Want To Find Penny Stocks to Buy? You Might Want To Follow The Money
Whether you’re talking about penny stocks or not, everyone wants an edge over the rest of the market. We’ll discuss the “Follow The Money” strategy today. It’s not overly complicated and simply involves taking a bit of extra time to dig through corporate filings. Generally, companies won’t announce when their management, large funds, or other related insiders are buying or selling stock.
However, like stocks with unusual options activity, this data will be used by traders to gauge sentiment. Of course, there aren’t any guarantees that insider buying means stocks will go up or insider selling signals a crash incoming.
For some investors, large insider trades are used as another data point for investors to use as part of their broader research strategy. This article looks at three more insider penny stock picks from November. It continues the list of stocks from our update Best Penny Stocks To Buy Now? 4 Insider Picks In November.
Penny Stocks To Buy According To Insiders In November
Satsuma Pharmaceuticals Inc. (NASDAQ: STSA)
Shares of Satsuma Pharmaceuticals continue attempts at recovering this month. The penny stock imploded a few weeks ago thanks to its Phase 3 migraine drug (STS101) study results. Even though topline data showed favorable responses compared to placebo, it didn’t achieve the “statistical significance” that was hoped for. The final straw came as the company said there aren’t any plans to invest in commercializing STS101 and will now explore alternatives.
Despite the slump and pivot to alternatives, STSA stock has performed better as a sub-$1 stock than during months prior. In fact, since hitting 52-week lows of $0.59, the stock has managed to bounce back by as much as 33%. Insider buying may have helped give some bullish sentiment to traders.
Who’s buying STSA stock in November? The most recent purchases came from 10% owner Braden Leonard directly and through a holding of BML Investment Partners. Together, more than 6.5 million shares were scooped up between $0.5913 and $0.75.
If you’re looking ahead, Satsuma could be on the radar thanks to potential catalysts next week. The company participates in the ISI HealthCONx Conference on November 30th. Satsuma CEO John Kollins plans to discuss STS101, including a U.S. regulatory pathway and any implications from the last round of Phase 3 data.
Canoo Inc. (NASDAQ: GOEV)
The EV maker Canoo Inc. was one of the standouts this summer. Shares surged to highs of $5 after the company announced its latest deal with Walmart (NYSE: WMT). Canoo reported that it would provide 4,500 Canoo electric delivery vehicles for Walmart to use in its last-mile delivery services. Since then, however, the EV niche of the stock market has cooled, and companies, including Canoo, have seen shares tumble.
Earlier this month, the company hoped to recharge investors with an update on a potential acquisition. Canoo reportedly had planned to purchase a vehicle manufacturing facility in Oklahoma City that would be equipped to ramp to a 20,0000 unit annual run rate by the end of next year.
Tony Aquila, Chairman, and CEO at Canoo. “We are working with our third-party manufacturing partners to achieve SOP on our own equipment this month. Following these initial builds, we will aggressively shift all our equipment into our new facility during 1H’23 with production ramp in 2H’23.”
Aquila is in the spotlight again this week. Canoo’s CEO reported purchasing over 9 million shares of GOEV stock. He did so directly and indirectly through associated LLCs. All purchases were made at $1.11 per share. Something to note is that the shares were bought in accordance with a November PIPE or “private investment in public equity.” The market has responded favorably to the info since the purchase price was higher than recent closing prices.
Heliogen Inc. (NASDAQ: HLGN)
Like other companies on this list of penny stocks, Heliogen recently put in new 52-week lows. But some more robust than normal price action on Wednesday appears to have turned some heads into the end of the week. Missed earnings contributed to the latest pullback. However, management seems to remain optimistic based on the progress made during the third quarter.
CEO Bill Gross explained, “The successful completion of the initial field testing of our ChariotAV autonomous heliostat cleaning vehicle and the start of final qualification for our automated, high-volume heliostat production lines moves us that much closer to achieving these goals…By signing the MOU with the City of Lancaster, California, for the production of green hydrogen, Heliogen continues to grow its portfolio of hydrogen-focused customers.”
Heading into next week, HLGN stock is on watch for a few traders. That comes after Mr. Gross purchased a block of 50,000 shares, bringing his total direct holdings to more than 1.67 million shares.
More About “Follow The Money Trading”
SEC filings are where you can easily “follow the money,” so to speak. You’ll find reports from hedge funds, minority & majority owners, management, and other insiders. But if you’re new to this strategy, you’ll want to know exactly where to look and what to look for so you can do your research as well. Below are a few “go-tos” for finding insider and institutional activity in penny stocks:
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.
Read more about filings here: Penny Stocks & Due Diligence: Understanding Important SEC Filings.