Best Penny Stocks To Buy
It’s Friday, and even though the stock market crash continued this week, there are plenty of penny stocks to watch that have outperformed broader sectors. The exciting part about these cheap stocks is that they tend to move independently, detached from the overall market. This goes both ways but, today, we look at a handful of penny stocks to watch that investment funds and insiders have started buying.
Why Does Insider Buying Matter For Penny Stocks?
In short, the answer to this question is, “It depends.”
Depending on your trading strategy, insider buying and institutional investments may or may not matter. If you’re day trading penny stocks, chances are you won’t be looking at the company in a few days or even tomorrow. On the other hand, if you’re investing in penny stocks, insiders and money managers could be a fundamental aspect that you’ll use as part of your overall strategy to decide whether to avoid or buy penny stocks.
So, where do you begin when it comes to finding insider or institutional activity? Step one: look at the SEC filings. Unless you’re talking about stocks that government officials buy, there is a standardized method that most larger investors must abide by, including filing specific SEC documents. 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 any person 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 large 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.
You can read more about filings here: Penny Stocks & Due Diligence: Understanding Important SEC Filings.
Penny Stocks To Buy
The following list of penny stocks includes companies that have seen recent insider and institutional buying activity according to Schedule 13s and Form 4s.
F45 Training Holdings (FXLV)
Originally made popular by singer, actor, producer, and all-around nice guy Mark Wahlberg, it has become somewhat of a nightmare for early investors. The 45-minute workout fitness program company, F45 Training, has seen share prices slip from over $16 to under $1 in less than a year. Missed earnings and cutting guidance haven’t helped things either. But that also hasn’t stopped big money bets from being placed on FXLV stock.
Last month and now in September, Kennedy Lewis Management has been building a position in the penny stock. From August 18th to August 29th, the firm amassed holdings through related entities. This week Kennedy Lewis is in the spotlight once again. In a new 13D filing, details show that it now holds over 14 million shares of FXLV stock right now.
In addition, there was also a buyout offer written into the 13D filing. What’s on the table? A proposed transaction at a price of $4 per share in cash to acquire all outstanding shares remaining. As speculation has begun driving momentum, FXLV stock could be on the radar for some traders heading into October.
SOBR Safe Inc. (SOBR)
This stock has become even more active during the second half of September. Following news that the National Transportation Safety Board was suggesting the requirement of a passive alcohol-detection system, SOBR stock has been on the move. The company’s exposure to the industry is much more direct as it develops alcohol-detecting devices for automotive alcohol-sensing systems.
Its touch-based identity verification, detection, and reporting platform act as a preventative solution for drivers. In particular, commercial fleets, workplaces, and even alcohol rehab locations are target industries for SOBR Safe’s platform. While things have been incredibly volatile for SOBR stock, its share price has maintained an overall uptrend since the news hit.
This week, the company announced that its SOBRcheck reached a new milestone. SOBR Safe signed three reseller agreements with distributors to open access to more extensive customer networks specifically for replacing breathalizers in the American Judicial market. The news also comes shortly after recent insider trading activity piqued the interest of traders. What’s important to note is that even though the specific Form 4 was published in September, the activity was done in late August. Director Steven Beabout snagged a little over $50,000 worth of SOBR stock at an average cost of $1.14. Since then, those purchases have more than doubled in value.
CalAmp Corp. (CAMP)
CalAmp provides organization solutions for monitoring, tracking, and protecting virtual assets. While you might think that everyone is running for the hills, especially with tech stocks, thanks to the new lows by the S&P 500 and Nasdaq, you would be wrong. The latest string of insider buying in CalAmp Corp. shows that clearly. Director Wes Cummins picked up 194,600 shares of CAMP stock at an average price of $4.1584 through funds managed by B. Riley Asset Management. Cummins is the President of B. Riley.
CalAmp recently reported more robust second-quarter earnings for its 2023 fiscal year. Total consolidated revenue jumped 13% sequentially to $72.8 million with solid backlog, according to the company. It also saw software and subscription services revenue jump to $44.5 million, accounting for 61% of overall revenue.
President and CEO Jeff Gardner explained in CalAmp’s September update, “The revenue growth in both Software and Subscription Services and Telematics Products was attributable to improvements in the supply chain which enabled us to accelerate customer conversions to recurring subscription contracts and fulfill more orders for our customers. Of the existing customers eligible to convert to recurring contracts, we exceeded a cumulative total of 50% in the quarter, underscoring the progress we continue to make on our SaaS transformation.”