If there’s one thing that gets traders excited about penny stocks, it’s when “big buyers” are present. But how would you know a major institution was buying shares of a company? Furthermore, how could you find out if insiders are joining the party too? Is it a big secret that only Wall Street’s elite know about? To the untrained eye, you might think that would be the case. But all you really need to do is know where to look, and public information is readily available.
If you read our article, “Penny Stocks & Due Diligence: Understanding Important SEC Filings,” you’ve got a good idea of what to look for. We’re going to focus on things like Form 4s for insiders and 10% owners. As far as institutional interest goes, you’ll often find the information in things like 13Ds and 13Gs. As we explained:
These Schedules involve parties reporting ownership of stock that is over 5% of a certain equity class in a company. That 5% threshold is considered “significant ownership” of a company. Because of this, it must be declared. There are much longer format definitions of these forms. But the main difference involves the size of the investor. A Schedule 13D is filed by an “active investor” and those owning more than 20% of the outstanding shares.
A 13G pertains to “passive investors” owning less than 20% of a company’s outstanding shares. Once a “passive investor” reaches more than 20% of the OS, they need to start filing 13D statements. These are important because we’ll see which large funds or investors are taking a larger position in a company. These typically lift sentiment for a given company.Is Insider Or Institutional Ownership Important?
When it comes to the importance or lack thereof, it really comes down to the firm or individual purchasing or reporting a position. A 0.2% stake might be menial, a 5% stake from a major fund could be big and a reflection of confidence in the market behind a particular company.
On the other hand, when it comes to company directors or management buying shares, usually the size of the position matters, but not as much as the fact that insiders are buying. Again, it’s relatively situational in nature, but the act of bigger buyers taking a position usually raises eyebrows at the very least. Here are 4 companies with recent filings showing such positions:
- 22nd Century Group Inc. (NYSE: XXII)
- Express Inc. (NYSE: EXPR)
- Oblong Inc. (NASDAQ: OBLG)
- Corvus Pharmaceuticals (NASDAQ: CRVS)
Shares of 22nd Century have been in rally-mode since mid-November. How much of a rally? Well, during the period from November 13th through this week, XXII stock has climbed as much as 505%. It also reached fresh 52-week highs of $4.66, a price it hasn’t traded at since 2014. While the company’s focus had been on its low nicotine tobacco product, a more current point of interest is on the pot play that the company has begun establishing.
Earlier this month, 22nd Century and KeyGene launched an advanced technology platform for accelerating the development of new varieties of hemp and cannabis plants. Considering that KeyGene has an established base in plant research specific to increasing crop yields, it could be beneficial for 22nd Century.
Furthermore, look at the company’s most recent 13G. ETF Managers Group reported an 8.89% stake in the company in a filing last week. ETF Managers Group LLC is also the name of the company associated with the ETFMG Alternative Harvest ETF. This was an increase to the previously reported stake from just one week prior.Express Inc.
Penny stock traders have had Express on their watch list for the last several weeks now. Reddit traders got behind EXPR earlier this year in the flurry of short-squeezes that went on across the market. Most notably was GameStop, but shares of Express, Nokia, AMC, and many others were part of the excitement. While the stock has been trying to establish new support, institutions have reported stakes in the company.
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Last week Charles Schwab Investment Management, Inc reported a 7.33% stake in the company. This was the latest in a series of institutional stakes reported since the end of January. Also getting into the mix have been The Vanguard Group, Renaissance Technologies, and Contrarius Investment Management – Check out all EXPR filings.
One thing to mention if EXPR is on your list right now is the S-3 that was just filed. This is a shelf registration for 25 million shares. Obviously, any financing rounds can dilute the market. So if EXPR has caught your attention, make sure to understand the risks involved with any offering.Oblong Inc.
Shares of Oblong have been off and on our list of penny stocks to watch over the last few months. The company has been in the spotlight especially during the pandemic for its collaboration solutions. Oblong’s Mezzanine™ solution was awarded a new Cisco Certification in the Content Experiences category this year.
Mezzanine’s integration with Webex allows distributed teams to share up to 10 live streams of content simultaneously. Using newly added features in Webex, touch-enabled devices can now remotely connect participants to a Mezzanine experience.
Obviously, stocks like Zoom and, of course, Cisco Systems grabbed attention thanks to virtual engagement. With that, it might make a bit more sense that certain institutional investors have moved to gain exposure to this niche. In Oblong’s case, Greenspring Opportunities Fund and Foundry Group Select reported stakes in the company recently.Corvus Pharmaceuticals
Corvus had a monster day on Monday. It was one of the companies that we discussed over the weekend in our article, “5 Penny Stocks To Buy With Up To 219% Upside According To Analysts.” Monday’s session did not cease to amaze the market as CRVS stock shot up more than 20% on one of its highest share volume days in months. We pointed out that the company’s recent funding round would be used for advancing its Phase 3 clinical trial of CPI-006, among other things. CPI-006 is the company’s immunotherapy. It’s begin evaluated in a Phase 3 clinical study for treating hospitalized patients with COVID-19.
Furthermore, we highlighted that analysts at H.C. Wainwright were also increasingly bullish on the stock. The firm has a Buy on the stock along with a $12 price target right now. Now, with cash in hand, the market appears to have also grown more bullish on the penny stock. This includes institutional investors and insiders.
Biotechnology Value Fund, OrbiMed Advisors, and associated trusts of the company’s CEO all filed 13Gs and 13Ds this month, in addition to several Form 4s. Furthermore, co-founder and board member Peter Thompson also reported the purchase of 1,285,714 in the company’s last registered offering at $3.50. With growing support from insiders and institutions, will CRVS continue to climb after the epic session it had on February 22?