Page Perry

Investors beware ? penny stock hucksters are preying on investors again. Jonathan Hoenig, managing member of Capitalistpig Hedge Fund warns “Penny Stocks Aren’t Worth a Dime” (SmartMoney.com, Feb. 6, 2012). Most of the stocks that make the yearly new-low list are penny stocks (less than $5 a share), and many institutional investors will not buy stocks under $5.00, according to Mr. Hoenig, for the following reason: “There are few lower probability trades than penny stocks, especially of microcap companies trading at a multi-month lows. They are the classic sucker’s wager. Scratching off lotto tickets might be a better bet. It’s a smart discipline: with thousands of different risks to assume, why take on the worst possible option?”