Five stocks that make me shake my head

Weird events keep the market more interesting

Independent Investor

From time to time, I try to engage my kids in discussions about investing and the stock market. For example, if we are at Tim Hortons, I explain to them how it was purchased by the U.S. holding company which owns Burger King. During our recent roller coaster trip to California, I explained that they could buy shares in a roller coaster park company, Six Flags Entertainment Corp. and earn a four per cent dividend while they save for university.

But, sometimes, the stock market is just too weird to explain. Even for me, with 40 years-plus now of investing experience, I still shake my head at some of the goingson with companies, investors and the market. Let’s take a look at five weird events over the past few months: formerly listed in Toronto (delisted in August, 2015, for failing to meet listing requirements and now selling as MAAFF on the over-the-counter market in the U.S.). With an $11-million market cap, it is largely ignored now. Except for one recent glorious day in the sun: On March 24, the stock price rose 32,043 per cent. That’s right. From a price of $0.0018 per share on March 22, Mag shares rose to $0.90 per share on March 24, on volume of 10 million shares. What caused this spike? Pretty much nothing from the company. Trading looks to be a perfect example of a “pump and dump” scheme on the over-the-counter market, known to be so bad for investors that U.S. regulators actually use a skull and crossbones logo on some companies so investors know what they are getting into. After its meteoric rise, it took Mag shares all of three days to go from $0.90 per share back to below one cent per share.

Canadian health care investors, rightly so, have been nervous following the giant collapses of two of the biggest companies in the sector, Valeant and Concordia. So, last week when there was a rumoured short report on CRH, investors didn’t wait long to panic. CRH shares, which were $12.35 on April 20, and at all-time highs, plunged to $7.56 per share the very next day. The whole thesis of the short report, which most investors haven’t even seen, was that margins and CRH’s payer relationships need to be watched. Well, anyone investing in the health care sector should know this already. Governments are always trying to lower costs. While the report was fairly well-written (unlike many short “attacks”) there is nothing in the report that should be any news to any long investor in the company. Thursday the company reported solid earnings, and the stock is up 25 per cent this year, but it might still take CRH some time to recover from this incident.