Borislav Tonev

Nate's Foods Co (OTCMKTS:NHMD) Sputters to a Halt

by Borislav Tonev November 25, 2014

The month of November was shaping up to be quite a good one for Nate's Foods Co (OTCMKTS:NHMD, NHMD message board)'s stock. Interest in the ticker was suddenly revived a couple of weeks ago and the increasing volumes sent it on a rather impressive climb up the charts. Between November 3 and November 14, it managed to jump from under $0.04 per share all the way to over $0.17.

Predictably, it then moved sideways for a bit, but the excitement suggested that many people were really confident in its ability to put up a more consistent performance in the near future. Truth be told, the press releases did give investors more than a few reasons to be happy.

NHMD started production of their pancakes in a can recently and within minutes of launching them on their own website, they managed to sell thousands. They negotiated a few contracts which means that the products should soon hit the shelves in a grocery store near you and they also said that they have managed to reach a financing agreement which should not only solidify the balance sheet, but should also help them release some new flavors during the upcoming 2015.

The torrent of good news hasn't stopped, but the stock is now showing some serious signs of weakness. Yesterday, for example, NHMD wiped out more than a fifth of its market cap in a matter of just six and a half hours and it finished the day at just over $0.12 per share. The ticker also managed to log a dollar volume of around $236 thousand which means that the drop can't be blamed on lack of liquidity.

Some investors are starting to have their doubts about the company while others are outright furious with the performance and predict that the fall will continue. A certain article on a famous financial website suggests that they might be right.

A group of people who rather ambitiously call themselves the “Investor Protection Association” posted their opinion on NHMD about an hour before yesterday's closing bell and it's fair to say that they're not huge fans of the stock. They claim that because of some promotional activity that they've witnessed recently and because of the horrific balance sheet, a huge portion of the market cap will soon disappear. The aforementioned group say in the disclosure statement that they “may initiate a short position in NHMD over the next 72 hours”.

If you've been following our articles closely, you'd know that we've also covered NHMD's Q3 report and you'd recall that we touched upon all of the problems that can be found in it (there are a few). On the other hand, however, the recent announcements coming from the company headquarters suggest that the financial woes will soon be dealt with.

And this means that you, as a regular investor, are faced with a dilemma. You need to decide whether you should trust the so-called Protection Association (who “may” initiate a short position really soon), or whether you should take NHMD's word for it and hope that the business will soon take off.

Before we leave you to contemplate the two options and decide which is best for you, however, we like to remind you that a couple of years ago, when the company was still in the mineral exploration business, some investors got a huge amount of discounted stock. To be more specific, they bought a total of 42 million shares at just $0.0008 a piece and we won't be too surprised if they start selling them on the open market right now.

About forty minutes after the opening bell, NHMD is sitting at $0.11 per share (about 10% in the red).

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