Trying to track down the best penny stocks to buy right now? Some traders will focus on technical indicators and charts. Others may look for news headlines or earnings reports. There’s another train of thought that simply “follows the money”. What I mean by this is some investors look at stocks with recent or constant insider buying. If you’re new to the market, this phenomenon may seem foreign to you. How could you possibly know when insiders of a company are buying stock?
How To Find Penny Stocks With Insider Buying
When I talk about insider trading, this isn’t like what you’ve probably seen in the movies. This isn’t a “Blue Horseshoe/ Anacott Steel” situation. Thanks to rules put in place by the Securities and Exchange Commission, insiders are required to report their trades publicly. If a CEO is buying shares, it gets disclosed in a Form 4.
The same is true if shares are being sold or options are being issued. But it isn’t solely limited to officers of a company. Larger shareholders are also required to file reports with the SEC showing their positions. Armed with this information, you can gauge the sentiment of those actually “in the know” and if they see potential in the companies they actually work for.
This article is a continuation of “5 Best Penny Stocks To Buy Right Now According To Insiders” published this month. To see that full list of penny stocks just click the link and you can read the update. Today we’ll take a look at a few more companies that’ve seen insider activity picking up recently. We’ll also take a look at any additional details that may be important to note when looking at these companies.
- Qumu Corporation (NASDAQ: QUMU)
- Surgalign Holdings Inc. (NASDAQ: SRGA)
- MannKind Corporation (NASDAQ: MNKD)
Qumu Corporation (NASDAQ: QUMU)
This year has been a difficult one for Qumu. A string of bad earnings hasn’t helped things either. But could the recent insider activity begin raising eyebrows in the market? If you look at the latest filings in QUMU stock, you’ll see a series of Form 4s files this month. The most recent came last Friday when director Kenan Lucas showed share purchases from his related funds, totaling more than 300,000 at average prices between $2.4447 and $2.5002. This latest purchase adds to the growing number of insiders buying QUMU stock in August.
Aside from this, the video technology company has a few other things to take into account. First, Qumu has been adding members to its leadership team including a new Chief Technology Officer, Andi Mann. Mr. Mann holds a strong track record when it comes to digital technology. He previously served at Splunk where he helped expand the company’s machine learning business. “Andi’s deep understanding of digital transformation and expertise in cloud software will be central to Qumu’s next phase of video content creation, management and analytics,” said TJ Kennedy, president, and CEO at Qumu.
Piggybacking off of this, the company announced a strategic partnership with JS Group earlier this month. The financial terms of the deal weren’t disclosed. However, the two look to enhance Qumu’s enterprise video network capabilities. With a rise in virtual learning and working, this could present an interesting situation for Qumu if it is able to execute on its latest endeavor with JS Group.
Surgalign Holdings Inc. (NASDAQ: SRGA)
Another one of the companies getting some love from insiders is Surgalign. Late last week, Director Nicholas Valeriani and CEO Terry Rich reported purchases of SRGA stock. In total, more than 1.1 million shares were purchased with the bulk (over 1 million) coming from Mr. Rich. If you look at the SRGA filings, you’ll also see that average purchase prices range between $0.91 and $0.95 between the two of them.
Similar to QUMU, this year has been hard on Surgalign. Shares have slipped from over $3 to under $1. But could this latest round of insider buying become a new catalyst? For those unfamiliar, the company focuses on digital surgery. In its most recent earnings update, Surgalign reported nearly$25 million in global spine revenue alone. This was compared to $20.5 million during the same quarter of 2020.
What’s more, the company has also made progress in the development of its Holo digital surgery platform. An initial 510(k) form was submitted to the FDA and the company anticipates having the first procedures performed using the platform in the U.S. by the end of the year. So, in addition to recent insider activity, any new updates on Holo could also be something to watch for heading into the second half of the year.
MannKind Corporation (NASDAQ: MNKD)
On the opposite end of the spectrum, MannKind Corp’s year has been much stronger. Since the start of 2021, MNKD stock has climbed from $3.15 to over $4 and also saw highs of $6.25 in between. One of the bigger drivers for the company is its commercial product portfolio. Its lead product, Afrezza is MannKind’s prescription glucose management product.
Patients inhale the dry insulin powder to control high blood sugar meant for those with type 1 or 2 diabetes. The company is also working with United Therapeutics (NASDAQ: UTHR) to advance its Tyvaso product as a potential treatment for pulmonary arterial hypertension and pulmonary hypertension associated with interstitial lung disease.
Second-quarter results came in strong for MannKind with Afrezza driving revenue. Specifically, there was a 43% boost in Afrezza net revenue for the quarter. While continued progress with its product pipeline will likely be a focus, recent insider activity could also add some excitement to the mix. Earlier this month, a series of Form 4s came out showing officers of the company participating in MannKind’s Employee Stock Purchase Plan.
Several thousand shares were purchased by insiders at a price of $2.99 as laid out in the purchase plan. Another thing revealed in the MNKD stock filings was an 8-K posted on August 16th. In it, the company reported that it and United Therapeutics entered into a commercial supply agreement last week. MannKind is responsible for manufacturing products and United will purchase the products on a cost-plus basis. The agreement is set to expire in August of 2026 unless terminated earlier.
Should You Buy Penny Stocks That Insiders Are Buying?
This is a great question to ask at the end of the day. Just because an insider is buying or selling, that may not directly correlate to the success or failure of a company. It’s important to not only observe the trading activity but also dig a bit deeper and understand the circumstances surrounding each trade.
Was the purchase part of a predetermined plan? Did a CEO sell because he had already filed a form that scheduled share sales throughout the year? Are company directors building larger positions because of related corporate events? These are just a few of the things to think about when looking at penny stocks with insider buying.
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Ultimately, it’s up to you to decide if a company is a good investment for you or not. These are just a few of the companies seeing insider buying right now. For the first 5 penny stocks on this list, check out: 5 Best Penny Stocks To Buy Right Now According To Insiders