July 5, 2022

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Penny Stock Surges After Fidelity Legend Lynch Reveals Stake

(Bloomberg) — Peter Lynch still gets investors’ attention.

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The former Fidelity Magellan fund manager revealed on Wednesday that he had taken a 5.2% stake in Imac Holdings Inc., a provider of alternative medical treatments — and on Thursday the shares surged, up as much as 25% in early trading.

Lynch tries to avoid owning more than 5% of a particular stock and didn’t realize that his $1.2 million stake put him over that threshold, requiring him to disclose it in a filing, he said in an interview Wednesday.

He likes small-cap stocks because “they are less well followed,” Lynch said, declining to discuss why he invested in Imac.

At Fidelity, Lynch generated annualized returns of 29% from 1977 to 1990, making him a Wall Street star who later wrote popular books on stock-picking.

Read more: Peter Lynch Says All-In on Passive Investing Is All Wrong

Shares of Brentwood, Tennessee-based Imac were up 18% to $1.01 each at 9:37 a.m. in New York Thursday. The stock is down 11% this year.

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