ACB $1.430 (1.42%)

ACNNF $0.030 (0%)

AERO $3.210 (0%)

ALEAF $0.050 (-14.97%)

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AVXL $11.060 (-0.98%)

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BBM:CNX $0.030 (-14.29%)

BBRRF $0.027 (-3.27%)


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BE:CNX $0.005 (0%)

BIO:CNX $0.013 (0%)

BLIS:CNX $0.315 (0%)

BLO:CNX $0.395 (2.6%)

BLOZF $0.308 (2.5%)

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CHOOF $0.003 (-16%)

CNBX $3.990 (0%)

CNGGF $0.203 (0%)

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CPMD $0.020 (-4.81%)

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CRON $3.050 (0.33%)

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CSI:CNX $0.070 (-12.5%)

CURR $0.349 (2.65%)

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DIGP $0.014 (0%)

EEVVF $0.078 (0%)

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EPWCF $0.059 (0%)

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GNBT $0.001 (0%)

GRIN:CNX $0.075 (-16.67%)

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GTBIF $10.150 (-1.46%)

GTII:CNX $13.090 (-1.65%)

GWPH $218.960 (0%)

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IGXT $0.219 (13.76%)

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ITHUF $0.062 (5.65%)

KBEV:CNX $0.045 (0%)

KHRNF $0.091 (-2.15%)

KSHB $0.695 (0%)

LHS:CNX $1.470 (0%)

LHSIF $1.145 (0%)

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MCIG $0.028 (0%)

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MNTR $0.040 (0%)

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NDVAF $0.111 (-6.17%)


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ORHOF $4.050 (0%)

PHCG $0.001 (0%)

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SOLCF $0.250 (0%)

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XXII $1.740 (-12.12%)

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What You Need To Know About Investing In The Cannabis Sector

Feb 27, 2015 • 2:00 PM EST
chart-discussion-770w.jpg
4 MIN READ  •  By Michael Berger
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The cannabis industry is the most rapidly developing industry in the United States. New companies sprout up every day, companies change their name and symbol on a regular basis, and mergers and acquisitions routinely occur. These types of corporate actions happen frequently and that makes it difficult for an investor to follow and understand what is going on in this industry.

That is where Technical420 comes in. We follow and track these developments so investors can be sure that they are investing in legitimate companies who are focused on creating value for their shareholders.

Prior to starting Techniacl420 I worked for the equity research department at Raymond James Financial and was responsible for the Energy and MLP sector. This was the largest sector covered by Raymond James equity research and I had to follow around 250 companies. These companies were not in their developmental stage and were not nearly as volatile. Investors that are interested in cannabis companies need to understand that they are investing in companies that are in their infancy and the investor must keep up with company developments if they want to see a positive return on their investment.

The cannabis sector is a different animal. These companies undergo changes that confuse even the smartest investors. Before making an investment in a cannabis company an investor must do their due diligence. We recommend looking into the following:

  1. Name and Stock Symbol Changes
  2. Management Changes
  3. Stock Splits (Forward and/or Reverse)

Company Name and Stock Symbol changes

Many cannabis companies are still in their developmental stage and do not yet fully understand the capital markets. Most of these companies recently went public through a reverse merger which means that they merged into a company which is no longer operational. The cannabis company most likely did not like the name of the company that no longer exists, so they decided to change it. If this was the only change, it would not be so bad; however, it is not. Many companies have changed their names two or three times. Companies do this for a number of reasons, some of which are not the most ethical or intelligent. These companies do this to attract new investors, or so investors forget about the mistakes made while the company was operating under a different name.  Listed below are just a few examples of companies that changed their names

  • Signature Exploration and Production (SXLP) –> Growblox Sciences, Inc. (GBLX)
  • Cannabis Therapy Corp (CTCO) –> Peak Pharmaceuticals, Inc. (PKPH)
  • Brazil Interactive Media, Inc. (BIMI) –> American Cannabis Company (AMMJ)
  • Nuvilex Inc. (NVLX) –> PharmaCyte Biotech, Inc. (PMCB)
  • MediSwipe, Inc. (MWIP) –> Agritek Holdings, Inc. (AGTK)

Management Changes

These companies often swap out members of senior management and so for a number of reasons. Some members of management leave by choice and others are forced out. It really depends on the situation and it is not always fully disclosed to shareholders.

Yesterday, Surna Inc. (SRNA) announced that Tom Bollich, President/CEO, will be stepping down on April 15, 2015. Bollich was Surna’s claim to fame and the company frequently reminded the public that he was one of the co-founders of Zygna.

“I’m extremely proud of what the team has accomplished thus far and grateful I was able to add value during Surna’s start-up stage,” commented Bollich.  “Now the timing is right to transition into new leadership, and I’m confident the current team will continue to evolve Surna into the unquestioned leader in the cannabis industry. I’m excited about Surna’s future.”

Stock Splits

Stock Splits and Reverse Stock Splits are something every investor should be aware of. Due to the nature of this developing industry, many companies within the financial sector have experienced a stock split or reverse stock split.

A stock split is a type of corporate action taken by a company that increases the number of the total shares outstanding and lowers the price of the stock. A stock split does not increase the value of the company or its market capitalization. For example, a 2-for-1 stock split results in each stockholder receiving an additional share for each share they hold, but the stock price is cut in half. The end result is that the two shares now equal the original value of one share before the split. In the case of a reverse stock split: a 1-for-2 means that for every two shares you own, you get one share. In this case the price would double, but you would have half as many shares.

Listed below are a few examples of companies that had a stock split.

  • Monarch America (BTFL):3-for-1 forward stock split
  • Zoned Properties (ZDPY): 1-for-120 reverse stock split.
  • Vaporin Inc. (VAPO): 1-for-50 reverse stock split
  • Vape Holdings, Inc. (VAPE): 1-for-40 reverse stock split.
  • Medican Enterprises Inc. (MDCN): 20-for-1 forward stock split

Outlook

If an investor wants to be successful in the cannabis industry they must understand what they are investing in, and why they are investing that particular company. One of Techniacl420’s goals is to make this process easy for you. We will keep up with company developments and keep you informed about what is going on. Sign up for a free week membership by using the link below so you can take advantage of our service.

https://www.technical420.com/user/register

 

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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