Press releases and lots of chatter are all well and good, but nothing speaks louder than real investors investing real money in a certain stock. With that in mind, here are last week’s small-cap stocks with the most buying activity. We’ve analyzed the reason behind the mass purchasing below, as well as what the future may hold in each case.

In no particular order, last week’s most-purchased stocks were Antigenics Inc. (AGEN), SpongeTech Delivery Systems, Inc. (SPNG), Hemispherx Biopharma, Inc. (HEB), and Satyam Computer Services Ltd. (SAY).

Oh, and just for the record, Bank of America (BAC) saw the heaviest accumulation of all stocks.

Antigenics Inc. (AGEN)

Here’s a little irony for ya’… last week’s first op-ed headline for Antigen was the Motley Fool’s “1 Star Stocks Poised to Plunge”. The worry was that AGEN’s 200% gain from the week earlier was going to be retraced.

Well, it wasn’t.

Instead, this penny stock flattened last week, which is considerably better than a selloff, but not as good as more gains.

As for the reason Antigen rallied, the stock was riding the coattails of a broad biotech surge. However, Antigen does have something in development that helped spur the stock - last week, the company’s kidney cancer therapy Oncophage was indeed shown to extend the lives of its users (though it’s only approved in Russia, and is waiting for approval in Europe).

So, buy or sell? I say sell while there’s something to gain.

Not only is the failure to follow through on the prior week’s surge a red flag, but there are some interesting tidbits about Oncophage the market seems to have forgotten.

First, though Oncophage is approved for sale in Russia (as of a year ago), it’s not actually on the market there. What the heck? Second, Oncophage went through the FDA’s Phase III testing as a kidney cancer treatment here in the U.S., but was ultimately a failure in their eyes - not approved. There are other possible uses, but nothing past Phase II testing.

If you don’t mind past and future losses, AGEN is great. If you actually want your investments to be, you know, profitable companies, steer clear. We’re not sure why the buying interest was so heavy last week.

SpongeTech Delivery Systems, Inc. (SPNG)

We’ve been following this penny stock since it was trading around five cents in mid-May.Wait, strike that - we’ve actually been following it since lare 2007…. it just didn’t get interesting until May of this year. However, our readers who stuck with it from our 2007 recommendation finally made a lot of money. Anyway…

We also encouraged traders to take profits at 8 cents, and again at 20 cents (which we also thought was fair value at the time). As it turns out, we were a bit early - about a day - on calling the peak, but Friday’s huge pullback from the peak at 28 cents (to the close of 17 cents) proves the discipline we were trying to apply….it’s better to be early than late, ’cause the tumbles come a lot faster than the rallies.

As for why SPNG has done so well of late, it’s because the company pre-reported more than $50 million in revenue and more than $10 million in earnings for the last fiscal year. Not bad for a company that was at a market cap of $30 million two weeks ago.

The problem is, the company was valued at $100 million when the full-year news came out, and was at $123 million when news of $6.4 million worth of orders was announced. Congrats to the company, but it’s all priced in…. the growth pace is slowing, and the euphoria is wearing off.

There’s a future for the company, but since SPNG is likely to be fully valued now, we still think it’s wise to lock in profits.

Hemispherx Biopharma, Inc. (HEB)

This is hardly the first time Hemispherx was put on our radar. Last week’s accumulation was a carry-over from the prior week’s hope that chronic fatigue syndrome treatment Ampligen would finally be approved by the FDA. It’s still not, pushing the FDA’s announcement delay now past the two-week mark. Very unorthodox.

In the meantime, the cash-desperation started to shine through.

The company tested the waters to see if enough money could be raised through a private placement (PIPE), but the response was tepid. The next option is/was to issue a registration statement for $150 million worth of shares…which couldn’t be sold by the buyer for six months from the date of issue. Our understanding is that the possibility still exists, but is going to be equally tough to sell as long as the FDA decision is still unannounced.

The whole thing stinks. If Ampligen was approved, the company could raise all the funds it needed. Why such a rush to raise funds (with much fewer selling points) before the FDA’s decision?

We’ve heard multiple whispers that professional pumpers are working this stock, which makes sense - keep the price afloat when you’re trying to raise funds. What happens afterwards though?

We don’t think anything else Hemispherx has got in the pipeline can justify a share price of $2.67, making this one a ticking time bomb in our view.

Satyam Computer Services Ltd. (SAY)

It’s back. Tuesday and Wednesday were banner days for this Indian tech stock, pushing shares from $2.72 to $4.94 on the best buying volume we’ve seen in months (prior to the $ billion accounting BS fiasco from January). Unfortunately, Thursday’s and Friday’s selling was pretty strong as well, pulling SAY back down to $3.67. Net, however, it was still one of the market’s most-bought stocks.

But why the rally? Most of it as attributable to a flattering ‘overweight’ rating from J.P. Morgan. The report’s target price for shares was only $2.10 though, so why blow past the $4.00 mark (even temporarily)? The outlook for 2010 is much better than current or past results.

Our take? It’s actually a decent calculated risk, not to mention a stock that’s under-followed. Plan on lots more volatility, but we don’t think this is a totally crazy long-term idea here.

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How do you make a biotech stock gain 77% in one day? Have the company unveil a potential treatment for swine flu that (1) works, and (2) doesn’t cause a host of side effects in a swine flu patient that could actually make their illness worse rather than better. Take CEL-SCI Corp. (CVM) as an example. This stock - which had been off the radar for a while - made some big waves on Friday when it gained 77% following an announcement that their L.E.A.P.S. technology could possibly be adapted and turned into a very effective swine flu vaccine.

Exciting? Yep, but a little background may be in order to fully grasp what CEL-SCI offers to investors…. it’s not just a potential swine flu drug.

We actually recommended CEL-SCI back in January, when shares were trading at 27 cents.  For those who stepped in then, you’re up about 50% now. But, the basis of our recommendation wasn’t a swine flu treatment (which wasn’t even needed then). It was Multikine - the company’s impressive head and neck cancer treatment that’s on the verge of entering Phase III testing.

Biotech stocks are funny creatures though. As I mentioned in a column yesterday evening, the group is either hot, or cold… there’s no in between.

Back in January, the biotech environment was fairly cold. No capital-raising deals were being done, lending (and therefore acquisitions and expansion) had dried up, and the stock market was retreating. That’s quite a headwind, so we weren’t surprised to see so many of these stocks struggle. All tings considered, CVM’s sideways movement during that time was a relative victory.

Then, like the flip of a switch, a combination of the swine flu outbreak and the acceptance of immune therapies by mainstream medicine (thanks to Dendreon’s success with its prostate cancer treatment Provenge - an immune therapy) turned the biotech sector’s stocks ‘on’ again. If history holds up, they’ll stay on for quite a while, offering investors a chance at superior gains.

Now recognizing the wind is at our back, let’s fast forward to today.

We knew last Friday that CEL-SCI’s L.E.A.P.S. technology could work as a swine flu treatment, and we saw the stock rally as a result.

As of just a few moments ago, CEL-SCI announced they would indeed be developing a swine flu-specific L.E.A.P.S. treatment. As they put it, “expanded testing”.

On the surface, today’s press release may just look like a repeat of Friday’s news, but it isn’t. The theme is the same… L.E.A.P.S. is adaptable into several treatments, such as a vaccine for avian flu, Spanish flu, and now swine flu. What’s different, however, is that the work CEL-SCI is beginning is designed to fight not just the current strain of swine flu, but any possible mutations that could occur between now and the thick of the next flu season.

The possibility of mutations wasn’t discussed much when swine flu hysteria was running rampant in late April. The rush was to get a treatment on the market fast…. any treatment. Whether it worked great or just barely worked at all was irrelevant - just get it made. And, Sinovac Biotech Ltd. (SVA) seems to have won the initial race….  they’re mass producing a vaccine already.

All well and good, but as I said last night, biotech can’t be rushed. The Sinovac vaccine may work great against a mutated form of H1N1. Or, it might not work at all. One thing I am relatively certain of though….H1N1 will eventually mutate, and could possibly render many vaccine candidates obsolete.

CEL-SCI’s answer to that possibility? Prepare for a mutation now by creating a vaccine that’s able to fight not just the current virus, but the virus strain we could be seeing when swine flu comes around again this winter.

I suspect we’re going to see the stock go wild again today on the news. I hope you were in a position. Our readers have been in since January, finally being rewarded for their patience.

By the way, as impressive as CEL-SCI’s L.E.A.P.S. platform is, that’s not even the highlight of their R&D. Given that biotech in general is back in favor, I’m going to put CEL-SCI front and center again for our readers, as I think it’s one of the best small cap opportunities out there right now. If you want to learn more about what I think’s going to put CEL-SCI up on the same pedestal as Dendreon, stay tuned.

By the way, here’s today’s press release.
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As we continue to make our way through the first real shakedown of what I believe is a new bull market, the cream is starting to rise to the surface. In other words, the rising tide isn’t lifting all boats equally. (Two cliches in the first paragraph? Impressive.)

Where are they?

As most of you probably know by now, I’m a big proponent of looking for the leading and lagging industries among the small cap realm (S&P 600 stocks). According to Bill O’Neill, almost half of a stocks’ performance can be attributed to its industry. And, I think a fair amount of it can be attributed to its size as well, meaning there’s a frequent disparity between the large and small caps in a particular group.

I’m also just as interested in the technicals as I am the fundamentals, since stocks don’t always trade at “what they’re worth”.

With that idea in mind, I’m going to use the next several work days to cycle through what I feel are the best and worst groups within the small cap universe. And yes, I’ll also ‘drill down’ into individual stocks.

On with the show.

Today’s chosen small cap industry and opinion? I’m bullish on the insurance brokers.

In short, I have a theory behind last year’s 95% plummet for this group - they were thrown in with the insurance companies, like AIG. However, with just a little digging, it’s not all that hard to figure out that a broker and an underwriter aren’t quite the same thing.

Oh, there’s crossover to be sure. By and large though, brokers don’t take on payout risks - they’re just the middlemen. As for the true small caps in the group, we’re talking about Catalyst Health Solutions, Inc. (CHSI), eHealth, Inc (EHTH), CorVel Corp. (CRVL), and National Financial Partners Corp. (NFP). However, there are a handful of other small caps I think you could reasonable add to the list of compelling ideas.

Anyway, the S&P 600 Insurance Broker chart caught my eye. These stocks are up from than 500% since November’s bottom, yet still have a ton of room to go before even testing prior highs. Tons of upward momentum.

And what about the underlying fundamentals? Not that they’re worth a lot, but they’re at least worth a look. (In some cases, a ‘0′ just means data wasn’t available.)

Interesting, huh?

While I’m relatively unimpressed by analysts and their guesses, it’s not like they’re always wrong or usually off-base. In fact, I think they generally have the right idea, even if they don’t’ see everything. In this case, even being marginally on target bodes well for the brokers - the group as a whole seems undervalued.

I’d still pick and choose carefully within the group. eHealth’s numbers, for instance, don’t look all that attractive. But, it seems you’ll at least have the wind at your back with most of these picks.

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Though I’m always skeptical of jumping on a penny stock breakout, SpongeTech Delivery Systems’ (SPNG) has me curious. Maybe the time has finally come for this stock to be fairly valued.

Over the last three days - counting today - we’ve seen SPNG move from 3.8 cents to 6.5 cents, where it currently rests. If you look back through late March, you can also see that each surge has spanned about the same 2 to 3 cents.

Normally (based on the pattern), we’d be telling you to take profits right now and stay sidelined until it pulls back. And frankly, we think that’s the right thing to do now. However, there’s something drastically different about today’s breakout effort…..

The high of 6.5 cents today is also a new 52-week high. Perhaps just as importantly, a nagging resistance line - or perhaps resistance ‘zone’ - from 5.0 to 5.5 cents has been broken.

While I still suspect to see the same up and down we’ve seen since late March, I think now the ‘ups’ will come a lot easier, and the ‘downs’ wont be as severe. It was just a matter of getting out of that 18 month rut (which was rumored to be created by short sellers, though we could never confirm that with any data we saw).

On a more personal note, I’m glad to see this finally happen. We’ve been following SpongeTech since late 2007. Though our coverage officially ended in 2008, I’ve kept tabs on the company because it’s one of those stocks you cheer for… simply because the underlying success is there.

Don’t get me wrong - I’ll sell the daylights out of it if the stock gets a little overextended. At least the visionaries are finally being rewarded for their patience though.

If you’re curious, here’s all of our coverage and commentary for SpongeTech Delivery Systems.

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Well, here were are again delivering the same ‘take profits’ message for Applied DNA Sciences (APDN). If my count is correct, this is the third time in four months we’ve done so for this penny stock. That’s fine by us (and hopefully you), since each exit has reaped a triple-digit reward.

If you’ll recall what we said when we suggested a re-entry back on May 14th, we were only looking for a move to 22 cents from what started at a low of 8 cents (APDN was at 11 cents on the 14th). Yesterday, Applied DNA shares peaked at 21.1 cents, and don’t seem to want to follow through. We’ll take it.

As much as we’d like to see this stock soar to 30 cents or more, it’s just not that kind of stock yet. It’s still a ‘trading’ stock, and is still moving with a fairly predictable ebb and flow. The next time around, the ‘ebb’ should be a higher low, and the ‘flow’ should be a higher high. There’s no reason to take the return trip lower though, when you’ve got profits in hand.

That said, we maintain this stock is indeed the kind of stock you can feel reasonably good about stepping into on its dips. The company has done a good job on the news/publicity side, and should continue to do well going forward. More important to us though, the stock responds to the news positively…. until it reaches an extreme reading (like now).

When will this penny stock no longer be a ‘trading’ stock and actually graduate to become an ‘investing’ stock? Not sure, but I think the answer is when the valuation ratios look more like the market’s averages. Right now, APDN ebbs and flows based on the expected revenue and earnings numbers from the future. When the future becomes the present, volatility should be reeled in.

Just to be clear, our sell recommendation has nothing to do with an opinion about the stock’s current or future value - this is strictly a trade based on the chart.

Bottom line - take profits, have a seat on the sidelines, and pick a better entry spot to get back into the stock.

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