In this article, we will look at the 11 Best Rising Penny Stocks to Buy According to Hedge Funds.
On August 22, Tom Lee, Fundstrat’s head of research and chief investment officer, appeared on CNBC Television to discuss his reaction to Fed Chair Powell’s speech at Jackson Hole, market expectations, and what it all means for small-cap stocks.
Lee sees Jay Powell’s recent remarks as positive, as the Fed acknowledged the risks of a softening labor market and signaled a dovish stance. He noted that this means the Fed no longer views tight labor markets as a primary driver of inflation, which bodes well for the stock market, particularly small-cap stocks. Lee believes that a dovish Fed environment is a green light for small-cap stocks, which have outperformed recently by around 3-4%. He noted that one key indicator to look for is the mortgage rate, as the mortgage spreads are right now 360 basis points higher than the ten-year. Therefore, a potential drop in mortgage rates from the current high spread would boost housing and benefit financial small caps. Similarly, it could also result in the revival of the ISM manufacturing index, which has been below 50.
Lee is optimistic about further market rally potential, targeting an S&P 500 level near 4800 by year’s end, driven by financials and technology sectors.
With that, let’s take a look at the 11 best rising penny stocks to buy according to hedge funds.

Stocks
Our Methodology
To curate the list of 11 best rising penny stocks to buy according to hedge funds, we used the Finviz stock screener, Yahoo Finance, and Insider Monkey’s Q2 2025 database. Using the screener, we aggregated a list of penny stocks (trading under $5) that have gained more than 30% over the past month. Next, we cross-checked the performance from Yahoo Finance and ranked the stocks in ascending order of the number of hedge fund holders, sourced from Insider Monkey’s database. Please note that the data was recorded on August 25, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11 Best Rising Penny Stocks to Buy According to Hedge Funds
11. Galiano Gold Inc. (NYSEAMERICAN:GAU)
Price: $2.11
1 Month Performance: 40.67%
Number of Hedge Fund Holders: 8
Galiano Gold Inc. (NYSEAMERICAN:GAU) is one of the Best Rising Penny Stocks to Buy According to Hedge Funds. On August 20, Galiano Gold Inc. (NYSEAMERICAN:GAU) announced new drilling results from its Abore project at the Asanko Gold Mine in Ghana.
Management noted that the Phase 2 drilling program found several new high-grade gold zones in the Abore South and Main areas. Notably, a new significant high-grade discovery was made at Abore North, which lies below the current mineral resources. Some of the highlights from the discovery include 6.8 grams per tonne over 23 meters and 5.3 grams per tonne over 16.4 meters. Management believes that these findings will help expand the open-pit resources quickly, offering the company promising targets for further exploration.
Galiano Gold Inc. (NYSEAMERICAN:GAU) operates the Asanko Gold Mine in Ghana, which includes multiple open-pit gold deposits and a processing plant.
10. SNDL Inc. (NASDAQ:SNDL)
Price: $2.25
1 Month Performance: 46.10%
Number of Hedge Fund Holders: 9
SNDL Inc. (NASDAQ:SNDL) is one of the Best Rising Penny Stocks to Buy According to Hedge Funds. On July 31, SNDL Inc. (NASDAQ:SNDL) released its fiscal second-quarter results for 2025. The market has reacted positively following the announcement, as the stock has surged 30.81% since the announcement.
During the quarter, the company delivered a quarterly revenue of $244.8 million, reflecting 7.3% year-over-year growth. Management noted that the key drivers of this growth were the cannabis business, which grew 17.4% and a return to growth within its liquor retail segment. Notably, the gross profits also improved by 16.2% year-over-year to reach $67.6 million.
Looking ahead, management highlighted that they have agreed to acquire 32 cannabis retail stores from 1CM Inc. for $32.2 million, which are expected to close in Q3 2025.
SNDL Inc. (NASDAQ:SNDL) is a vertically integrated company that operates in both the cannabis and liquor retail sectors in Canada. It owns and operates several retail banners selling cannabis products, accessories, wines, beers, and spirits.