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Matthew Finston
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I approach investing as a social theorist and a cultural historian. As a result, I am a contrarian. Studying the history of financialization, I have to agree with value investors like Seth Klarman, George Soros, and John Quiggin that markets are ultimately inefficient. However, I am not an... More
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  • Potentially Safe, Speculative, Suspicious, Or Fake Pot Stocks 21 comments
    Apr 6, 2014 4:14 PM | about stocks: ATTBF

    I am going to a running tabs on MJ stocks. I will be using the following criteria:

    1) Does not engage in any business activity

    2) releases vague PR (for example :" interest in going into the marijuana industry")

    3) Does not file with a recognized regulatory agency (pinks and below$

    4) Significant Shareholder dilution 100% or more

    5) Excessive Insider selling (over 25% of holdings is suspicious. note we like insider buying!)

    6) No clear management team (Company should have a CEO, CFO, Board of Directors, etc).

    7) recent dramatic rise in price 1,000% or more.

    8) Large Float (issuer has issued all or most authorized shares. Aka 100m a/s and 95m o/s

    9) sudden change to the marijuana industry after years of running unprofitable businesses (all the junior mining companies fall here)

    10) little to no revenues (less than $10,000)

    11) no assets (less than $100,000)

    12) management has criminal background

    13) inconsistent business model (changes week to week, press lease to press lease)

    14) recently halted/suspended

    15) being pumped by anonymous investment group (on Facebook, ihub, twitter, seekingalpha)

    16) No Investor Relations

    0-3: possibly safe but more due diligence would be helpful 4-7: caution but possible high risk/high reward 8-11: suspicious, not worth the risk, 12-15: fake only value is the pump

    Feel free to use the criteria and leave your views in the comment section. Do not supply a rating without using the criteria. Do not just write ATTBF 1/15 without supporting it. For instance I would argue that

    ATTBF 4/16: #4 dilutions #10 no revenues 7#price #15 Pump

    LATF 5/16: #3 regulatory, #dilution #6 management team, #8 Float, #16 poor communication

    *17 something smells fishy

    MCIG 3/15: #7price #15 Pump #8 Float

    MDCN: 2/16 #No revenues #7 Rise in price

    MDRM 11/16: #1 no business #2 vague #3 filing #4 dilutions #6 management team (recent change in CEO) #7price #8 large float #10 no revenues #11 no assets #13 inconsistent #15 Pump

    SPRWF 6/16 #1 business #2 vague #7 float #8 cheap warrants being exercised at 5 cents add to OS #9 good and bad track record of CEO, radio station is positive, #10 start up but purchase offer for existing MMAP producers

    Disclosure: I am long ATTBF, MDCN.

    Additional disclosure: I used to be long on MDRM. I am no longer long until the company fully discloses financials. I apologize for any confusion.

    Stocks: ATTBF
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Comments (21)
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  • Green&Golden
    , contributor
    Comments (39) | Send Message
    I'm looking forward to your insights!
    6 Apr 2014, 05:25 PM Reply Like
  • Econ Student
    , contributor
    Comments (237) | Send Message
    (OTCQB:MCIG) The only thing is the price run up. It's overvalued though. That's the only 1-3 range stock I can think of. I don't mind 4-7 though.
    6 Apr 2014, 08:46 PM Reply Like
  • Matthew Finston
    , contributor
    Comments (961) | Send Message
    Author’s reply » I didn't include 'overvalued' because that is interpretive. I was considering a criteria like market cap exceeds revenues/equity by 100x. Thanks ECON, I'll add that to the list.


    Remember 0-3 does not mean a buy. It can still be 'overvalued.' It just means it might be safer to hold onto.
    6 Apr 2014, 09:33 PM Reply Like
  • Philberg
    , contributor
    Comments (102) | Send Message
    what's with the MCIG filings?
    I don't get point 3) here...
    7 Apr 2014, 12:08 PM Reply Like
  • Darren McCammon
    , contributor
    Comments (2346) | Send Message
    Hi Matt,


    This would be a good basis for due diligence. Can I make a couple suggestions? (Well to bad I'm going to anyway!)


    1.) I think you should also suggest it on the 420 Investor forums. In that way the community as a whole can achieve greater results than any one of us is likely to.


    2.) ATTBF 4/15 is a good format but on the specific fails I think it makes it easier to reference if you also include the #. For instance:


    ATTBF 4/15: #4 dilution, #15 pump


    is better than


    ATTBF 4/15: dilution, pump


    P.S. I find posting on the blog much easier than writing an article. Sometimes you just don't want to spend the time writing a complete article and would rather get down to what is important. The instablog is good for that but doesn't have as much visibility.
    24 Apr 2014, 06:15 PM Reply Like
  • Darren McCammon
    , contributor
    Comments (2346) | Send Message
    LATF 5/17: #3 regulatory, #6 management team, #8 Float, #16 poor communication (management does not return investor calls), #17 something smells fishy
    24 Apr 2014, 06:23 PM Reply Like
  • Matthew Finston
    , contributor
    Comments (961) | Send Message
    Author’s reply » Wow! great Darren. I agree. that looks a lot better.
    24 Apr 2014, 06:25 PM Reply Like
  • belgium
    , contributor
    Comments (1155) | Send Message
    Smells shrimpy
    24 Apr 2014, 07:31 PM Reply Like
  • Kuala Kaimi
    , contributor
    Comments (589) | Send Message
    I like ATTBF's positioning too.


    SPRWF I come out around 4 or 5 negatives


    as per Darren's suggestion
    #1 not yet anyhow since it is a start up
    #7 just barely though
    #8 cheap warrants being exercised at 5 cents add to OS
    #9 good and bad track record of CEO, radio station is positive
    #10 start up but purchase offer for existing MMAP producers


    Biggest risk, not getting the MMPR license
    Biggest positive, low market cap and little pump
    24 Apr 2014, 07:38 PM Reply Like
  • nicksanta
    , contributor
    Comments (312) | Send Message
    Matt, I don't agree with SPRWF and #2 (vague). I think at first they were but recently they disclosed a plan to simply purchase several growers and apply for MMPR. Is there something else I'm missing or that you find lacking? Otherwise, I'm on board with you and Kuala on every other point.
    27 Apr 2014, 12:01 AM Reply Like
  • Matthew Finston
    , contributor
    Comments (961) | Send Message
    Author’s reply » an older version of the criteria had vague or 'misleading.' for some reason that was taken out. the PRs have been highly misleading from what I read. sorry about my own 'misleading'/'vague' criteria.


    #2 refers also to any PRs now or before. just bc one is not vague doesn't make up for the fact that others were. that is a red flag bc it challenges investors' ability to trust future PR.
    27 Apr 2014, 12:06 AM Reply Like
  • Kuala Kaimi
    , contributor
    Comments (589) | Send Message
    I would like to look at reworking the model. I think your on the right track here Matthew but maybe we could add much more, some positives too. I haven't wrote anything down but I have been thinking a bit about it since I stumbled across your list.
    27 Apr 2014, 12:14 AM Reply Like
  • nicksanta
    , contributor
    Comments (312) | Send Message
    Good point Matt. It's very possible the next couple of PRs could be vague. And that will definitely sour interest. Makes sense to use the history of PRs, especially recent ones for a start up like Supreme.
    27 Apr 2014, 12:21 AM Reply Like
  • Matthew Finston
    , contributor
    Comments (961) | Send Message
    Author’s reply » No positives allowed. I was planning to have a separate blog for that. This is about hard truth, no sugar coating, no mercy. If a co. hits all 16 flags is it even worth the spec? on the flip side a co. can be 0 but still be a bad investment.


    I'd be happy to come up with a separate list for positives. but they shouldn't merely be the opposites of the ones listed here. BC essentially a high pro ranking will be a value stock and ultimately a great buy. but that is relative to the co. value.


    My three criteria are transparency, accountability, and timeliness.
    27 Apr 2014, 12:23 AM Reply Like
  • Kuala Kaimi
    , contributor
    Comments (589) | Send Message
    True we need to at least separate out many so we can concentrate on the few....then the second list! lol


    In all investing, one part of it that I have shown to be good at is judging sentiment, at least in big caps or market trends. There is never going to be a test for that so not all empirical evidence will separate winners from losers. Soros was a master at that style of investing.
    27 Apr 2014, 12:29 AM Reply Like
  • Matthew Finston
    , contributor
    Comments (961) | Send Message
    Author’s reply » Soros is a contrarian. I like that idea though. A ranking for value investors.


    the point is to have a ranking system that others wouldn't consider useful. This would be a way to spot out undervalued companies.




    1) negative sentiment without fundamental considerations
    2) unrealized future accounts (negative books but a business transaction underway?)
    3) in a sector tangentially related to current market pump (this would be like investing in a securities firm for MMPR. I see security firms as the real 'picks and shovels'. or something we missed? what is essential to all these companies that we haven't considered that only one or two companies have? maybe we should also look into utility companies. I've been investing in atlantic power that is my other 'picks and shovels play'. I'm already up 21% since its crash. running a marijuana facility is going to drive up huge electricity bills. Kuala! besides atlantic power do u know any firms that serve the canadian market?).
    4) too many red flags + oversold (too many red flags can be a plus as I have said before. company is cheap as a result)


    I know the fundamental, technical indicators are useful but I ultimately think they are pointless. only rarely do I use those.
    27 Apr 2014, 12:42 AM Reply Like
  • Kuala Kaimi
    , contributor
    Comments (589) | Send Message
    Utiliities is a sector I have avoided because I have been almost all growth stocks. I will think about it a bit though.


    Fertilizer space, with Agrium (AGU) might be a good play. They are a diversified player in the space.


    With either space, I am not sure that MJ demand moves the needle?


    We could look at the medium that MJ growers are selecting to grow the plants in or perhaps the containers etc and manufacturer's that may be listed.


    This article is full of ideas on products to look at that will be suppliers to the MJ industry. Coconut soil, lighting and ventilation systems suppliers, water filtration systems, climate control systems and computer programs.


    So many that we might just find one supplier that is an industry favorite, with sound financials and management. Now that would be a stock to bet on. I think I am going to start putting more of my time into that pursuit over trying to figure out these MJ companies with complicated and nefarious management teams. Maybe an article or blog where we can post our findings collectively and brainstorm as a group?



    Anyways, Matthew, as always. I appreciate you making me think so hard and challenging me to become a better investor and think outside the box too. I am considering going back into business so I may not have the same time available in the future.


    Thanks brother!
    27 Apr 2014, 01:31 PM Reply Like
  • nicksanta
    , contributor
    Comments (312) | Send Message
    Wow, MDRM going from long to bordering on fake. Interesting. I like this idea of ranking using your 16 points, but it may not match with your true feelings on the company.


    Example: if MDRM discloses financials you would be long again but still have 10 issues, which falls in the "suspicious and too risky" category.
    27 Apr 2014, 12:11 AM Reply Like
  • Matthew Finston
    , contributor
    Comments (961) | Send Message
    Author’s reply » if mdrm files, I think the score could go down to a 4-5/16. 6 of the 10 issues concern the filings. My impression was that once we had the filings the co. would become a 4/16, which is why I wrote up a bullish article. But it has been a over a month and no disclosures. Sadly, MDRM goes back on the schwag list for me. I'm not saying it is a sell. I'm saying that I can't support a long position without full disclosure. I hope investors don't panic and sell. I don't think they will. Again, there is an argument that the risk adds to its value. Even though I would love to speculate, ethically I cannot.
    27 Apr 2014, 12:29 AM Reply Like
  • nicksanta
    , contributor
    Comments (312) | Send Message
    Thanks. I was wondering if financials would effect other points. Makes sense. I'm holding MDRM for now, but my patience is thinning.
    27 Apr 2014, 12:33 AM Reply Like
  • Matthew Finston
    , contributor
    Comments (961) | Send Message
    Author’s reply » Another concern of mine is that EAPH keeps touting that its working with MDRM. when I spoke with Declan last month he said that EAPH did contact him but MDRM decided not to work with them. something doesn't seem right. I have several theories but all make assumptions.


    If MDRM had its financials released and EAPH was touting a JV I wouldnt care.


    For all I know monday everything will be publicly available. However, I believe giving them the benefit of the doubt has created a moral hazard wherein MDRM has no incentive to be transparent anymore. My real motivation is to force them to be transparent and not to just whisper sweet nothings to me and to other investors.
    27 Apr 2014, 12:47 AM Reply Like
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