In this article, we will take a detailed look at Insiders Are Buying These 11 Penny Stocks. For a quick overview of such stocks, read our article Insiders Are Buying These 5 Penny Stocks.
US stock market started the second quarter of 2024 in the red, driven by rising treasury yields, broader volatility and uncertainty around rate cuts as inflation remains sticky. Julian Emanuel, Evercore ISI senior managing director, recently talked to CNBC and said that it was surprising for him to see how well the market took the Fed’s revised expectations of three rate cuts this year instead of six rate cuts initially expected. But the analyst said that a further shift from three rate cuts to two cuts won’t be easy for the market to digest. Emanuel said that the market was 10% higher in the first quarter and its earnings expectations for the rest of 2024 are higher by “no landing” scenario. Emanuel also thinks there is volatility ahead since the CPI data point has become “unbelievably important” and the market would be on “pins and needles” when it comes to the Fed’s decisions in the coming weeks and months. The analyst, who has a year-end target of 4750 for the S&P 500, said the Fed’s indication of two or three rate cuts could further boost treasury yields because the market still expects inflation to remain high for a long period of time. This is what bothers the stock market, according to Emanuel. He said that when you have the market betting on $2 trillion market cap stocks to double over a matter of a few days, there’s something wrong and shows the market needs correction. Overall, Emanuel thinks this is not the end of the bull market. He thinks it’s a normal correction since we are priced for “great earnings”, “great interest rates trajectory” and inflation “not being as sticky as it’s proven in the last couple of months.”
Should The Fed Give Up On Its Inflation Target?
Many analysts and experts were already expecting the Federal Reserve and the overall markets to eventually accept higher-than-before inflation as a new normal. For example Switzerland-based Julius Bär Group AG, in its 2024 outlook report, predicted:
“Inflation usually lags growth, i.e. there is generally a delay in terms of when inflation is visible in an economy. However, in the current cycle, the effects have been immediate and enormous. Looking ahead, inflation should continue to fall closer to the comfort zone of central banks. The question now is when will inflation bottom? The risk is that overly restrictive policies for a longer period of time could hamper the recovery of economies. Thus, we believe that Western governments and central banks will choose to accept slightly higher inflation of around 3%. The reasons for this include the post-crisis normalisation of demand and, more importantly, supply-side factors, e.g. geopolitical tensions have led to a change in global supply chains, and demographic pressures in the workforce in the West and in China could limit the labour supply going forward and put upward pressure on wages.”
Would the Fed fed give up on its 2% inflation target or settle on a higher-for-longer scenario? Only time would tell. For now investors will have to keep looking over their shoulders for more clarity and data.
In this scenario, it’d be interesting to take a look at what penny stocks insiders are buying despite the current volatility and more turbulence ahead. For this article we first used Insider Monkey’s insider trading stock screener and listed down penny stocks (under $5) that saw insider buying activity over the past few weeks. From these companies we chose the penny stocks with the highest insider buying activity in terms of dollar value. But why is it important to keep tabs on hedge fund and insider activity? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Photo by jason briscoe on Unsplash
11. Azitra Inc. (NYSE:AZTR)
Number of Hedge Fund Investors: N/A
Azitra Inc. (NYSE:AZTR) makes treatments for skin diseases. The stock ranks 11th in our list of the penny stocks insiders are buying. On March 29, Azitra Inc.’s (NYSE:AZTR) CFO Norm Staskey bought 47,600 shares of Azitra Inc. (NYSE:AZTR). Since then the stock price is almost flat.
10. Cartesian Therapeutics Inc (NASDAQ:RNAC)
Number of Hedge Fund Investors: N/A
Cartesian Therapeutics Inc (NASDAQ:RNAC) is known for mRNA cell therapies for autoimmune diseases. On January 17, Timothy A. Springer, Ph.D, a board member, bought 18,400 shares of Cartesian Therapeutics Inc (NASDAQ:RNAC) at $0.62 per share. Since then the stock is down 22%. The same director bought 19,044 shares of Cartesian Therapeutics Inc (NASDAQ:RNAC) on March 18 at $0.60 per share. He also bought 1,185,872 shares of Cartesian Therapeutics Inc (NASDAQ:RNAC) for $0.56 a piece on March 14.
9. Alzamend Neuro Inc (NASDAQ:ALZN)
Number of Hedge Fund Investors: 1
Alzamend Neuro Inc (NASDAQ:ALZN) makes treatments for Alzheimer’s disease. On January 5, Milton “Todd” Ault III, a director at Alzamend Neuro Inc’s (NASDAQ:ALZN) board, bought 5,000 shares of Alzamend Neuro Inc (NASDAQ:ALZN). Since then the stock is down 7.37%.
8. Summit Therapeutics Inc. (NASDAQ:SMMT)
Number of Hedge Fund Investors: 3
Summit Therapeutics Inc. (NASDAQ:SMMT) ranks eighth in our list of the penny stocks with recent insider purchases. Dr. Maky Zanganeh, who is the Co-Chief Executive Officer and President of Summit Therapeutics Inc. (NASDAQ:SMMT) as well as a board member, on March 27 bought 110,321 shares of Summit Therapeutics Inc. (NASDAQ:SMMT) at $3.73 per share. Since then the stock price has increased 5.33%.
As of the end of the fourth quarter of 2023, just three hedge funds had stakes in Summit Therapeutics Inc. (NASDAQ:SMMT).
In a latest earnings call the company talked about future plans and shared progress on its projects:
“A decision is expected in the second quarter of this year from the CDE. We also expect that Akeso will provide a data readout of the top line results of their Phase 3 trial at this time. Additionally, Akeso has an interim analysis planned for next quarter for its study comparing ivonescimab to pembrolizumab in a monotherapy setting for first-line advanced lung cancer patients harboring tumors with positive PD-L1 expression referred to as AK112-303. This head-to-head trial against pembrolizumab is a major milestone for ivonescimab, both in differentiating ivonescimab from a PD-1 antibody, as well as illustrating the potential of its novel mechanism of action that simply does not exist in oncology therapeutics today. Given the direct implications of the AK112-301 results on our HARMONi study, as well as the potential ability to compare ivonescimab pembrolizumab in AK112-303, we believe these events will be pivotal moment drivers in ivonescimab’s development globally.
As mentioned earlier, we also plan to complete enrollment in a HARMONi study in the second half of this year, providing momentum towards a submission for ivonescimab in our licensed territories. While non-small cell lung cancer indication represent our initial development plan for ivonescimab, we will continue to expand our clinical program. HARMONi and HARMONi-3 represent the first step in our strategy and we believe ivonescimab has potential in both additional non-small cell lung cancer indications and in other solid tumors. In addition to progressing our internal development program, we appreciate a high level of enthusiasm we are hearing from key opinion leaders and other physician leaders for what ivonescimab can do to make significant positive difference in and outside of lung cancer.
We continue to receive and are considering multiple inquiries for potential investigator sponsored trials or ISD programs. We expect to share additional information later in 2024.”
Read the full earnings call transcript here.
7. Retractable Technologies Inc (NYSE:RVP)
Number of Hedge Fund Investors: 3
Safety needles and syringes company Retractable Technologies Inc (NYSE:RVP) ranks seventh in our list of the penny stocks insiders are buying. On March 6, Retractable Technologies Inc’s (NYSE:RVP) CEO and President Thomas J Shaw bought 6,068 shares of Retractable Technologies Inc (NYSE:RVP). Since then the stock is down 7%.
Out of the 933 funds tracked by Insider Monkey, three hedge funds had stakes in Retractable Technologies Inc (NYSE:RVP).
6. BioCardia Inc (NASDAQ:BCDA)
Number of Hedge Fund Investors: 3
BioCardia Inc (NASDAQ:BCDA) makes cellular and cell-derived therapeutics to treat heart diseases. The penny stock recently saw insider buying activity as its CEO Peter Altman bought 500 shares of BioCardia Inc (NASDAQ:BCDA) at $0.39 per share on March 28.
Since then the stock is down 2.44%.
Click to continue reading and see Insiders Are Buying These 5 Penny Stocks.
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Disclosure. None. Insiders Are Buying These 11 Penny Stocks was initially published on Insider Monkey.