In this piece, we are going to present you the 5 best penny stocks to buy now. For an overview what penny stocks are and to get a more comprehensive list of companies, take a look at 10 Best Penny Stocks To Buy Now.
5. Kadmon Holdings Inc (NASDAQ:KDMN)
In Kadmon Holdings Inc (NASDAQ:KDMN), there were 24 investors holding shares at the end of September, down by five over the quarter. Joseph Edelman’s Perceptive Advisors and Mitchell Blutt’s Consonance Capital Management are among the top shareholders of the company with stakes worth $61.59 million and $54.91 million, respectively.
You have to pay attention whenever you see Perceptive Advisors among the top holders of a publicly traded stock. Joe Edelman’s healthcare focused hedge fund returned close to 54% in 2019 net of large hedge fund fees and this isn’t the first time he pulled off that feat. How many investors do you know who can deliver similar returns in multiple years.
4. Comstock Resources Inc (NYSE:CRK)
At the end of September, 24 funds held shares of Comstock Resources Inc (NYSE:CRK) with a total value of $123.59 million, significantly up from 17 funds and $82.36 million, respectively a quarter earlier. Matt Smith’s Deep Basin Capital, which is the top shareholder of Comstock Resources among the funds in our database, more than doubled its position during the quarter to 5.24 million shares worth $123.59 million.
This is another beaten down energy company that made our list of the best penny stocks to buy now. CRK is a very leveraged stock though. Even though its market cap is only $1.1 billion, its enterprise value is nearly $4 billion. Leveraged stocks could easily go bankrupt, but if CRK hasn’t gone bankrupt so far, it will probably survive the pandemic. If oil prices manage to climb above $60 in 2021, CRK investors can easily outperform the market by a huge margin.
3. Colony Capital Inc (NYSE:CLNY)
Colony Capital Inc (NYSE:CLNY) saw the number of bullish investors go up by eight to 24, while the aggregate value of their positions surged to $188.77 million from $83.81 million between July and September. Seth Klarman’s Baupost Group disclosed holding 22.62 million shares worth $61.76 million in its latest 13F filing.
2. Clear Channel Outdoor Holdings Inc (NYSE:CCO)
The number of funds from our database that hold shares of Clear Channel Outdoor Holdings Inc (NYSE:CCO) went up to 30 from 27 during the third quarter. Among these funds, Kenneth Mario Garschina’s Mason Capital Management and Don Morgan’s Brigade Capital are the top shareholders with $35.83 million and $18.35 million worth of stock, respectively.
We like outdoor advertising stocks but CCO is a highly leveraged stock. Its market cap is merely $650 million, but its enterprise value is more than $7 billion. Huge leverage means huge upside potential if things go well.
1. Genworth Financial Inc (NYSE:GNW)
With a total of 38 funds that held in aggregate $249.19 million worth of stock, Genworth Financial Inc (NYSE:GNW) is the most popular penny stock among hedge funds. The company saw an increase in bullish sentiment among the investors tracked by us, as three months earlier, there were 36 funds holding $164.49 million worth of shares. Among the top shareholders of Genworth Financial are Bill Miller’s Miller Value Partners and Himanshu H. Shah’s Shah Capital Management, which reported ownership of 10.34 million shares and 9.23 million shares, respectively, as of the end of September.
Bill Miller’s hedge fund is among the funds we track closely. They talked about GNW in their 2020 Q2 investor letter:
“Genworth Financial Inc. (GNW) declined -30.5% during the quarter as investors grew concerned on the potential closing of the acquisition by China Oceanwide. The company noted on their 1Q call that China Oceanwide’s financing plans were “progressing well,” but also noted that China Oceanwide was having discussions with third parties beyond their primary lender creating concern that the primary lender might not follow through on its commitment. Management noted that they expect the deal to close by June 30th, but noted that the buyer had allowed Genworth to explore alternatives it could pursue if the deal fell through. The company reported 1Q revenue of $1.84B below consensus of $1.99B with EPS of $0.07 below consensus of $0.27. After the quarter ended, the company announced another extension of the acquisition agreement with China Oceanwide. The new agreement extends the merger deadline to September 30th with an interim update on financing by August 31th. The company held a call to discuss the extension as well as “Plan B” options available to it if the deal fails.”
This concludes our list of the best penny stocks to buy according to hedge funds. Please also see 10 best large-cap stocks to buy now and 10 best value stocks to invest in.
Disclosure: None.
