Insiders Play The Stock Market Game With Penny Stocks
Want to find penny stocks to buy? How about trying the “Follow The Money” trend? It’s becoming more popular lately, especially in light of the recent stock market game being played. One day markets are up; the next, they’re down, seemingly based on how investors feel about inflation and a pending recession (or current recession, depending on how you look at it).
Let’s face it, those concerns aren’t going away quickly, and by the look of the latest tech earnings, neither is stock market volatility. While the stock market hovers around its 2022 lows, traders are “following” the money by hunting for insider activity.
Who’s buying stock, selling stocks, or getting compensated with the company’s shares? The market usually looks at insider activity for a sentiment gauge. Today we look at a handful of penny stock picks from insiders in October.
Penny Stocks To Buy [According To Insiders]
- Local Bounti Corporation (NYSE: LOCL Insider Stock Report)
- Cosmos Holdings (NASDAQ: COSM Insider Stock Report)
- Imara Inc. (NASDAQ: IMRA Insider Stock Report)
- Black Diamond Therapeutics (NASDAQ: BDTX Insider Stock Report)
Local Bounti Corporation (NYSE: LOCL)
Agriculture stocks have been in and out of the spotlight throughout the year. That’s thanks in part to the geopolitical constraints that the Russia-Ukraine war has brought. Local Bounti specializes in indoor agriculture in the U.S., including vertical and greenhouse growing technologies.
This week the company launched its chef-inspired “grab-and-go” salad product. Craig Hurlbert, Co-CEO of Local Bounti, commented, “Our salads will feature a unique mix of our locally grown greens combined with fresh, high-quality, and flavorful ingredients.”
Local Bounti also recently launched a $23.3 million private placement which it said would bring in “Significant investment” from existing investors. The stable of investors includes Fidelity Management & Research and BNP Paribas. Funds will go toward a long-term grown strategy to support its continued scale-up of agriculture facilities.
[Read More] Buying Penny Stocks? 3 Technical Indicators to UseLOCL Stock Insider Buying
One of the 10% owners, Charles R. Schwab (yep), snagged 3 million shares of LOCL stock this month. These were part of that private placement mentioned above.
Cosmos Holdings (NASDAQ: COSM)
Global healthcare group Cosmos Holdings has experienced a significantly higher momentum over the last few weeks. Initially, it was bearish momentum thanks to news of a $7.5 million public offering. But since it closed, COSM stock has headed higher. Funds were earmarked for its pending or potential acquisitions and payment of certain liabilities to existing warrant holders, among other things.
Earlier this year, the company launched its Sky Premium Life Nutritional Supplement products in Germany & Austria. Via Amazon, eBay, and Mediprovita, Cosmos rolled out this retail strategy. It also said there are plans to extend its relationship with Mediprovita “in the near future” to include the distribution of 70 SKUs. The full-service distributor and logistics provider (Mediprovita) signed a distribution agreement with Cosmos for exclusive distribution of Sky Premium in Austria and Germany.
COSM Stock Insider Buying
This month CEO Grigorios Siokas picked up 12.5 million shares worth $1.5 million. Like LOCL, Siokas purchased the stock as part of a public offering earlier this month.
Imara Inc. (NASDAQ: IMRA)
October has been an active month for insiders. News of a new merger deal has excited the market as IMRA stock climbs. Last month Imara sold off certain assets for over $34 million in addition to potential milestones of up to $60 million. In addition to a planned $165 million financing, Imara entered into a merger agreement with Enliven Therapeutics to focus on Enliven’s oncology product candidate pipeline. Specifically, the newly formed company, Enliven, will further advance pipeline candidates, including ELVN-001 and ELVN-002.
With the merger expected to finalize next quarter, investors and insiders have grown even more bullish.
IMRA Stock Insider Buying
Ra Capital Management, a 10% owner of IMRA stock, is the one doing the buying this month. On multiple occasions, the firm snagged more than $2.1 million in IMRA shares. These purchases were made in the market and don’t appear to be part of any offerings at the time of purchase. The most recent string of buying came between October 20th and October 24th.
Black Diamond Therapeutics (NASDAQ: BDTX)
Biotech penny stocks have gained plenty of attention in the stock market recently. Black Diamond Therapeutics has followed suit. Over the last few weeks, shares of BDTX stock have bounced back from 52-week lows of $1.18 to over $1.70 thanks to a mix of speculation, insider buying, and milestone news.
This week the company announced its presentation at the European Organisation for Research and Treatment of Cancer—National Cancer Institute—American Association for Cancer Research Molecular Targets and Cancer Therapeutics symposium. Black Diamond presents preclinical data on its BDTX-1535 and BDTX-4933 platforms. These target potential tumor treatments prohibiting cell growth.
[Read More] 5 Penny Stocks To Buy According To Analysts Right NowDavid M. Epstein, Ph.D., President and Chief Executive Officer of Black Diamond Therapeutics, said, “We believe the productivity of our drug discovery engine enables us to provide differentiated approaches to cancer treatment with a strong focus on targeting broad families of mutations that previously have not been addressed by approved therapies. The data shared at EORTC-NCI-AACR further support the clinical advancement of both BDTX-1535 and BDTX-4933, and we look forward to sharing updates on our progress for these programs in 2023.”
BDTX Stock Insider Buying
Black Diamon is another one of the companies with more active insider buying this month. Biotech Growth NV is the fund doing the buying. October 19th through the 21st was the period of purchasing, with the most recent (from the 21st) buying over 87,000 shares at an average price of $1.5111.
What is Follow The Money Trading?
Whether you’re trading penny or higher-priced stocks, the Follow The Money trading strategy is the same. It entails looking at corporate filings and seeing where money is flowing. There might be insiders buying shares of their own companies. It could also be institutional funds snatching up cheap stock in big chunks. Whatever the case, the trading strategy behind following the money is all about publicly released data on large trades from “smart money” and company employees.
How To “Follow” The Money Trading Penny Stocks
The easiest way to find big-money bets on penny stocks is to look into 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 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.
Read more about filings here: Penny Stocks & Due Diligence: Understanding Important SEC Filings.
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