April 7 was a big day for a particular penny stock that experienced huge buying volume from 5 company insiders.
In all, those officers and directors purchased enough shares to value over $11.5 million, and $6.5 million were from the CEO alone!
And to make things even more interesting, this is all happening for this penny stock that’s priced at just $3.50 per share…
On a single day last week, nearly 500,000 shares of Full Circle Capital Corp. (FULL) were traded—that’s more buying volume than on any other day dating back over a year.
And it’s not a coincidence that all of that action followed directly behind the insider trading I mentioned above…
So, let’s start simple: what is FULL?
Plainly, FULL is an investment company. It’s non-diversified with closed-end management, and it uses debt and equity investments in an effort to generate income and capital appreciation.
That part is simple, but when I look further into this penny stock company, it get’s a bit more complicated…
First of all, FULL has great annual and quarterly gross income data that shows an increase from year to year over the past 3 years, and from quarter to quarter over the past 4 quarters. That signifies steady and strong growth in both the short and long term.
But on the flip side, share prices of FULL have done virtually nothing but fall since March of 2014 when it was $8! That 56% decrease is interesting for a company that appears to have plenty of healthy growth.
For FULL, here are the 3 possible scenarios I see:
1. The price drop for FULL has made it so ‘cheap’ that the insiders have decided to get huge chunks of shares at what they view as a discount.
2. The insiders are trying to bring new buyers in by giving the share price and volume a quick spike.
3. The insiders know something the public doesn’t—something that is likely to make the price of FULL shares climb.
For savvy investors, #1 and #2 are terrible reasons to follow insiders and buy shares of FULL. Both of those scenarios give no evidence that this penny stock is healthy enough to rise.
However, scenario #3 is perfect. In that case, the insiders are showing you their confidence based on sound data, results, innovation, etc. For the CEO of FULL, he might be making his $6.5 million bet because he knows something that is almost certain to have a positive impact on the stock.
How do you know which one is really happening?
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