Thursday, January 19, 2017

Quick Pick a Winner Vodis Pharmaceuticals

CANNABIS SMALL CAPS: Quick Pick a Winner, VODIS PHARMACEUTICALS


A READER asked me how I select quality cannabis stocks to invest in.  My response is that most of the time it’s not so much about picking winners as it is about avoiding losers and having an exit strategy.

It is rare that I will see a stock and immediately purchase shares.  The last time it happened to me was when I saw that Vodis Pharmaceuticals, Inc. (VDQSD) shares started trading.  I put my entire cash position, all of about $40, into 500 shares of Vodis at $.08 per share. Those were pre-consolidation shares.

In light post 1:4 trading I added another 150 shares.  The McKenzie Speculation Research Portfolio and Roth IRA now holds about 275 shares of VDQSD (about $110) and it is with high hopes we reach toward the future in another episode of speculative adventures in stock trading.

I am individual investor.  I blog about the stocks I will and won’t buy.  I have a conservative portfolio in an IRA from which my food money comes.  The Research Portfolio is the racehorse.  Here I dabble in the risky and speculative land of penny stocks.  

There hasn’t been much buzz in the press or media about Vodis, not yet.  Haha, it’s a creeper stock and it will hit you soon.  This company has been waiting for the other shoe to drop for years.

Vodis is a Canadian cannabis company and it has been waiting for a Health Canada Licensed Producer certification since 2014.  They have income producing grow space in Washington state. The word is that they grow excellent marijuana through controlled environment agricultural practices.  They could end up being like the Stumptown Coffee of cannabis or so I hope.

Basically, an exciting developmental stage cannabis company that could still be around five years from now.  I also liked what I like to call “window dressing.”  The management of the company was taking measures to clean the balance sheet and ensure that shares in the company retain the potential for value and growth.  Like grooming a dog for a show, these guys are shooting for the blue ribbon. I love Canada.

CAUTION: this is a high risk, speculative investment.  All funds invested could be lost.  Buyer beware.  Research all stocks before you purchase them.  I could also lose all my money, and that has happened to me in the past with other speculative investments.

Avoiding Losers is Just as Important as Picking Winners

Having said all that, I usually go through an agonizing process of elimination before I buy a stock.  It’s not a pick a winner deal most of the time.  I eliminate a lot crappy companies right away just by looking at their float, share price and market price.

When I bought Vodis it had a market cap under $3,000,000 on a float of about 30,000,000 shares.  But what motivated me was that it would do the 4:1 reverse and that I would have 125 shares in a company with much higher share prices.  Plus these new concentrated shares would be in a company with a float of 7,500,000 shares. Not bad for a potential Canadian Licensed Producer.  That’s why I bought.

The Float

The float is the number of shares available for trading. Large floats generally benefit the company by quickly adding to market value, and individuals who own large numbers of shares in the company, such as the insiders or directors or venture capital lenders.  However, a large float is contrary to the interests of the individual investor.

It may seem like a value to purchase thousands of shares of stocks at pennies per share, but low share prices may indicate that the company’s float is overly diluted.  That means that the share price is reduced due to an over supply of shares available for sale.  There isn’t much upward movement.

If all other factors (revenues, debt, opportunities, etc.) are equal, the smaller float will reward investors with greater increases in share prices. If a company has several billion shares in its float, it will attain a market cap in the hundreds of millions of dollars before it reaches a share price of $.05.  That’s not very exciting.

Dilution and Authorized Shares

Another risk factor is how many shares the company has authorized.  A company might have a 100,000,000 share float and have ten times that amount of shares that it could dump on the open market at any time.  That’s called “dilution” and it will send the share price down fast.

Sometimes debt instruments cause dilution as debt turns into large numbers of discounted shares.  

Pump and Dumps

The best known scam for small stocks is the pump and dump.  A company can issue press releases or hire another company to write and disseminate news about the company. When a company starts announcing big news, the price of the stock usually goes up.  That’s the pump.  



The dump comes when holders of millions of shares in the company start selling into the hype.  They are making money at the investor’s expense because once the hype is over, the shares will drop back down to their true value.

A lot of money can be made through lies and overstated opportunities.  It’s a scam.



The Basics of Stock Elimination

If a stock passes the basic float and value analysis, further inquiry is required.   With cannabis companies and small caps in general one must be alert to scams.  Many small caps are new or developmental and may not have significant revenues or business activity.  That’s the starting point for interesting investment analysis.

A review of the company’s filings with the Securities Exchange Commission will give additional information to an investor, such as whether the company is current on financial reporting.  Many people will not buy a stock if the company is not current on filings, and it is a cause for concern.  I have ignored that rule a few times.

Lack of filings deprives investors from the information they need to determine whether to buy shares.  If you don’t have the information, the stock is a guessing game.

Basic Due Diligence

I once researched a company that had an address in a skyscraper in Seattle.  When I looked closer, I found that the address was essentially a post office box in a company that rents office space and services.

The company’s website looked okay.  It was up and functioning.  But when I called the phone number for the company, no one would answer the phone.  They were screening calls and my calls were disconnected after the first two rings.  That’s is a bad warning sign.  

A relatively easy due diligence test is to check the company’s website.  An operating business today should have an attractive and well organized website.  Any products for sale should be displayed there.  The website should also have a section where investors can obtain additional information.  If the website is amateurish or not active, that is another very bad sign.

Management Responsiveness and Reputation

I have shares in a company in Colombia, New Columbia Resources (NEWC) and the CEO of that company is available to investors via email.  I saw on the boards today that the CEO responded to an email in about 15 minutes.   Investors have also gone so far as to visit the company in Colombia just to make sure it’s the real deal.

A large part of the early momentum in that company comes through the responsiveness of the CEO.  That is a good indication that management is actively involved in operations of the company, it’s not just a shell waiting for opportunities elsewhere.

The reputations and careers of the CEO and other directors of the company is highly relevant  to future success.  While an unknown may create an exciting business over time, venture capital flows quickly to companies headed by CEOs who know how to make money and have made money in the past.

Shells

Shells are holding companies.  A good shell is debt free or close to debt free. That is another aspect of window dressing, preparing a shell company for acquisitions, mergers and joint ventures.  

Shells are not bad things alone.  Getting into a good shell early can be highly profitable, but it can also lead to potential total losses.  They could lose money and go away never to return.
Don’t buy junk.  Know what you buy.  Buyer Beware.

Brokers and investment advisors will rarely recommend the stocks that I am talking about here.  They are too risky and they are right.  With penny stocks investors are typically acting alone, bearing greater risk and seeking greater rewards, and without all the necessary information.

It comes down to each individual knowing exactly what they are buying when they purchase shares of stock.  If you are aren’t careful, you will make bad investments.

Mike McKenzie
The McKenzie Speculator © 2017

The opinions stated here are my own and I have not been induced or compensated in any way by the companies or businesses that are mentioned herein.  The article above is not an inducement or call to action to purchase or sell stocks or investments of any form.  I own shares in the stocks mentioned as indicated in the text.

I am not a stock advisor or financial expert.  I am an individual investor.  I am no more responsible for your stocks losses than you are for mine.

The stocks discussed here are small cap, penny stocks.  Part of the reason I trade in these shares is the entertainment value of observing corporate financial transactions in potentially high risk, high growth ventures.  I may at times discuss companies that have not achieved significant or material revenue streams.  Investors in such companies may lose all or significant portions of funds invested in such companies.

Small caps are typically dependent upon key personnel.  In the cannabis space companies are dependent upon licenses and regulations that they do not control but which may have severe impacts upon the ability of the company to survive.  If a license is revoked or if a crop fails, such events could have immediate negative impacts upon the stock price.  Investors must also consider the overt over-taxation inherent in the United States “legal” cannabis industry and invest according.

Wednesday, January 11, 2017

I should have bought (BLANK)

The McKenzie Speculator: I should have bought (BLANK)


January 12, 2017


I should have bought CanLabs, Inc. (CANL) when I had the chance.  I looked at it for years and never pulled the trigger. I won't another chance.


CANL went from .25 per share up to over .50 in a couple days time.  On the boards investors are talking a reverse takeover, and the Colorado Secretary of State’s records show the corporation has voluntarily dissolved.  The smarts are saying management is holding their shares and own a large percentage of the company, and individual investors may do well to hold and see what happens.


CANL, of course, must be compared to Digipath, Inc. (DIGP), and of the two The McKenzie Speculator would have invested in DIGP over CANL,  hands down, no question. DIGP stands at this writing still at a relatively palatable .19 per share on a float of 15 million shares, the latter being truly investor friendly.  They also promise to turn around a test in 48 hours, which is quick.  Didn’t buy DIGP either, at least not yet, still looking at it.


One really shouldn’t talk about CANL and DIGP without at least giving a mention to Signal Bay, Inc. (SGBY).  And moving onto more promising issues …   


SGBY’s float is more like a “share tsunami” and it’s just not truly speculator investment grade at an astounding 483 million shares.  Talk about dilution, SGBY will be lucky to see a dime any time soon, at which point the market cap will be a hefty $50 million.  DIGP and CANL shares will each be well over a dollar at a similar market level, showing  the logic of pinning the third place medal on SGBY.  


WHO AM I AND WHY SHOULD YOU CARE?


I am individual investor.  I have traded individual issues off and on for over 30 years, as well as a self directed IRA.  I must rely upon the funds in my 401k to feed me, so my investments there are conservative, almost cowardly.  There I am pathetic and dreary.


In The McKenzie Speculator Small Cap Research Roth IRA, we laugh at risk.  We eat risk for breakfast.  There is no penny stock too small.  Give us your small caps yearning to be big.  Here we seek mighty mites, although often hearing a “clank” at the sound of the closing bell.


The investments discussed here are speculative small cap stocks.  Penny stocks that no legitimate broker or advisor will discuss and will never advise you to buy.  It is here in the OTC boards that I dwell.  I might throw some lunch money -- $30 or $40 -- on a marijuana real estate company where it appears that someone ran off with the stash and cash, if the balance sheet looked okay and the float was right.  They had to launder all that weed money somewhere.  Maybe they buried it in their back yard.


Indirect Cannabis Connections


All of these stocks are ancillary providers to the cannabis industry.  (I own no shares in any of these companies, but I may buy or sell any or all of these companies in the future.) While not growing or selling cannabis directly, these companies serve the quasi-legal American cannabis industry.


Consensus knowledge is that dispensaries and cultivators are spanked at tax time due to federal illegality.  Cannabis real estate companies make good financial sense, so long as the companies stick to being landlords primarily, they can draw profitable rents from growers.


CANL, DIGP and SGBY operate in the cannabis testing lab sector, another area with decent investment promise.  US “legal weed” states generally require marijuana to be tested for everything from pesticides to mold.  California is the current exception to that rule, but the state will likely enact regulations to require analytical testing soon.  Canada is also touting the wisdom of knowing what is in your smoke and may require testing soon.


Whereas almost anyone can grow pot, it takes some science, knowledge and equipment to be an analytical lab.  The competition is fierce among dispensaries and growers.  But a license could be revoked or suspended by the issuing authority.  A heavy rain could come in late September and ruin an outdoor crop.  But a testing lab is good day after day.


It’s sort of like the price of entry keeps the losers out of the testing arena.  Speaking of losers, have you considered an investment in Pazoo (PZOO)?  Check their litigation records before investing in that mess.  They did just get a new license from the City of Las Vegas but it’s priced at nothing for a reason.  It is worth about what it is worth.

Mike McKenzie
The McKenzie Speculator (c) 2017


DISCLAIMER


The stocks discussed herein are high risk, speculative businesses.  Investors should be caution when purchasing such securities because share prices may fluctuate wildly in and investors may lose all or part of funds invested.

This article contains my opinions and it is my own work. I was not compensated or induced in any way by party to write or comment on the stocks mentioned.

When investing in any securities it is important to thoroughly research the company before purchasing shares.  Small cap stocks may be thinly traded or traded, so that one might not be readily able to purchase or sell shares.  Buyer beware.  Know what you buy.

Wednesday, January 4, 2017

Cannabis Plus for Value



Try New Cannabis Plus!

January 4, 2017

The brain trust at The McKenzie Speculator High Risk Roth IRA came to the conclusion in late 2016 that American cannabis companies would suffer the curse of federal illegality for several years to come.  The federal government may debate and resist legalizing cannabis in America for a very long time to come.

We sought companies that weren’t exclusively cannabis companies, entities that had some sort of back up plan better than Health Canada’s promise of a license.

Canadian cannabis companies were highly favored, but the portfolio was already well represented in that department.  It needed to diversify and include and represent other nations and peoples and the world-wide cannabis holdings available to a public investor.

US Government marijuana plants at the Univ. of Mississippi.
The mission then became to explore the universe of cannabis and hemp, find publicly traded companies outside North America and if possible invest in them.

High risk investment candidates were sought and compared.  Speculative ventures lined in rows with their financials reviewed. Tens of dollars readied for trading on the shadowy bourses and OTC bulletin boards.

Tiny companies in Colombia and Puerto Rico were identified for possible investment.  These two companies had the right combination of future promise and current affordability.  These companies also had cannabis, yes, but they had “Cannabis Plus” … in other words, cannabis interests plus something else.

Those companies are …

WHO AM I AND WHY SHOULD YOU CARE?

I am an old American guy who likes to read financials and research companies. I enjoy looking for under-valued and oversold public businesses.

I have had a Traditional IRA for about 30 years.  I invest conservatively there because I need the money to buy food.  In The McKenzie Speculator Research Portfolio, however, I am a Crazy Hippy from Oregon. A stock sleuth on the prowl.  I look for little companies that want to become bigger companies, then I hope if they don’t fail completely while trying.

Once a purchase is indicated, a Research Portfolio investment is typically an amount of funds that would have otherwise purchased a pair of pants and a shirt.  Currently my largest single holding is in a Canadian cannabis company worth about $110.  I write about my trades, and I always disclose when I am writing about a stock I own, which is most of the time and today.

Those companies are ...

New Colombia Resources (NEWC)

New Colombia Resources is located in Barranquilla, Colombia.  It was a coal mining concern that ran out of steam when the global coal market was beached three years ago.   During the downturn the company expanded into the medical marijuana industry, obtaining a medical marijuana license from the government and engaging an indigenous tribe to grow cannabis for the company.  The cannabis is crafted into cures under a product line entitled, Sannabis.

NEWC has produced legal cannabis-based medicines in Colombia since 2014.  The climate in Colombia is exceptional for growing cannabis, and it can grow year round outdoors. Colombia is also entering a new era of peace, as negotiations recently ended a 50 year long internal war.

The company’s coal mining concessions add resources and a strong potential for company earnings.  This company was a mining company first, and put together a marijuana company in the off season.  Coming into 2017 the international market for coal has improved dramatically and the company has announced that it will attempt to recommence coal mining operations in the first quarter of 2017. Recently shares in the company have gone up in price and volume. 

NEWC products include Sannaxhol Pain Cream, a product that will be advertised in the US with an endorsement from retired American all star baseball player Edgar Renteria.

(The Research Portfolio and the author of this article own 5,000 shares of NEWC.)

Stereo Vision Entertainment Inc. (SVSN)

Stereo Vision Entertainment is a multi-media and entertainment company incorporated in Nevada.  Stereo Vision also owns a medical cannabis company in Puerto Rico, Green Vision Systems.  In 2016 it was announced that SVSN had entered a joint venture with Mentor Capital (MNTR) to further develop the medical cannabis business.

With the Mentor deal banked, SVSN has established a presence in the state of Florida, seeking to invest in that state’s large potential medical cannabis industry.  

The company also produces and films videos and movies in Puerto Rico.  Actually, the company always was in the movie business.  While it can be difficult to discern from the company’s financial filings and website, it does have an active project in production involving themes of world unity and understanding.

(The Research Portfolio and the author signed below own 800 shares of SVSN.)

© 2017 Mike McKenzie
CEO McKenzie Research and Reports

The companies and investments discussed in this article are considered high risk, speculative investments.  Investors should use due diligence and fully research a company before investing money in that company.   Investor caution is advised when buying shares in such companies because the company is engaged in exploratory or development stage activities.  Investors may lose all or substantially all of their funds invested in speculative investments of this nature.  Nothing herein is or should be construed as an inducement or call to action to buy or sell shares of any company at time.  

Do your own research. Buyer Beware.  Know what you buy.