13 Cash-Rich Penny Stocks Hedge Funds Are Buying

Published January 15, 2023 at 3:10 pm EST Updated August 19, 2026 at 9:15 am EDT

In this article, we will take a look at the 13 cash-rich penny stocks hedge funds are buying. To see more such companies, go directly to 5 Cash-Rich Penny Stocks Hedge Funds Are Buying.

Amid the widespread stock market bloodbath we saw in 2022, investors are avoiding risky investment vehicles like micro-cap companies or penny stocks. However, as several analysts predict a possible market rebound near the end of 2023 or 2024, some experts believe now could be the right time to pile into risky stocks that have solid fundamentals or growth catalysts. A report by Oberweis Asset Management said that given the risks related to micro-cap investing, many small-cap fund managers have started to avoid investing in the sub-$1.5 billion spectrum. The report says that in 2011, an average small-cap manager allocated about 57% to their portfolio to companies with market caps below $1.5 billion. By 2021 that figure reached below 14%. The report also claimed that micro-cap managers generate higher returns than traditional small-cap managers over longer periods of time. The report also added that “contrary to popular belief,” volatility is not higher for micro-cap stocks when compared to small-cap stocks.

The report also said that allocating a certain percentage of your portfolios to micro-cap companies can increase risk-adjusted returns of your investments. That’s because micro-cap companies aren’t strongly related to US equities, foreign currencies, global market movements or bonds. Perhaps they are too small to be affected by macro movements. Investors can take advantage of this phenomenon and invest in solid penny stocks that have a potential to grow in the long run.

Another point the Oberweist report makes to support micro-cap investing is linked to the oversaturation in the large-cap space. The report says that all market analysts tend to talk about and research large-cap companies. This creates an opportunity for those investors who want to invest in undiscovered micro-cap companies that are still unknown. Here’s an interesting excerpt from the report:

“Most Wall Street analysts focus their research on larger companies that generate investment banking fees and trading commissions. On average, there are five times as many analysts covering large-cap companies compared to the average micro-cap. Nearly one-third of micro-caps are covered by only one sell-side analyst, and some aren’t covered at all. This lack of Wall Street research in the micro-cap arena means active managers who conduct their own fundamental research should have an information advantage which can help them generate above-market returns.”

Our Methodology

For this article, we scoured the large universe of penny stocks and first screened for penny stocks that are priced below $5 and have a price to free cash flow ratio under 5. Lower price to free cash flow ratio indicates that the company in question is in a strong position in terms of cash and has a strong ability to continue its operations. Price to free cash flow ratio is used to compare a company’s stock value to its cash management practices over time.

After applying the first check, we got a large list of penny stocks that are relatively stronger in terms of cash. We then checked hedge fund sentiment of these companies and picked the top 13 companies that have the highest number of hedge fund stakeholders. To gauge this data point, we used Insider Monkey’s database of 920 hedge funds.

The list is ranked in an ascending order of the operating cash flow (ttm) metrics of the companies. The currency of this metric is USD.

Cash Rich Penny Stocks Hedge Funds Are Buying

13. Barnwell Industries, Inc. (NYSE:BRN)

Operating Cashflow (TTM): 7.29M

Number of Hedge Fund Holders: 1

Barnwell Industries, Inc. (NYSE:BRN) is a Hawaii-based company that has oil and gas operations in the US and Canada. Over the past six months the stock has gained about 17% in value.

Barnwell is another cheap dividend stock in our list. Last month, Barnwell Industries, Inc. announced a $0.015/share dividend. Forward dividend yield at the time came in at 6.02%. The dividend was payable Jan. 11 to shareholders of record Dec. 27.

Barnwell Industries, Inc. also announced its fourth quarter results last month. The oil and gas company said its revenue in the quarter notched a whopping 80% growth.

Quant genius Jim Simons’ hedge fund is the only stakeholder in Barnwell Industries, Inc. according to Insider Monkey’s database. The fund has a $1.14 million stake in this penny stock.

12. American Shared Hospital Services (NYSE:AMS)

Operating Cashflow (TTM): 8.76M

Number of Hedge Fund Holders: 2

American Shared Hospital Services (NYSE:AMS) is a San Francisco-based radiosurgical and radiation therapy equipment provider. In November last year, American Shared Hospital Services posted its third quarter results. Revenue in the period jumped about 17.8% to total $4.83 million. Gross margins in the quarter jumped 33.4% to $1,957,000, as the gross margin percentage expanded 470 basis points to 40.5% of revenue compared to 35.8% for the third quarter of 2021. American Shared Hospital Services also said that its operating income in the period came in at $448,000, compared to just $186,000 in the comparable period last year. This shows a 141% increase in the figure.

Jim Simons’ Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors own stakes in American Shared Hospital Services as of the end of the third quarter.

11. CareCloud, Inc. (NASDAQ:MTBC)

Operating Cashflow (TTM): 21.23M

Number of Hedge Fund Holders: 3

CareCloud, Inc. (NASDAQ:MTBC) is an IT company operating in the healthcare sector. While CareCloud, Inc.’s third quarter results missed estimates, its management said it saw highest ever bookings in the period, thanks to strengths in CareCloud, Inc. digital health solution Wellness. Recurring bookings in the period came in at $7.1 million, three times more than the figure posted in the comparable period last year.

As of the end of the third quarter, 3 hedge funds tracked by Insider Monkey reported having stakes in CareCloud, Inc., compared to 6 funds in the previous quarter.

10. Fluent, Inc. (NYSE:FLNT)

Operating Cashflow (TTM): 26.49M

Number of Hedge Fund Holders: 8

Fluent, Inc. (NYSE:FLNT) is a US-based digital marketing and media company that helps marketers to reach consumers and expand their return on investments. In November, Fluent posted its third quarter results. Fluent, Inc. said non-GAAP EPS came in at $0.06, beating estimates by $0.04. Revenue in the quarter jumped 3.7% to reach $89 million.

Of the 920 hedge funds tracked by Insider Monkey, 8 hedge funds reported having stakes in Fluent, Inc.. The total value of these stakes was $2.2 million. Notable hedge funds have stakes in Fluent, Inc.. These include Israel Englander’s Millennium Management, Jim Simons’ Renaissance Technologies and D E Shaw.

Fluent, Inc. shares have gained about 12.6% over the past six months.

9. CorEnergy Infrastructure Trust, Inc. (NYSE:CORR)

Operating Cashflow (TTM): 31.74M

Number of Hedge Fund Holders: 4

Corenergy Infrastructure is a Kansas-based REIT. It ranks 9th in our list of cash-rich penny stocks hedge funds are buying. As of the end of the third quarter, 4 hedge funds tracked by Insider Monkey had stakes in CorEnergy Infrastructure Trust, Inc. (NYSE:CORR), compared to 3 funds in the previous quarter. Millennium Management of Israel Englander has a $115,000 stake in CorEnergy Infrastructure Trust, Inc.. CORR is one of the best cheap dividend stocks in the market for those who are looking for high-yield plays in a budget. The stock has a dividend yield of 9% as of January 12. CorEnergy Infrastructure Trust in November declared a dividend of $0.05/share.

During the same month, CorEnergy Infrastructure Trust, Inc. posted its Q3 results, according to which its revenue fell 11% on a YoY basis. CorEnergy Infrastructure Trust, Inc.’s management said that its MoGas and Omega natural gas operations showed “steady performance” in the quarter.

8. PHX Minerals Inc. (NYSE:PHX)

Operating Cashflow (TTM): 37.53M

Number of Hedge Fund Holders: 7

PHX Minerals Inc. (NYSE:PHX) is a Texas-based natural gas and oil mineral company which owns about 75,000 leased mineral acres principally located in Oklahoma, Texas, Louisiana, North Dakota, and Arkansas.

At the end of the third quarter of last year, 7 hedge funds reported having stakes in PHX Minerals Inc., compared to 8 funds in the previous quarter.

PHX is also a solid dividend stock. Last month, PHX Minerals Inc. increased its quarterly dividend by about 12.5%.

7. comScore, Inc. (NASDAQ:SCOR)

Operating Cashflow (TTM): 47.51M

Number of Hedge Fund Holders: 18

As of the end of the third quarter, 18 hedge funds tracked by Insider Monkey had stakes in comScore, Inc. (NASDAQ:SCOR). The biggest stakeholder of comScore, Inc. was Jim Tarantino and Chris Galvin’s Westerly Capital Management, which owns a $5.6 million stake in comScore, Inc..

Last month, comScore, Inc.’s stakeholder Pine Investor, which is affiliated with Cerberus Capital Management, disclosed that it now owns a 25.5% stake in comScore, Inc..

6. Republic First Bancorp, Inc. (NASDAQ:FRBK)

Operating Cashflow (TTM): 52.48M

Number of Hedge Fund Holders: 6

Republic First Bancorp is a bank holding company. As of the end of the third quarter of 2022, 6 hedge funds in Insider Monkey’s database had stakes in Republic First Bancorp, Inc. (NASDAQ:FRBK), compared to 8 funds in the previous quarter. Israel Englander’s Millennium Management has a $1.3 million stake in Republic First Bancorp, Inc..

Republic First Bancorp recently appointed Thomas Geisel as its new CEO.

5. Citizens, Inc. (NYSE:CIA)

Operating Cashflow (TTM): 56.45M

Number of Hedge Fund Holders: 7

Citizens Inc. is a Texas-based insurance company that offers life and disability insurance products. As of the end of the third quarter, 7 hedge funds tracked by Insider Monkey reported having stakes in Citizens, Inc. (NYSE:CIA), compared to 11 funds in the previous quarter. Some of the notable hedge fund stakeholders of Citizens, Inc. include Thomas E. Claugus’ GMT Capital, Israel Englander’s Millennium Management and Jim Simons’ Renaissance Technologies. In November, Citizens Inc posted its third quarter results. Citizens, Inc.’s total premium revenue in the quarter jumped 1% to total $43.9 million.

In November, Citizens, Inc. also announced that it entered into a white-label partnership with The Titan Agency to market and sell Citizens’ newly developed life and final expense insurance products.

4. CleanSpark, Inc. (NASDAQ:CLSK)

Operating Cashflow (TTM): 71.44M

Number of Hedge Fund Holders: 7

CleanSpark is a US-based Bitcoin mining company. The stock has been suffering due to the bearish trends in the crypto market. It has lost about 70% in value over the past 12 months. Earlier this month, CleanSpark, Inc. (NASDAQ:CLSK) announced that it mined 464 Bitcoin (BTC-USD) in December 2022. CleanSpark, Inc.’s annual production came in at 4,621 Bitcoins, which shows a whopping 200% growth. CleanSpark, Inc. also said that it has 63,700 latest-generation Bitcoin miners deployed with a hashrate of 6.2 EH/s, up 13% from November 2022.

As of the end of the third quarter, 7 hedge funds tracked by Insider Monkey had stakes in CleanSpark, Inc., compared to 5 funds in the previous quarter. Among the most notable funds having stakes in CleanSpark, Inc. are Mark Coe’s Intrinsic Edge Capital (about $3 million stake) and Cliff Asness’ AQR Capital Management ($1.4 million stake).

3. OppFi Inc. (NYSE:OPFI)

Operating Cashflow (TTM): 219.52M

Number of Hedge Fund Holders: 10

Oppfi is an Illinois-based financial technology company. OppFi Inc. (NYSE:OPFI) says its target market is the 60 million US adults who lack access to traditional credit.

In the third quarter of 2022, OppFi Inc.’s revenue jumped 35% on a YoY basis and beat analyst estimates by a whopping $14.59 million. Receivables in the quarter rose 39% to reach $407.7 million.

As of the end of the third quarter, 10 hedge funds tracked by Insider Monkey reported having stakes in OppFi Inc., compared to 7 funds in the previous quarter.

2. Altice USA, Inc. (NYSE:ATUS)

Operating Cash Flow (TTM): 2.58B

Number of Hedge Fund Holders: 42

Altice is a media company that provides services such as television, Internet access and cable TV to about 4.9 million residential customers in the US. Altice is one of the most popular cash-rich penny stocks among the 920 hedge funds tracked by Insider Monkey. Of the 920 funds in our data, 42 hedge funds reported having stakes in Altice USA, Inc. (NYSE:ATUS) as of the end of the September quarter, compared to 35 funds in the previous quarter. However, the stock in November tanked to record lows after Altice USA, Inc. posted weak Q3 results, mainly due to broadband subscriber losses and higher operating costs.

Investment firm UBS also cut its price target on the stock to $9 from $19 after the results. However, the firm maintained its Buy rating on the stock.

Here is what MPE Capital has to say about Altice USA, Inc. in its Q2 2022 investor letter:

“Two (very) costly mistakes I’ve made over the last twelve months have been my investments in Altice USA and Poshmark. Both are down over 50% from my initial purchase price. I not only poorly appraised business quality, I also incorrectly appraised the intrinsic value of both of these companies. It should rarely end up the case that we pay over intrinsic value, at worst case we should never lose money on an investment. I will dive into one of these mistakes below and maybe dive into the other in a future letter. My thinking when buying Altice USA was that they operate as a duopoly in their main footprint, the New York Tri-State area. They provide a needs-based service: internet, video, and voice services. I figured this is a very stable business with high barriers to entry. Management seemed competent as well based on historical capital allocation decisions. I didn’t fully appreciate at the time how poorly positioned they were relative to Verizon Fios, as well as how fiercely competitive the business can get on promotions and customer acquisition.

Altice offers hybrid fiber coaxial (HFC) while Fios offers fiber-to-the-home (FTTH). FTTH is a far superior product, which has led to some share loss to Fios in the parts of their footprint that overlap. There have also been some subscriber losses in their other footprint due to new cable entrants and fixed wireless offerings.

My original thinking was that the video business will go to zero overtime due to continued pressure from services like Netflix. In hindsight, I overstated their free cash flows excluding the video business due to difficulties disaggregating their business results. This FCF delta is a huge contributor to the difference between my current and original estimates of intrinsic value. Now, it’s possible that the video business doesn’t go to zero; however, I have a hard time envisioning that many households in ten years will still subscribe to linear television.

After losing some subscribers and facing some headwinds, they are now reinvesting many billions over the next few years in order to fiberize the majority of their footprint. I think this is a great plan and it will hopefully cement their position as a true duopoly in the New York TriState area. However, in their other major footprint, new fiber entrants are coming in and competition will only intensify. There are also some new entrants entering this space like Starlink satellite internet and fixed wireless internet from tier one mobile carriers. I think these will generally be more expensive and inferior to FTTH; however, they may end up putting some pricing pressure on Altice overtime.”

1. UWM Holdings Corporation (NYSE:UWMC)

Operating Cashflow (TTM): 4.61B

Number of Hedge Fund Holders: 17

UWM Holdings is a Michigan-based mortgage lending company. The stock has gained about 2% over the past six months. The stock is one of the most attractive cheap dividend plays in the market. Its dividend yield stands at 10% as of January 12. In November, UWM Holdings Corporation (NYSE:UWMC) declared a $0.10/share quarterly dividend, in line with previous.

Last month, UWM Holdings agreed to buy a majority stake in NBA’s Phoenix Suns and the WNBA’s Phoenix Mercury.

As of the end of the third quarter, 17 hedge funds tracked by Insider Monkey reported having stakes in UWM Holdings Corporation, compared to 15 funds in the previous quarter. The total value of the hedge funds stakes in UWM Holdings is $13.4 million.

You can also take a peek at Top Stocks in Each Sector and Dow 30 Stocks List 2022.