With the first quarter of 2023 coming to an end, the stock market continues to be in a topsy-turvy environment. 2023 was off to a strong start with major markets such as the New York Stock Exchange (NYSE) and the NASDAQ Composite posting double digit returns after taking months of beatings in 2022 due to rising inflation and interest rates. However, the glory of 2023 was put to a screeching halt by the chairman of the Federal Reserve’s Monetary Policy Committee (MPC) Mr. Jerome Powell as he took the stand in Congress as part of his semiannual monetary policy report. Chairman Powell, who has been forced to take an aggressive approach towards interest rates as part of his institution’s battle against inflation, had signaled earlier that the Fed might take the foot off the pedal and reduce the pace of its interest rate hikes to 25 basis points (o.25%) since inflation appeared to be cooling down.
However, both he and investors were surprised in February 2023 when inflation data for January saw prices increase once again and potentially signaled that the central bank’s fight against inflation still had some way to go. Mr. Powell confirmed these fears, as he testified to Congress that:
With inflation well above our longer-run goal of 2 percent and with the labor market remaining extremely tight, the FOMC has continued to tighten the stance of monetary policy, raising interest rates by 4-1/2 percentage points over the past year. We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In addition, we are continuing the process of significantly reducing the size of our balance sheet.
While on the surface these remarks appear to be benign, they are anything but. The ‘target range’ that Mr. Powell mentioned is the peak benchmark interest rate that his organization will hike rates up to before stopping. This is a crucial metric since it influences investor estimates about the base rate that they should expect from the stock market, and the higher it goes, the more they become wary of the stock market.
In this backdrop, investing in the market right now is a daunting task. Take for instance the shares of Tesla, Inc. (NASDAQ:TSLA). The largest electric vehicle maker in the U.S. faced a bloodbath in 2022, but is off to a strong start this year when its year to date price growth is considered. Tesla’s shares are up by 67.8% year to date. However, over the past month, the shares are down by 12%, indicating the highly volatile nature that is currently the main feature of most stocks.
One segment of the market that is relatively safer to invest in only when the entry price is considered is the penny stock segment. Penny stocks are defined as those whose share price is below $5. Penny stocks are quite controversial as well, especially since in the stock market, not money, but the information is king. If you can legally find out the right set of facts before others, and use them to make an investment, then you can profit from both a growth in share price by going long or its fall by going short. Penny stocks offer the potential for both massive returns due to their low entry points, and big losses due to wild price fluctuations that can bite out double digit percentages from the price at a moment’s notice. Not to mention, they are also often used as pump and dump scams where fraudsters buy shares in bulk, drive the price up, convince unsuspecting investors to also ‘catch in on the trend’, and once enough people have piled in, sell in bulk to reap the illicit profits.
This uncertainty around penny stocks combined with the fact that firms in the penny stock category are often not well covered by either the media or analysts leave a considerable amount of risk out in the open when investing in them. However, one area of interest that can potentially be of aid is insider transactions – where the firm’s management themselves buy the shares. These transactions are required to be reported to the SEC, and they often provide insight into a firm.
Today we’ve done just this for penny stocks, and some of these that are currently seeing insider attention are Summit Therapeutics Inc. (NASDAQ:SMMT), Flotek Industries, Inc. (NYSE:FTK), and OPKO Health, Inc. (NASDAQ:OPK).
Photo by Ruben Sukatendel on Unsplash
Our Methodology
We used a stock screener to list down all penny stocks that have had significant insider transactions reported during the ten days ending on March 8, 2023. Then, all the transactions were filtered for the purchases, added up for a final dollar amount, and ranked to make a final list out of which the top ten are selected and listed here. If you’re interested in more penny stocks, be sure to check out 15 Most Profitable Penny Stocks.
10 Penny Stocks with Insider Buying
10. Ensysce Biosciences, Inc. (NASDAQ:ENSC)
Total Value of Insider Purchases: ~$128,000
Number of Hedge Fund Investors in Q4 2022: 16
Ensysce Biosciences, Inc. (NASDAQ:ENSC) is a biotechnology company headquartered in La Jolla, California. The firm sells drugs for opioid abuse, pain, fibrosis, and other diseases.
Ensysce Biosciences, Inc. (NASDAQ:ENSC)’s director Bob Gower bought 270,000 shares of the firm for roughly $128,000 in March 2022. The firm’s shares started to trade on the stock market in 2021, and it announced in February 2023 that it has finished gathering trial data for an abuse drug and had locked the dataset. Two out of the 943 hedge funds surveyed by Insider Monkey during last year’s fourth quarter had bought the firm’s shares.
Summit Therapeutics Inc. (NASDAQ:SMMT), Flotek Industries, Inc. (NYSE:FTK), and OPKO Health, Inc. (NASDAQ:OPK) are met by Ensysce Biosciences, Inc. (NASDAQ:ENSC) as a penny stock with insider interest.
9. Gran Tierra Energy Inc. (NYSE:GTE)
Total Value of Insider Purchases: $129,000
Number of Hedge Fund Investors in Q4 2022: 16
Gran Tierra Energy Inc. (NYSE:GTE) is a Canadian oil and gas exploration firm. It is headquartered in Calgary, Canada, and has operations in Columbia and Ecuador. The firm has total proved reserves of 25 million barrels.
Gran Tierra Energy Inc. (NYSE:GTE)’s chief executive officer Mr. Guidry Gary bought 150,000 shares of the firm for $129,000 on March 3, 2023. Insider Monkey scouted 943 hedge fund portfolios for their December quarter of 2022 investments and found out that 16 had invested in the company.
Gran Tierra Energy Inc. (NYSE:GTE)’s largest investor in our database is Thomas E. Claugus’ GMT Capital which owns 22.5 million shares that are worth $22 million.
8. TETRA Technologies, Inc. (NYSE:TTI)
Total Value of Insider Purchases: ~$205,000
Number of Hedge Fund Investors in Q4 2022: 18
TETRA Technologies, Inc. (NYSE:TTI) is an American oil and gas equipment and services provider headquartered in The Woodlands, Texas. The firm provides oil companies with products and services for well drilling and completion, alongside letting them manage water on their sites.
TETRA Technologies, Inc. (NYSE:TTI) chief executive officer and chief financial officer bought 60,00 shares in March 2023 for an approximately $205,000 stake. The company is currently developing bromine resources in Arkansas. 18 of the 943 hedge funds part of Insider Monkey’s Q4 2022 survey had bought a stake in TETRA Technologies, Inc. (NYSE:TTI).
Out of these, Graham Morris’ Highland Peak Capital is TETRA Technologies, Inc. (NYSE:TTI)’s largest investor. It owns 3 million shares that are worth $10 million.
7. Asensus Surgical, Inc. (NYSE:ASXC)
Total Value of Insider Purchases: $207,577
Number of Hedge Fund Investors in Q4 2022: 3
Asensus Surgical, Inc. (NYSE:ASXC) is a medical devices company headquartered in Durham, North Carolina. The firm develops and sells robots that help surgeons during surgery. Its products include a four armed robot, instruments, hooks, and energy devices to melt tissue.
Asensus Surgical, Inc. (NYSE:ASXC)’s director Biffi Andrea bought 293,077 shares of the company that cost $207,577 on March 3, 2023. The company is quite confident about its robots’ prowess, as it believes that the Food and Drug Administration (FDA) will soon clear them for pediatric use as well.
Insider Monkey dug through 943 hedge fund holdings for their fourth quarter of 2022 investments and found out that three had also bought Asensus Surgical, Inc. (NYSE:ASXC)’s shares.
6. ObsEva SA (NASDAQ:OBSV)
Total Value of Insider Purchases: $440,000
Number of Hedge Fund Investors in Q4 2022: N/A
ObsEva SA (NASDAQ:OBSV) is a biotechnology company that is based in Geneva, Switzerland. The firm focuses on developing treatments for women who are suffering from uterus diseases resulting from fibrosis, women who are undergoing vitro fertilization, and other issues.
ObsEva SA (NASDAQ:OBSV)’s director Loumaye Ernest bought a massive four million shares of the company for $440,000 on February 28, 2023. The firm is currently downsizing its U.S. operations to save on costs and plans to operate primarily from Switzerland.
Flotek Industries, Inc. (NYSE:FTK), OPKO Health, Inc. (NASDAQ:OPK), and Summit Therapeutics Inc. (NASDAQ:SMMT) are some penny stocks with insider buying.
Click to continue reading and see 5 Penny Stocks with Insider Buying.
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Disclosure: None. 10 Penny Stocks with Insider Buying is originally published on Insider Monkey.