S/L: New Insider Report Trade Alert

October 12, 2017

The Insider Report

Trade Alert

As you know, I’ve been struggling to find a new stock pick for The Insider Report. Corporate insiders have been keeping the powder dry, wary of buying at new all-time highs.

But an overlooked micro-cap is trading at a discount – 14% below where executives just bought.

The company is Yuma Energy (NYSE: YUMA).

Yuma is, without question, a penny stock. The entire firm is valued at just $19.24 million, and the stock trades for $0.86.

But the story is compelling…

The stock almost never sees any insider buying. Until last month, no one on the inside at Yuma had purchased a single share in over three years.

Then last week, the company completed a secondary stock offering of 9.6 million shares. Top executives used their personal money to pick up 862,754 of them.

The proceeds are being used to explore and develop oil and natural gas assets in the Permian Basin.

But here’s the exciting part…

Insiders picked up shares for $1.00 each. The CFO, CEO, President and a top Director all saw this as a favorable price at which to invest their personal dollars.

But in the days since the offering, YUMA stock has fallen to $0.86 – giving us the chance to buy at a discount to the insiders.

Obviously, this is not a guarantee that prices will go higher. Penny stocks are traditionally volatile, and the low price of this stock means that moves of even 5-10 cents will be large on a percentage basis. For that reason, I encourage you to treat this as a speculative play.

If you are uncomfortable with 20-30% swings, you might choose to pass this one up.

But great risk often equals great reward. YUMA traded above $3.00 as recently as July, and a return to this level would represent a 248% gain. So the profit potential is there.

We will be working a stop at $0.50. Although this is only 36 cents below the current price, it comes out to a 41% risk. But there is no other way to give a stock like this enough room to move without getting shaken out.

Action to Take: Buy Yuma Energy (NYSE: YUMA) at the market. We will work an end-of-day stop at $0.50.

YUMA does not have call options. But option traders should see plenty of volatility from this micro-cap.

If you have questions, feel free to shoot me an email support@hubertsenters.com.

All the Best,

Ross Givens

Editor, The Insider Report