Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds Say These Penny Stocks are Poised to Explode

Penny Stocks represent a very risky investment, but also one that might provide a great amount of profits if chosen wisely. However, with literally hundreds of thousands of penny stocks on the market, it’s really difficult to know which ones represent real companies that might gain more ground in the medium- to long-term, and which ones are just schemes to manipulate you into wasting money.

quick and easy team building activities for small groups

Here’s where we come to help you. One of the most certain ways to pick penny stocks is to follow hedge funds into them. Hedge funds don’t play around with a couple of thousands of dollars when it comes to buying a stake in a company, so they must conduct due diligence on each stock they intend to buy, which is why imitating their picks in the penny-stock space is a safer way to get some profits. Another idea is to follow hedge funds into their small-cap ideas, which the Insider Monkey strategy is all about. We have determined that imitating most popular small-cap stocks among hedge funds, can help retail investors generate double-digit annual alpha by analyzing their 13F filings between 1999 and 2012. Based on our research, we have developed a small-cap strategy that involves imitating 15 most popular small-cap stocks among over 700 hedge funds and it has returned over 118% in the last three years, beating the market by more than 60 percentage points (read more details here).

With this in mind, we have compiled a list of five stocks that trade under $1 per share, which are the most popular among the investors from our database. On the fifth spot is is LeapFrog Enterprises, Inc. (NYSE:LF), a $64 million developer of toys and educational entertainment for children, whose stock has slid by 80% since the beginning of the year. Among the hedge funds we track, 17 were bullish on the company at the end of June, holding $84.14 million worth of stock, which represented 8.50% of its outstanding stock. David E. Shaw‘s D.E. Shaw held the largest stake in LeapFrog Enterprises, Inc. (NYSE:LF) at the end of June, disclosing 1.65 million shares in its latest 13F filing, followed by John W. Rogers’ Ariel Investments, which initiated a position during the second quarter containing 917,500 shares of LeapFrog Enterprises, Inc. (NYSE:LF).

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.