As our readers might know by now, Benzinga is constantly on the lookout for both good and bad investment options. One of our top sources for investments in the cannabis industry is Alan Brochstein, founding partner at New Cannabis Ventures and founder at 420 Investor, who periodically updates us on which marijuana stocks we should keep an eye on and which ones we should avoid.
In this occasion, the expert shared a look at two marijuana penny stocks with suspicious insider buys: mCig Inc (OTC: MCIG) and Players Network (OTC: PNTV).
mCig’s Undisclosed Insider Sale
First off, Brochstein went into mCig. “This is a company that came out in 2013 and really disappointed people. It never really lived up to its promises,” he commenced.
Now, the company “is being heavily promoted,” he continued. “They are trying to build investor confidence— and so, one of the easy tools a company can use is have a — let’s call it — insider buy.”
So, this is what mCig did: Founder and CEO Paul Rosenberg recently disclosed the purchase of $100,000 of convertible preferred shares. However, there was something really weird about the transaction, Brochstein noted. The company had never properly disclosed a sale that Paul Rosenberg completed during the year ended April 30, 2016.
So, the investor looked into it and published an article explaining what was wrong with the filings. “I feel like this is a ploy by the company to build up confidence,” he said, talking about why he had written this piece.
“I just doesn't seem right that they would point attention to a purchase that becomes relatively small when compared to the sales that were made in the year ended April 2016. So, I demonstrated how they never accounted for — through a Form 4 or any other way — exactly how those millions of shares were disposed of, at what price, or anything like that,” he commented.
“That's the bottom line: I just feel like the company is playing a game here,” he ended.
Player’s Network
Brochstein moved on to expound what is going on at another weed penny stock, Player’s Network.
“One of mCig's clients is Green Leaf Farms,” which is 80 percent owned by Players Network.
What’s interesting here is that Players Network is “playing the same game,” the expert noted. “The CEO made a video where he bragged about how he made this purchase— And, once again, there's no Form 4 on that one!” In fact, the last insider transaction disclosed by the company was completed in 2011.
Author’s Note: Player’s Netowork’s video was made by MoneyTV, which very recently made another video for Singlepoint Inc (OTCMKTS:SING), one more cannabis-related company that has been subject of Brochstein’s inquiry due to its 'Slim And Shady' Finances – which might suggest a pump and dump.