In this article, we will take a detailed look at the 13 Penny Stocks with Insider Buying in 2024. If you want to skip our detailed analysis and see the top 5 stocks in this list, click 5 Penny Stocks with Insider Buying in 2024.
Insider transactions have always drawn market attention as it’s now a well-known fact that when insiders are piling into a stock, the odds of it going higher in the future are pretty bright. Academics all over the world have conducted decades’ worth of research to reach this conclusion. For example, Mervyn King and Aisla Roell at the London School of Economics analyzed insider purchases in the UK stock market from January 1986 through August 1987.
Insider Trades Post Strong Returns in the Long Term
A total of 52 stocks in the dataset posted a 53% return in excess of The Financial Times-Actuaries All Share Index when evaluated one year after insider purchases. These returns shrunk to just about 3% when the time window was narrowed to one month following the insider trade date. That means insiders are long-term investors and they pile into their company shares based on information and growth catalysts that are expected to show their impact in the long term.
How Can Outsides Profit from Insider Trades Triggered by “Special Information”
Another research paper entitled The Linkage between Insider Trading Activities, Market Efficiency, and Stock Information Content cites an extremely useful study, published in 1968 by James H. Lorie and Victor Niederh, which takes a closer look at the connection between insider trading and stock returns. The study, which analyzed 200 large companies during the period from 1962 through 1968, found that insiders do operate with “special information.” However, mimicking insider trades are only profitable in the long term. The results showed that trades with 8-month holding periods “had large returns after transaction cost being taken into account.”
Insiders Don’t Always Enjoy “Superior Success”
However, paying attention to insider trades is a not always profitable. For example, the research by James H. Lorie and Victor Niederh randomly chose 30 companies and analyzed their data and returns from 1961-1964 and during 1957-1960. The results did not show insiders’ tendencies to trade with “superior success.” However, the researchers said complementing insider trades with “proper and prompt” analysis of data and research is useful.
A Vicious Cycle: Insiders Profiting From Market Reaction to Insider Trades?
Over the past several decades the market seems to have accepted that whenever insiders buy a stock it’s bound to go up and when insiders are selling a stock it’s headed for declines in the future. This assumption has in turn created a new opportunity for insiders: they often play the market by profiting from stock movements in response to insider trading activity. Insiders buy or sell their stock to cause a market response to generate profits, creating a vicious circle. This phenomenon was seen by researchers Dan Givoly and Dan Palmon in a study where they analyzed 68 companies listed on the AMEX from 1973 to 1975.
The paper The Linkage between Insider Trading Activities talked about this study:
“The study focused on observing the association between insider transactions and subsequent news disclosure to estimate and detect transactions that yield abnormal returns but did not find any consistent result to show that insiders exploit information about forthcoming news disclosure would realize abnormal gain. However, the result indicated that a significant abnormal return is produced as a result of the trades themselves, promoting the conjecture that public investors accept the superior knowledge and imitate the insiders’ trading behaviors (Givoly and Palmon, 86). In other words, the authors suggested that insiders’ gain might take place after public investors conduct transactions triggered by insiders.”
For this article we used Insider Monkey’s insider trading stock screener to identify penny stocks that saw insider buying activity in 2024. Why should you pay attention to insider trading activity? Insider Monkey’s monthly newsletter and portfolio that focuses on activist hedge funds, insider trading and stock picks from hedge fund investor newsletters and conferences returned 199.2% between March 2017 and March 12, 2024 and outperformed the S&P 500 ETFs’ 144.9% gain by more than 54 percentage points.
13. Marpai Inc (NASDAQ:MRAI)
Number of Hedge Fund Investors: N/A
Health plans services provider Marpai Inc (NASDAQ:MRAI) ranks 13th in our list of the penny stocks with insider buying in 2024. On March 7, 2024, Marpai Inc (NASDAQ:MRAI) CEO Damien Lamendola bought 910,000 shares of Marpai Inc (NASDAQ:MRAI) at $1.65 each. Since this transaction the stock has gained about 60% in value.
12. Flora Growth Corp (NASDAQ:FLGC)
Number of Hedge Fund Investors: 1
Cannabis products company Flora Growth Corp (NASDAQ:FLGC) is one of the penny stocks that saw insider buying this year. On April 8, 2024, Flora Growth Corp’s (NASDAQ:FLGC) CEO Clifford Starke bought 526,315 shares of Flora Growth Corp (NASDAQ:FLGC) at $1.90 per share. Since then the stock has lost about 33% in value.
11. Intrusion Inc. (NASDAQ:INTZ)
Number of Hedge Fund Investors: 3
Texas-based cybersecurity company Intrusion Inc. (NASDAQ:INTZ) is one of the notable penny stocks that recently saw insider purchases. On April 22, 2024, Intrusion Inc.’s (NASDAQ:INTZ) CEO Anthony Scott snapped up 585,748 shares of Intrusion Inc. (NASDAQ:INTZ) at $1.70 per share. Since then through May 8 the stock is down about 3.7%.
10. Modular Medical Inc (NASDAQ:MODD)
Number of Hedge Fund Investors: 5
Development stage medical device company Modular Medical Inc (NASDAQ:MODD) is one of the penny stocks with insider buying in 2024. On February 16, 2024, Manchester Management Co LLC, which has a director status at Modular Medical Inc (NASDAQ:MODD), bought 900,000 shares of Modular Medical Inc (NASDAQ:MODD) at $1.10 per share. Since this transaction the stock price has seen a decline of about 2.3%.
9. Corvus Pharmaceuticals Inc (NASDAQ:CRVS)
Number of Hedge Fund Investors: 8
Clinical stage biopharma company Corvus Pharmaceuticals Inc (NASDAQ:CRVS) ranks ninth in our list of the penny stocks with insider buying in 2024. On May 6, 2024, Richard A. Miller, MD, Corvus Pharmaceuticals Inc’s (NASDAQ:CRVS) CEO, bought 577,634 shares at $1.73 each. Since this transaction, as of May 8, the stock has gained about 2%.
Earlier this month the company talked at length about its pipeline and future plans:
“We plan to begin patient enrollment in our soquelitinib registrational Phase 3 clinical trial in relapsed PTCL in the third quarter of 2024. We are working with or are in advanced discussions with a number of leading centers in the United States and Canada. We anticipate about 40 centers will participate in the trial. The vast majority will be in the United States. Now for an update on soquelitinib for atopic dermatitis, the first immune disease indication we are evaluating. In April, we initiated patient enrollment in the first patient cohort of the trial. There is high interest in our trial from physicians due to several attractive features of soquelitinib. First, this is a first in class drug with a novel mechanism of action. Soquelitinib acts upstream by blocking Th2 and Th17 cells and thereby results in inhibition of many different cytokines involved in disease.
Second, it is an oral therapy and in our cancer studies has been shown to have very good safety profile and third, it may have broad utility across many different autoimmune and inflammatory diseases and this trial may prove provide proof of concept for the treatment of other immune diseases. The trial is designed to enroll 64 patients with moderate to severe atopic dermatitis that have progressed on at least one prior therapy. The study is randomized, placebo controlled and blinded to patients and treating physicians. There will be four sequentially enrolled cohorts of 16 patients, with patients in each cohort being randomized three to one to different dosing regimens of soquelitinib or placebo given for 28 days. The primary endpoint is safety and tolerability and efficacy is measured using investigator global assessments and the clinically validated measurement of improvement in eczema area and severity index score, also known as EASI.”
Read the full earnings call transcript here.
8. Zura Bio Ltd (NASDAQ:ZURA)
Number of Hedge Fund Investors: 10
Zura Bio Ltd (NASDAQ:ZURA) is one of the notable penny stocks that saw heavy insider buying this year. On April 22, 2024, Someit Sidhu, a director at Zura Bio Ltd (NASDAQ:ZURA), piled into 1,186,901 shares at $3.13 each. The total worth of this transaction was about $3.7 million. Since this transaction the stock has gained by a whopping 42%.
7. Absci Corp (NASDAQ:ABSI)
Number of Hedge Fund Investors: 14
Biotech company Absci Corp (NASDAQ:ABSI) is one of the penny stocks with insider buying in 2024. On March 1, 2024, Redmile Group, LLC, a director at Absci Corp (NASDAQ:ABSI), snapped up 222,222 shares at $4.50 each. Since this transaction the stock is down 9%.
6. Tenaya Therapeutics Inc (NASDAQ:TNYA)
Number of Hedge Fund Investors: 14
California-based Tenaya Therapeutics Inc (NASDAQ:TNYA) is one of the penny stocks with insider buying in 2024. On February 12, 2024, David V. Goeddel, a director at Tenaya Therapeutics Inc (NASDAQ:TNYA), piled into a whopping 2,222,222 shares of Tenaya Therapeutics Inc (NASDAQ:TNYA) at $4.50 each. Since then the stock is down 20%.
Click to continue reading and see 5 Penny Stocks with Insider Buying in 2024.
Suggested Articles:
- Insider Buying Alert: CEOs Are Buying These 10 Stocks
- 15 Best S&P 500 Dividend Stocks To Buy Now
- Insiders are Buying These 10 Undervalued Bank Stocks
Disclosure. None. 13 Penny Stocks with Insider Buying in 2024 was initially published on Insider Monkey.
