to avoid owning more than 5% of a particular stock (which would require a disclosure to be filed). He apparently didn’t realize that his stake in IMAC stock put him over that threshold, he said in an interview this week. In any case, other investors aren’t so secretive about the penny stocks they own. The recent flood of 13F filings that have come out shows where Wall Street funds stand on their holdings. Many currently have positions in penny stocks. Yes, that also includes the Oracle of Omaha, Warren Buffett.
Penny Stocks To Watch
1. Nu Holdings (NYSE: NU)
Shares of Nu Holdings haven’t been kind to investors since last year’s IPO. Following day one highs of $12.24, NU stock hasn’t done much besides drop. Earlier this month, the Fintech stock hit fresh lows of $3.32. However, the last three sessions have been some of the most active since Nu went public.
Many are calling this Buffett’s bet on Bitcoin. Whether that was the intention or not is secondary to Nu’s latest developments. The company provides digital banking services to nearly 60 million customers across Brazil, Colombia, and Mexico. Where do cryptocurrencies come into the picture? The cross-over into digital currencies would seem obvious as a digital banking business. In this case, Nu is beginning to launch Bitcoin and Ethereum trading for customers. Its parent company has also taken steps to invest in Bitcoin.
What To Watch With NU Stock
Nu recently reported solid earnings for its first quarter. It topped revenue estimates and reached record levels. The company also swung to an adjusted Q1 profit. In Nu’s corporate update, David Vélez, founder and CEO, explained, “This is the strongest quarter in Nu’s history. We reached nearly 60 million customers and a record-high activity rate of 78%. Our earnings-generating formula helped drive a record high quarterly revenue of US$887 million (226% increase YoY on a FXN), with a low customer acquisition cost, increasing revenue per customer, and decreasing cost to serve. Our credit portfolio grew significantly above market and maintained healthy quality levels.”
Though Berkshire Hathaway’s (NYSE: BRK.A) leadership appears to be bearish on Bitcoin, it hasn’t stopped it from taking a stake in NU stock. Thanks to the latest 13F filing, investors can see the Oracle of Omaha’s firm held 107,118,784 shares of NU stock at the end of the first quarter.
2. VivoPower International (NASDAQ: VVPR)
With the stock market bouncing back (for now), tech stocks have come into focus. It’s not just fintech like Nu Holdings. VivoPower, for example, specializes in sustainable energy tech and offers solutions focused on the electrification of fleet, solar, and critical power applications. VivoPower’s applications have a broad range of integrations, including exposure to cryptocurrency.
Right before the start of the year, it announced a letter of intent with Caret LLC to form a company focused on renewable-powered Ethereum, Litecoin, and Bitcoin mining. Specifically, Caret will contribute solar sites in Texas in exchange for equity in the company to make the operation environmentally efficient. This new business segment is also expected to be spun off as another separate public company.
What To Watch With VVPR Stock
Bitcoin mining isn’t the only thing VivoPower is focused on. This week the company announced an agreement with Toyota Motor Company Australia for its Tembo e-LV subsidiary. The two will work on the next stage of designing electrification solutions for the Toyota LandCruiser 70 in Australia.
VivoPower’s Executive Chairman and CEO, Kevin Chin, said, “We are honoured to have entered into this commercial agreement with TMCA and are fully committed to working closely with the TMCA team to deliver an electrified LandCruiser 70, which is fit for purpose and safe for corporate fleets, especially for off-road use cases such as mining. In this regard, we have now dedicated a team within Tembo that is solely focused on this important TMCA project. We will also be sub-contracting our partner in Australia, GB Auto, given their dedicated mining sector experience.”
Considering this news and the growing support of EV stocks, VVPR could be one to watch following this news.
3. iQIYI Inc. (NASDAQ: IQ)
With the downfall of Netflix (NASDAQ: NFLX), entertainment stocks have been a mixed bag over the last few months. However, since the beginning of 2022, iQIYI has maintained a relatively consistent trading channel except for a brief pullback in March. The company not only focuses on traditional entertainment intellectual property but has also extended its reach into digital assets and collectibles.
At this point, non-fungible tokens (NFTs) are commonplace. While some of the original luster may have worn off, companies continue pursuing their value proposition & utility. Several weeks after the launch of its latest round of digital collectibles, analysts at JP Morgan gave a double upgrade to IQ stock, setting its rating at Overweight and boosting its $2 price target to $8.
What To Watch With IQ Stock
Upgrades and digital collectibles aren’t the only things to watch with IQ stock. This week the company announced the upcoming release of over 200 new pieces of content ranging from TV series and films to variety shows. Next week could be an important one for iQIYI as it reports its first-quarter results on May 26th.
Best Penny Stocks To Buy
Penny stocks are shares of companies trading below $5 and have inherent volatility. A small move in the price of a few pennies can equate to a massive change in portfolio value. With that, it’s essential to keep your risk management strategy in mind. It doesn’t matter which hedge funds or investors own specific stocks. It’s your bottom line that matters most. If you’re looking for the best penny stocks to buy, the first step is to research and understand how to navigate market swings. Here are a few articles to check out if you’re just getting started trading: