Comstock Inc (LODE)

[DumpsterDiver]

Hedge funds: While many financial institutions are prohibited from trading penny stocks, loosely-regulated hedge funds have no such restrictions. That said, most hedge funds won't trade penny stocks on the long side: they far prefer short-selling penny stocks that look to have peaked after being heavily promoted. Penny stocks, although they often do indeed trade for mere pennies, can still be exceedingly dangerous to short because of the risk of a short squeeze. So while the risk-reward payoff for shorting a penny stock is too skewed (i.e., offering a limited reward if the short strategy works and unlimited risk if it doesn't) to be worthwhile for an average investor, the strategy may entice a deep-pocketed hedge fund.