At market close on Jul 29, Zoned Properties Inc (OTCMKTS:ZDPY) went for $0.87 a share. At peak on August 2, the company traded at $2.70. At time of writing, mid US morning on Wednesday, August 3, it’s hovering around the $2.64 mark. That’s a 210% gain in around forty-eight hours’ worth of trading.
There have been no material updates from the company as far as operations are concerned, and a look at Zoned’s SEC filings reveals nothing but a few mysteriously low share buys from an insider. Volume, on the other hand, is many multiples of its regular levels.
What’s going on?
First let’s get a quick look at the company. It’s a property lease company that rents out commercial and industrial real estate, and it’s got a current lead focus on the legal marijuana growth space. It’s got eight buildings spread across six locations, with a combined rentable square footage just shy of 2.4 million.
At last count (first quarter 2016) the company generated $406K revenues for a net loss of $236K. Full year 2015 came in at $1.39 million and $1.37 million for these two figures respectively. It’s got about $9 million total assets, of which rental properties account for circa $7.5 million and cash accounts for a little over $1 million.
The company has a pretty neat capital structure, with 17.1 million fully diluted shares outstanding, no warrants, 1.3 million options and 200,000 shares issuable upon conversion of convertible debt.
From an operations perspective, basically, the company buys properties it thinks will benefit from the various elements of the legal marijuana growth/distribution infrastructure, and secures long term (10 years, 15 years) leases for the properties.
So, a nice operations model, growth industry, very low short interest (500 shares at last count) and some albeit low insider acquisition – one of the company directors bought 600 shares between $1-2 on July 26 and July 27. None of this explains why the company gained so much over the last couple of days.
From what we can see there is no analyst coverage anywhere, and aside from some promotional coverage back in 2014, there’s been no newsletters or published pumps recently.
If anything, the biggest news in marijuana right now in the US, the DEA decision not to reschedule the drug from class I to class II (which would by proxy acknowledge that the drug holds medical value and allow for more research) should have beaten down on marijuana stocks. Especially stocks like this one, which would benefit from increased research activity based on increased demand for licensed marijuana research facility real estate and increased demand for raw product (which would necessitate increased growth space).
Not in this instance.
There’s only one real suggestion, and that is that there is something just around the corner that is going to boost the stock, and someone somewhere has an inside line. Perhaps the company has leased a large portion of its rentable footage and is gearing up to put out a press release highlighting the fact. Perhaps it’s picked up a fresh piece of real estate on favorable terms. Perhaps it’s about to close on a partnership with someone, or even better, pick up some institutional ownership. We’re not suggesting anything below board is going on, just that there is an inefficiency of information that has led to some seemingly unjustified (but that like will turn out to be justified) share acquisition. We don’t know what yet, but we are going to get to the bottom of it.
We’ve got our analysts on the lookout for any release that hints at what’s driving the volume. As soon as we see it, we’ll let our readers know through our free small cap research letter. Make sure you’re one of them by subscribing below.
Disclosure: We have no position in ZDPY and have not been compensated for this article.