Penny stocks, usually under $5 a share, draw traders looking for big gains. But these stocks can be risky. A smart move is to watch insider trading through SEC filings. Insiders like company directors and officers have access to key info that isn’t public. Their trading moves can give investors good clues.
Insider Trading and Penny Stocks
Watching what company insiders buy and sell can help you spot penny stocks to trade. Insider trades are important for smart investing but need careful study. In this article, we talk about using insider info to pick penny stocks. We cover the risks, the rewards, and the best ways to do it. We also look at penny stocks, where insiders have been buying recently.
What’s SEC Form 4?
Here’s a brief refresher if you’re starting to look for penny stocks with insider trading. Focus on things like SEC Form 4. It is a must for company insiders or certain big shareholders when they buy or sell company stock. It’s meant to keep things transparent and let the public know about insider trades quickly. This form helps stop illegal insider trading by making these trades public.
Key Points of SEC Form 4:
- Who’s Trading: The form tells you who’s trading, their role in the company, and how they’re connected to it.
- Trade Details: It shows when the trade happened, what was traded, how much, and for what price.
- Type of Trade: The form says if it’s a buy, sell, option exercise, or something else.
Investors and analysts use SEC Form 4 a lot. It shows them how company insiders are dealing with their own stock. This can hint at how confident they are about their company’s future.
Legal Insider Trading Explained
People like company execs and big shareholders are ‘insiders.’ They have strict rules for trading their company’s stocks. Trading with secret info is illegal, but there are legal ways to trade. Like using stock options in their pay, which follow set rules about when and how much they can trade.
Another legal way is using 10b5-1 trading plans. These plans set up trades for the future at specific times to avoid being accused of insider trading. Insiders might also trade based on public info or advice that’s not tied to their insider status.
Using Insider Trading Info for Penny Stock Picks
The SEC keeps a close eye on insider trades to stop illegal stuff. For investors, tracking these legal trades in SEC reports is really helpful. It points to penny stocks that might be worth a look. Some stocks have had interesting insider trading activity lately, making them worth checking out.
Are These Penny Stocks A ‘Buy’ Now?
Here’s what insiders are doing with these penny stocks to watch in November
Xeris Biopharma Holdings, Inc. (XERS)
This biopharmaceutical company focuses on developing and commercializing innovative therapies. Their goal is to improve patient lives across various treatment areas. This month Xeris Biopharma posted its financial results for Q3 2023.
They reported record revenues of $48.3 million, a significant 63% increase from the same period last year and a 27% increase from the previous quarter. The company also tightened its full-year 2023 revenue guidance from $155-$165 million to $160-$165 million, indicating strong performance and optimism.
The company ended the third quarter with $66.0 million in cash, cash equivalents, and short-term investments. They are on track to achieve cash flow breakeven in the fourth quarter of 2023. Furthermore, Xeris Biopharma extended the maturity of approximately two-thirds of its 2025 Convertible Senior Notes to 2028.
Key commercial products showed significant growth. Gvoke®, a glucagon therapy, saw a 30% increase in revenue and a 52% increase in prescriptions, leading to over 31% market share. Keveyis® also experienced revenue growth of 19%, with an increase in patient numbers. Recorlev® showed a notable revenue increase of $5.6 million, with patient numbers rising over 203%.
In their pipeline program, the Phase 2 clinical study of XeriSol® levothyroxine (XP-8121) is over 85% enrolled, with completion expected in the first half of 2024. Under technology partnerships, Xeris formulated the XeriJect™ formulation of TEPEZZA®, triggering a $6.0 million revenue from Horizon/Amgen.
XERS has also experienced insider trading this month. Though it isn’t as large a purchase as some of the other stocks on this list, Director, Maria Persky snagged another 6,370 shares at a $1.58 per share average. It also brought her holdings up above 60,000 shares.
iHeartMedia is the leading audio company in the United States. Global is the UK’s largest Radio and Outdoor media company. They both specialize in media and entertainment and why that is significant has everything to do with the latest headlines from the companies.
The two announced an exclusive partnership this week. This deal involves platform distribution and ad sales in the UK, Ireland, and the USA. Under this deal, iHeartMedia’s podcasts, which include over 800 diverse genres, will be available on Global Player and via DAX, Global’s digital advertising exchange.
Some notable iHeartPodcasts include ‘On Purpose with Jay Shetty’, ‘The Girlfriends’, and ‘Stuff You Should Know’. Similarly, Global’s high-profile podcasts will be accessible on the iHeartRadio App in the US and monetized by iHeartMedia. This includes titles like ‘The News Agents’, ‘My Therapist Ghosted Me’, and ‘Shaun Keaveny’s Daily Grind’.
The CEOs of both companies highlighted the potential for global growth and the opportunity to reach more audiences and advertisers through this partnership. While the partnership presents growth opportunities in the expanding podcast market, it’s important to consider market risks, including competition and changing consumer trends. The deal may be promising, but its success will depend on effective execution and market response.
In the meantime, iHeart CEO Robert Pittman is buying IHRT stock. This month he picked up 100,000 shares at an average price of $2.0595. This purchase also brought his total direct holdings to more than 3.1 million shares.
Ring Energy, Inc (REI)
The oil and gas company operates in the exploration, development, and production sectors. The company is based in The Woodlands, Texas. Ring Energy recently announced its third quarter 2023 results, highlighting key developments and financial metrics.
The company completed the acquisition of Founders Oil & Gas IV, LLC, resulting in increased sales volumes to 17,509 barrels of oil equivalent per day. Despite this growth, Ring Energy reported a net loss of $7.5 million due to losses on derivative contracts, contrasting with a net income in the previous quarter. However, they achieved a record Adjusted EBITDA of $58.6 million, a 10% increase from the second quarter, and remained cash flow positive for the 16th consecutive quarter.
The company also completed the sale of non-core-operated New Mexico assets for $4.5 million, resulting in net proceeds of approximately $3.8 million. Additionally, they updated their guidance for Q4 2023 based on current outlooks for sales volumes, operating expenses, and capital spending. These results reflect both the challenges and successes in the company’s operational and financial performance during the quarter.
Since these results came out, the market (and insiders) have been active. CEO Payl McKinney purchased 50,000 shares of REI stock on November 15. He paid an average price per share of $1.64, which brought his total direct holdings to more than 1.3 million shares.
List Of Penny Stocks To Buy According To Insiders
- Xeris Biopharma Holdings, Inc. (NASDAQ: XERS)
- iHeartMedia (NASDAQ: IHRT)
- Ring Energy, Inc. (NYSEAMERICAN: REI)
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