With 2017 coming to a close, we want to highlight an important theme that has accelerated as we approach the end of the year, insider selling.
Although there is nothing wrong with insider selling, timing is everything. If you are an executive and you are receiving a competitive salary, why would you sell stock?
While the legal cannabis industry offers investors access to some of the most attractive growth investments, it also offers tremendous risk. Investors need to be careful when investing in the legal cannabis industry and focus on companies that are led by a management team focused on creating value for the shareholders instead of themselves, that are well capitalized, and that continue to execute on previously announced initiatives.
Today, we have highlighted 3 marijuana stocks that continue to announce major insider sales and think investors need to be aware of this.
IGC’s CEO Continues to Dump Stock
In October, India Globalization Capital (IGC) announced that it was in the middle of a major turnaround and would be commercializing a product for Alzheimer’s disease. Although IGC has limited capital resources, the biotech firm said that they will target Germany, Canada and certain medical cannabis states in the U.S. for commercialization.
Over the last two months, IGC CEO Ram Mukunda has sold approximately 500,000 shares and these transactions contradict the claims made by the company. If your company is in the middle of a major turnaround, why would the CEO be dumping stock.
When it comes to the biotech side of the cannabis industry, we prefer companies that have realistic expectations and are led by a management team that is focused on creating value for its shareholders rather than themselves.
Terra Tech’s CEO Signs Form Preventing Further Sales
Terra Tech (TRTC) is another cannabis stock that needs to be highlighted for its heavy insider selling. So far this month, Terra Tech CEO Derek Peterson has sold more than 2 million shares and today, Derek and his wife signed a form that restricts them from selling stock for the next year.
Although the signing of this document is significant, other members of Terra Tech’s management team continue to dump stock and we continue to monitor this trend. While we are favorable on the company’s leverage to the Nevada and California market, we continue to see more attractive opportunities available for investors.
Cannabis Sativa: A Company to Avoid
Over the last month, Cannabis Sativa (CBDS) has rallied well off its recent lows and we continue to remain cautious on the shares. The company is led by a management team that has failed to execute but continues to sell stock.
In 2017, Cannabis Sativa’s management team has sold more stock than the company has generated in revenue…since inception! We continue to view CBDS as a low quality cannabis stock and continue to prefer other opportunities.