In this article, we will look at the 12 Best Penny Stocks to Invest In According to Billionaires.
The Russell 2000 Index, which represents small-cap companies, has gained 18.75% year to date. This performance surpasses that of its large-cap counterpart, the Russell 1000, which has gained only 9.12% during the same time. The S&P 500 Index also lags the Russell 2000 Index, with a 9.21% year-to-date return.
As per a recent report by CNBC, this performance is one of the best since 1991 and is mainly driven by the huge capital expenditure on AI from large-cap companies. As per the report, the AI capital expenditure from large and mega-cap companies has a trickle-down effect for smaller companies, which has been one of the leading causes of the small-cap rally. Moreover, the small-caps have also benefited from the broadening out trade as analysts have been cautioning investors to barbell their investment with small-cap stocks.
Recently, on June 23, Scott Chronert from Citi appeared on a CNBC Television interview to discuss his investment strategy. He noted that the S&P 500 is expected to end the year with good returns. However, he advised investors to balance or broaden out their portfolios with small-cap stocks, as Scott believes the small-cap rally has legs to run further.
With that, let’s take a look at the 12 Best Penny Stocks to Invest In According to Billionaires.
Our Methodology
To curate the list of 12 Best Penny Stocks to Invest In According to Billionaires, we used the Finviz Stock Screener and Insider Monkey’s billionaires database. First, using the screener, we aggregated a list of penny stocks (trading below $5) and sorted them by market capitalization. Next, we ranked these stocks in ascending order of the number of billionaire investors, sourced from Insider Monkey’s Q1 2026 database.
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. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
12 Best Penny Stocks to Invest In According to Billionaires
12. Prospect Capital Corporation (NASDAQ:PSEC)
Number of Billionaire Investors: 8
Total Value of Holdings: $59.3 billion
Number of Hedge Fund Holders: 14
Prospect Capital Corporation (NASDAQ:PSEC) is one of the Best Penny Stocks to Invest In According to Billionaires. Recently, on July 6, Prospect Capital Corporation (NASDAQ:PSEC) announced its investment in ShipOffers through a combination of a first-lien senior secured term loan and an equity-linked investment.
Management noted that ShipOffers is a 25-year-old e-commerce fulfillment company. The company offers sourcing, order processing, warehousing, packing, shipping, and real-time tracking for brands. The company provides these services for companies mainly in the health, beauty, nutraceutical, and consumer products spaces. It operates facilities in Colorado, Tennessee, and the Netherlands, allowing it to serve clients across both the US and Europe.
In addition, management described the investment as growth capital, suggesting it is meant to help the company expand its team, technology, and any physical facilities. Prospect’s Angel Solis framed the investment as support for a proven, differentiated platform entering its next growth phase.
Prospect Capital Corporation (NASDAQ:PSEC) is a business development company that focuses on lending to and investing in private businesses. The company’s debt and equity investments allow it to generate current income and achieve long-term capital appreciation.
11. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA)
Number of Billionaire Investors: 12
Total Value of Holdings: $136.5 billion
Number of Hedge Fund Holders: 33
Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is one of the Best Penny Stocks to Invest In According to Billionaires. Recently, on June 30, Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) updated its corporate presentation, highlighting its position as a global leader in tumor-infiltrating lymphocyte cell therapy.
The update noted that the company has now treated more than 1,500 patients through its commercial and clinical programs. The treatment has been expanded to more than 90 treatment centers as of May 7. The company also holds around $319 million in cash, which gives the runway into 2028.
Moreover, Iovance’s lead product, Amtagvi, for the treatment of advanced melanoma, remains on a strong trajectory. Management has provided strong full-year revenue guidance of $350 million to $370 million and Q2 guidance of $86 million to $88 million. Beyond melanoma, the company is expanding its solid tumor pipeline by testing Lifileucel in metastatic non-small cell lung cancer and soft tissue sarcoma, alongside multiple phase 2 and 3 trials. These efforts aim to build on its melanoma success and establish TIL therapy as a foundational immuno-oncology treatment across solid tumors.
Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is a commercial-stage biopharmaceutical company pioneering tumor-infiltrating lymphocyte (TIL) therapies to treat cancer. By harvesting and multiplying a patient’s own immune cells, they create personalized immunotherapies designed to recognize and destroy solid tumors.
