Are insiders something that you follow in the market when it comes to penny stocks? Some consider this strategy “following the money” and has lead to a new trend among retail traders. Mimicking the actions of larger investors is something that has been around for decades. But its prevalence has become more apparent in recent months thanks to new retail traders looking for the edge.
You could follow things like meme stocks or penny stocks to buy according to analyst ratings. But in both cases, they’re missing a critical component. That component is support from the companies themselves. I’m not talking about more financing or reaching corporate milestones but actual “skin in the game,” so to speak. Insider trading is something that usually gives an added layer of sentiment to a company’s public perception. When insiders buy, the market generally takes this as a positive sign.
When it comes to insiders selling, well, that’s usually seen as a negative. There are some exceptions to the rule. Executives and other insiders may put themselves on buying or selling schedules. One example of this is the periodic stock sales in Amazon (NASDAQ:AMZN) by CEO Jeff Bezos. Does anyone need to sell $3 billion worth of stock? Not really, but Bezos has a preset selling schedule that he is not in control of to avoid conflicts of interest. All the same, it was a rescheduled event and, thus, doesn’t tend to hold as much weight as far as market sentiment is concerned.
In this article, we’ll take a closer look at a few penny stocks insiders are scooping up this month. Then you can decide if it’s worth taking a closer look before October or if you should avoid them entirely.
Stocks Mentioned:
Tuesday Morning (NASDAQ: $TUEM)
NGL Energy Partners (NYSE: $NGL)
Athenex (NASDAQ: $ATNX)
9 Meters Biopharma Inc. (NASDAQ: $NMTR)
Hall of Fame Resort & Entertainment Company (NASDAQ: $HOFV)
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