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.
10. AMC Entertainment Holdings, Inc. (NYSE:AMC)
Number of Billionaire Investors: 13
Total Value of Holdings: $29.7 billion
Number of Hedge Fund Holders: 35
AMC Entertainment Holdings, Inc. (NYSE:AMC) is one of the Best Penny Stocks to Invest In According to Billionaires. Recently, on June 25, AMC Entertainment Holdings, Inc. (NYSE:AMC) announced the closing of a registered direct stock offering by selling 95,250,000 shares at $2.00 each. The company raised approximately $200 million in gross proceeds.
Management noted that they plan to use most of the proceeds to redeem all $125,471,000 of its 6.125% Senior Subordinated Notes due 2027. This move pushes back AMC’s next major debt repayment to 2029 and is expected to cut annual cash interest expense by about $7.7 million. Moreover, remaining funds will cover offering-related fees and expenses, plus general corporate purposes such as repayment of other debts.
The company also plans to invest leftover cash into theater upgrades starting this fall, focusing on premium seating and screens at its top-performing locations. The company’s CEO, Adam Aron, noted that the offering strengthens the company’s balance sheet and cash position.
AMC Entertainment Holdings Inc (NYSE:AMC) is the largest movie theatre chain in the world. It operates roughly 850 theatre locations across the globe and focuses on delivering premium experiences. Its theatres feature power-recliner seats and offer a wide variety of content as well as food and beverage choices.
9. Archer Aviation Inc. (NYSE:ACHR)
Number of Billionaire Investors: 13
Total Value of Holdings: $75.5 billion
Number of Hedge Fund Holders: 31
Archer Aviation Inc. (NYSE:ACHR) is one of the Best Penny Stocks to Invest In According to Billionaires. The stock has declined roughly 43% over the past 6 months, mainly due to an adjusted EBITDA loss of $172.5 million and free cash use of approximately $182 million during fiscal Q1 2026.
Despite the loss, Wall Street remains bullish on Archer Aviation Inc. (NYSE:ACHR), with analysts’ 12-month price target suggesting more than 130% upside from the current level. The optimism comes as CEO Adam Goldstein highlighted major progress across certification, commercial readiness, and defense and AI initiatives during the quarter.
Notably, the company expects Midnight aircraft operations to begin in US cities this year under the White House’s eVTOL Integration Pilot Program. The Midnight aircraft is also expected to serve as the official air taxi provider for the LA28 Olympic Games and was selected as the air taxi partner across 8 states, including Florida, Texas, and New York.
In terms of the certifications, Archer Aviation Inc. (NYSE:ACHR) became the first eVTOL company to close Phase 3 of the FAA’s 4-phase Type Certification process, while already advancing into Phase 4 testing.
Archer Aviation Inc. (NYSE:ACHR) is an American company that is designing and developing electric vertical takeoff and landing (eVTOL) aircraft for use in urban air mobility networks.
8. Coty Inc. (NYSE:COTY)
Number of Billionaire Investors: 13
Total Value of Holdings: $85.0 billion
Number of Hedge Fund Holders: 21
Coty Inc. (NYSE:COTY) is one of the Best Penny Stocks to Invest In According to Billionaires. On July 2, Coty Inc. (NYSE:COTY) announced major organizational changes aimed at accelerating the company’s Coty.Curated strategy.
Management noted that the Executive Chairman and interim CEO, Markus Strobel, will take direct oversight of Prestige’s commercial operations, with regional leaders now reporting to him. This move is aimed at speeding up decision-making and improving accountability for sales.
In addition, the company is also merging Prestige R&D, sustainability, and supply chain into one function, led on an interim basis by Chief Supply Chain Officer Graeme Carter. On the other hand, Consumer Beauty will remain under Gordon von Bretten’s existing integrated model.
Management noted that these changes come alongside several leadership departures, as Caroline Andreotti, Chief Commercial Officer, Prestige, will leave in September after serving the company for nearly 20 years. Moreover, Dr. Shimei Fan, Chief Scientific and Sustainability Officer, is also departing in August.
Coty Inc. (NYSE:COTY) is a producer, distributor, and marketer of beauty products around the world. It operates through various retail and online channels, and offers different products, including color cosmetics, fragrances, skin care products, and more. It covers a long list of brands such as Gucci, Orveda, Vera Wang, Tiffany & Co., and more.
7. Plug Power Inc. (NASDAQ:PLUG)
Number of Billionaire Investors: 13
Total Value of Holdings: $280.6 billion
Number of Hedge Fund Holders: 20
Plug Power Inc. (NASDAQ:PLUG) is one of the Best Penny Stocks to Invest In According to Billionaires. Plug Power Inc. (NASDAQ:PLUG) has announced significant developments over the past months, which have resulted in the stock gaining around 10% over the past 6 months.
Firstly, the company posted results for its fiscal Q1 2026 quarter on May 11. During the quarter, the company reported 22% year-over-year revenue growth to $163.5 million. Although still negative, the gross margins improved sharply from -55% to -13%, driven by cost cuts, better service execution, and more efficient fuel sourcing.
More recently, on June 24, Plug Power announced completing a major milestone at the Måde Power-to-X facility in Esbjerg, Denmark, operated by European Energy. Management noted that the project involved installing, testing, and handing over a 5 MW GenEco PEM electrolyzer system.
The company’s containerized system design simplified on-site work and sped up the path to production. With this project, Plug Power now has more than 70 GenEco electrolyzer systems running across six continents, giving it a growing base of operating experience to refine design and commissioning.
Plug Power Inc. (NASDAQ:PLUG) is an alternative energy technology firm. It designs, develops, commercializes, and manufactures hydrogen and fuel cell systems for the material handling and stationary power fields.
6. MannKind Corporation (NASDAQ:MNKD)
Number of Billionaire Investors: 14
Total Value of Holdings: $48.0 billion
Number of Hedge Fund Holders: 33
MannKind Corporation (NASDAQ:MNKD) is one of the Best Penny Stocks to Invest In According to Billionaires. MannKind Corporation (NASDAQ:MNKD) has gained roughly 20% since the FDA approved Afrezza, which is an inhaled insulin for children and adolescents aged 6 and older with type 1 or type 2 diabetes. The news came on May 29.
Management noted that this approval expands Afrezza beyond adults, where it was already approved. More than 350,000 children and adolescents in the US have diabetes, and most need lifelong insulin therapy. The drug works through the company’s Technosphere platform, delivering insulin via the lungs for rapid absorption. Moreover, the approval was based on the INHALE-1 trial plus two decades of additional safety and efficacy data on inhaled insulin.
More recently, on June 23, MannKind Corporation (NASDAQ:MNKD) also announced receiving a grant from Breakthrough T1D to support the company’s INHALE-1ST clinical study. The trial tests whether Afrezza can be used soon after a type 1 diabetes diagnosis in kids. The company’s CEO called the partnership a sign of growing confidence in inhaled insulin’s potential for newly diagnosed children.
Moreover, the Street is also bullish on the stock, with analysts’ 12-month average price target suggesting more than 54% upside from the current level.
MannKind Corporation (NASDAQ:MNKD) is a biopharmaceutical company that specializes in chronic disease care. Incorporated in 1991, the company provides solutions for serious conditions, such as diabetes, pulmonary hypertension, and fluid overload.
While we acknowledge the potential of MNKD to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than MNKD and that has 100x upside potential, check out our report about the cheapest AI stock.
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