My article “Green Interest Returns”, published last week in regard to what I think is a growing and renewed interest in the Cannabis/Marijuana Sector of the OTC Market garnered a lot of attention.
The company that was spotlighted in that article, CannaGrow Holdings, Inc. and they saw their share of attention last week also. What I want to talk about today is… Why.
I would like to think the reason why is the Investment Community is starving for information on how to profit from this growing market sector. If you will remember, I pointed out four things that I consider a “Must Do” before making a decision to buy into one of the Cannabis/Marijuana Sector stocks. What I said exactly was… Read the filings, check out the Recent Headlines, look into the Share Structure, and pull up the chart.
What I want to talk about today primarily is Share Structure and the reality of what that means. It has always been my experience that Micro Cap Stocks rarely respond favorably to dilution. Stocks that are already burdened with Bloated Floats have a very difficult time making and maintaining significant gains. In the beginning months of 2014 there were more than a few sub-penny stocks with hundreds of millions if not billions of shares in the Float that made phenomenal moves as the newly identified Cannabis/Marijuana Sector burst onto the scene… and like I pointed out in lasts weeks article the sector is littered with the corpses of some of those companies. I guess maybe not so much corpses as Zombies, the living dead…. Companies that may or may not have had the best of intentions but somehow failed to execute. This execution failure more often than not results in even greater dilution as the company in questions struggles to keep up with its monthly burn rate.
So now that we have hopefully reached a point of agreement and understanding as to the importance of share structure I want to once again direct my focus on CannaGrow Holdings, Inc. Last week CGRW made a hugely important announcement…. For the second time in recent months they reduced their authorized shares. Authorized Shares are the shares the company has available to issue. This action clearly demonstrates it is not the intent of CannaGrow to rev up the printing press and order up a fresh supply of ink… in market lingo… Little or no Dilution. Then, this morning out of nowhere comes another majorly significant press release. CannaGrow Holdings, Inc. has now rescinded a previous acquisition agreement, retrieved the shares that were issued, and retired them. This Company Action has reduced the Issued and Outstanding to 102,762,901 which is in the neighborhood of a 20% increase in the value of shares currently in the market. More important than the increase in value is, once again the Company is sending a signal to the Investment Community that they are very much cognizant of maintaining shareholder value, and let’s face it, shareholder value is what this investment stuff is all about.
Here are a few Huffington Post headlines that lend credibility to what I am about to speculate on.
October 15, 2014
September 25, 2014
April 7, 2014
U.S. Attorney General Eric Holder is about to become Former U.S. Attorney General Eric Holder. It is no big secret that wants to leave behind a memorable legacy… more than just being the first African American to hold the position of U.S. Attorney General. His boss, President Barak Obama probably has the same aspirations and his intended legacy is not faring well (that is a story for the Heath Care Sector).
Now here is the sizzle that turns this dish of pot roast and potatoes into a prime rib dinner. It is well known fact that a young Barak was fully aware of the “medicinal” qualities of Pot… In his 1995 memoir “Dreams from My Father,” Obama writes about smoking pot almost like Dr. Seuss wrote about eating green eggs and ham. As a high school kid, Obama wrote, he would smoke “in a white classmate’s sparkling new van,” he would smoke “in the dorm room of some brother” and he would smoke “on the beach with a couple of Hawaiian kids.” He would smoke it here and there….he would smoke it anywhere, and unlike Bill Clinton, Barack Obama never tried to say he didn’t inhale.
How about as a parting gift… soon to be Former U.S. Attorney General Eric Holder, and his boss decide to use their power to remove Marijuana from the list of Schedule 1 drugs. I think the general consensus around Washington is that it is going to happen… it is inevitable. So why not go down in history as the two brothas that stepped up to the plate and removed the “ganja” off of “The Man’s” list. In my opinion we are sitting on a nuclear bomb that might very well make the last Cannabis/Marijuana Sector explosion look more like a firecracker. When that fuse is lit, I can foresee CGRW joining the ranks of the likes of AERO, MJNE, CBDS, and MDBX