We nailed It! And by we I mean Myself (The Wolf of Weed Street) & Michael Berger from Technical420.com as we co-wrote this, but to be honest it wasn’t hard with MedBox Inc (MDBX) as the writing was on the wall way in advance. Since we wrote this article on July 8th, 2015 the stock is down 75% as of today and it goes to show that connecting the dots with management, watching the buy patterns, sell patterns and mixing it in with what they actually do is the best way for any investor to keep their hard-earned money. Remember this: A penny saved is a penny earned!
People who are new to the emerging public cannabis space always seem to mention Medbox Inc. (MDBX) to my team at MarijuanaStocks.com and about the sensational rise of the stocks price from $3.15 to $215 in under 10 days time. They saw MDBX getting lots of media coverage and every pundit seemed to have the same exact talking points of the PPS rising to epic proportions, yet on that fateful day when MDBX touched $215 a share (closing at $205) they all missed the smoking gun; the volume. Most people don’t know that the volume on November 15th, 2012 was only 1,470 shares traded, yes fourteen hundred and seventy shares traded! In fact from 11/5/2012 to 11/15/2012 the stock traded a total of 6,864 shares, inflating the market cap to well over a billion dollars and kicked off the first major catalyst in the Marijuana Stock sector: hype.
The then CEO came out and said that the price of the stock was “too high.” Even though the stock dipped down into the $20 range over the next two weeks the hype didn’t wear off. The volume had increased dramatically putting the stock well over 1000% from where it was just a month earlier and its stayed that way until around March 31, 2014. In case you are wondering what has happened to Medbox Inc. in 2015, here’s some info you might need to know.
Insider selling: A reoccurring theme for MDBX during 2015.
It is no coincidence that corporate executives always seem to buy and sell their company’s stocks at the right time. This is because company insiders typically have access to nonpublic, material information alongside first-hand knowledge of company initiatives and strategies.
The Securities & Exchange Commission (SEC) defines a company insider as an officer, director or any beneficial owner in the company as well as an individual investor or investment fund that owns at least ten percent of the company’s common stock. The SEC has taken steps to improve the transparency of insider trading by requiring insiders to report all transactions that involve company securities. Insiders file their initial holdings on Form 3 and report any changes on Form 4 within two business days of the transaction.
During 2015, around 4 million shares of Medbox Inc. (MDBX) were sold by company insiders (Vincent Mehdizadeh, PVM International, Bruce Bedrick and Vincent Chase).
Lizada Capital cancels stock transfer agreement with Vincent Mehdizadeh.
On February 26th, MDBX announced that its founder and largest shareholder, P. Vincent Mehdizadeh, entered into a share transfer agreement with Lizada Capital LLC. Lizada would purchase 22,160,000 shares, representing 2,000,000 preferred shares and 12,160,000 common shares of Medbox for upwards of $15 million. A total of $5 million of the funds had been designated for purchase of Medbox restricted shares of common stock, directly from Medbox, at $2 per share in the name of Mr. Mehdizadeh’s holding company, PVM International, Inc.
On June 30th, MDBX filed an amended Form 13D on June 30th which disclosed that Lizada Capital decided to cancel the transaction with Vincent Mehdizadeh. This was not a surprising development due to legal headwinds facing the company and consistent insider selling. Since entering into the agreement, shares of MDBX were down over 92% and Mehdizadeh had sold over 500,000 shares.
Disconnect between the largest shareholder and management
On December 30th, Medbox announced it will amend and restate its financial statements for the year that ended December 31, 2013, the third and fourth quarters of 2013 and the first three quarters of 2014. This news did not sit well with the founder and majority shareholder who then issued a letter to shareholders regarding developments.
“To that end, I recently gave full control to the board and current management to steer the ship and navigate the company properly. Recent events have caused me to call into question whether current management and the board of directors has enough industry experience to properly run this company. It is for this reason that I will be adding industry-experienced members to the board to work with the current board members to more effectively operate the company. I will also be taking a more active role with the company again to ensure our short-term and long-term goals can be achieved.”
Founder withdraws agreement to remove current board
In late January, after Medbox Inc. was already the subject of multiple lawsuits, the company announced that a group of shareholders who wanted to appoint successor directors, withdrew and cancelled its proposed stockholder consent agreement. The group of shareholders then entered into a voting agreement with Medbox Inc. that would prevent the shareholders from attempting to remove any current members of the board for a period of twelve months. The damage, however, was already done and shares of Medbox Inc. have been unable to recover since.
This week came the announcement from MedBox Inc. that Jeff Goh has been promoted to president and interim CEO. The market seems to like this news considering last Thursday (7/2/15) the stock touched .11 and as I write this is trading in the .22 range for a tidy 100% gain. Knowing what we know now about the rise and fall of MDBX, though, it is my opinion that this is a risky trade.
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