Investing

Beyond Penny Stocks: Congressman Buys a Penny Crypto Worth Ten Cents

Eric Bleeker

Published: June 23, 2024 5:00 pm

On April 18th, 24/7 Wall Street alerted investors to a recent stock purchase by Alabama Senator Tommy Tuberville of a penny stock named Humacyte (Nasdaq: HUMA). 

We track Congressional trades as sitting members of Congress aren’t subject to the same Insider Trading rules normal citizens face. So, a purchase of a stock can indicate bullishness gleaned from Congressional hearings and other sources.

Tuberville’s purchase quickly soared 153% by the end of May. Today we’re checking in on a new “penny stock” purchased by a Congressman, except this time it’s a penny cryptocurrency that trades for just $.10!

Background on the Penny Crypto a Member of Congress Just Bought

You can find key points from this discussion between 24/7 Wall Street analysts Eric Bleeker and Austin Smith below.

• On April 18th, 24/7 Wall Street published an article alerting readers that Alabama Senator Tommy Tuberville, a Republican from Alabama, had just purchased Humacyte.
• Humacyte fit most definitions of a penny stock: it was worth less than $500 million and trading for less than $5 per share.
• And between the time we published that article and May 30th – little more than a month – Humacyte rallied to gain 153% in little more than a month.
• Clearly, it pays to watch what members of Congress are buying – especially on smaller stocks. So, are there other small or even penny stocks that Congress members have been buying recently?
• As a reminder, members of Congress don’t have the same Insider Trading rules faced by normal citizens. 
• They can buy and sell stocks even if they’re privy to knowledge on industries and legislation from Congressional committees.
• In the case of Tuberville, he sits on the Armed Services Committee 
• Related to that, Humacyte has been developing bioengineered human tissue for the frontlines of Ukraine.
• So, you can see how Tuberville may have a good understanding of the need for what Humacyte is developing. 
• Simply put, it can really pay to watch what members of Congress are buying because this isn’t the first trade that’s looked like really good fortune.
• We went through recent records and picked out what we thought was the most eyebrow-raising recent purchase from Congressional records. 
• The purchase is a bit of a surprise, as it’s not even a penny stock. Instead, it’s a penny crypto! 
• The cryptocurrency is Velodrome Finance, and it’s trading for about $.10 per token. It has a market capitalization of $74 million and a fully diluted market capitalization of about $180 million. It’s small, currently the 449th largest cryptocurrency project tracked on CoinMarketCap.
• This purchase was made by Michael Collins, who is a Republican in the House from Georgia and was disclosed on June 17th. The buy was for less than $15,000 so it’s pretty small, but this is a tiny cryptocurrency with a tiny market cap of just $74 million which raises some eyebrows.
• And why is that? Well, Michael Collins has purchases of up to $110,000 worth of Ethereum. 
• These purchases were made before a May 23rd rule that permits spot exchange ETFs surrounding Ethereum.
• These Ethereum ETFs could now launch as soon as July and are seen as a big catalyst for its share price.
• So is this an unequivocal buy signal for Velodrome? Of course not – this is a highly speculative crypto project trying to create a central trading marketplace.
• However, we would put this on your radar as something to watch. It just may be that Collins has a good idea of some good news headed Velodrome’s way.

Transcript: 

Eric, last month you published an article alerting readers that Alabama Senator Tommy Tuberville, a Republican from Alabama, just purchased Humacyte.

I’m not sure if I’m pronouncing that correctly. Now, this fits almost every definition of a penny stock.

It was worth less than $500 million at the time, and it was trading for less than $5 a share.

And between the time that you published that article and May 30th, the company went on a 153% rally in a little over a month.

So… Clearly, it pays to watch what members of Congress are buying. We’ve all seen Nancy Pelosi’s winnings from Nvidia, but especially on smaller stocks.

So my question is, are there any other small or even penny stocks out there that Congress members have been buying recently that we may want to pay attention to?

Yeah, there’s a pretty intriguing one I’m going to get to in a moment, but we should look at the background on Humacyte.

A 153% return is obviously extremely impressive in a little more than a month’s time.

It’s worth knowing that in June, the stock has fallen back, but it’s still above that purchase price Tommy Tuberville had in April.

So what specifically was eyebrow-raising about that specific stock? Well, simply put, members of Congress, they don’t have the same insider trading rules as you or I.

They can buy and sell stocks, even if they’re privy to knowledge on industries and legislation from congressional committees.

In the case of Tuberville, he sits on the Armed Services Committee. So that’s important because Humacyte has been developing bioengineered human tissue for the front lines in Ukraine.

So again, you can see how Tuberville may have had a good understanding of the need for what they’re developing. And you can see why watching what members of Congress are buying can be a very profitable strategy.

Now, I went through recent records. I picked out what I thought was the most eyebrow-raising purchase from a congressman. And it’s a bit of a surprise.

It’s named Velodrome Finance, which is a cryptocurrency trading for about 10 cents per token. So we are talking serious definitions of penny cryptos.

This purchase was made by Michael Collins, who’s a Republican in the House from Georgia and was disclosed on June 17th.

So very recently, the buy was for less than $15,000. So it is pretty small, but this cryptocurrency, it’s tiny itself with a market cap below $100 million as we film this.

And why is this buy especially intriguing? Well, Michael Collins has purchases of up to $110,000 of Ethereum, another cryptocurrency.

And these purchases were made before a May 23rd rule that permits stock exchange ETFs surrounding Ethereum.

These ETFs, they’re believed to be launching as soon as July, and they’re seen as a big catalyst for the asset price of Ethereum as they were a big catalyst for the asset price of Bitcoin after spot ETFs launched around it.

Is this an unequivocal buy signal for Velodrome? Of course not. This is a highly speculative crypto project trying to create central trading marketplaces.

But I would put it on your radar as something to watch. It may be that Collins has a good idea of some positive news headed Velodrome’s way.

In the bigger picture, if you’re not watching what members of Congress are buying today, it’s not even a political statement. You can get into the ethics elsewhere.

It’s just been an attractive way to look for stock opportunities. So I would put that on your radar. There’s a number of good resources online you can search for to track these.

And if anything, I think this example shows exactly why it pays to watch.

Yeah. And you said it best, we’re not going to get into the ethics here and we’re not going to endorse one individual buying this and one individual buying that.

But the fact is, these are extremely informed, powerful, influential, and wealthy individuals.

So they have a lot of information. They’re looking at the broadest overview of economies and markets.

They have information about defense contracts or looming regulation, which can be influencing their decisions.

And as we’ve seen with that incredible 153% return, boy, I’ll take a few of those in my portfolio.

So again, putting the ethics aside, this is just a smart thing to do for any investor that wants to look for ideas and trends.

These are well-informed individuals. Almost always, they’re very wealthy as well.

They have a pattern of making and building wealth, and they’ve got fantastic information about what the trends in these industries and markets and regulations are.