Stock Delisted, what now?

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Oak&Elm
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Stock Delisted, what now?

Post by Oak&Elm » Thu Nov 08, 2018 7:48 am

so I had one remaining individual stock after converting 99.9% of my portfolio to a 3-fund plan. Save the boo's, I know it was a mistake. Regardless, my one stock MiMedix (MDXG) was just delisted and is now OTC. My Vanguard balance sheet shows $0 dollars. I was planning to sell when I got back to even at around $9/share but now I don't even know what my options are. Anyone else ever gone through this that can offer any advice?

jminv
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Re: Stock Delisted, what now?

Post by jminv » Thu Nov 08, 2018 8:07 am

You will be able to sell it OTC at some point.

The $9 price level you have in mind is anchoring. You shouldn't focus on it. If you can't trade it OTC online, you could call your broker and sell it.

Just as a side note, sounds like a terrible company to be a shareholder in. They failed to regain compliance with the SEC (why?) after disclosing internal accounting issues in July (basically accounting fraud dating back to 2012). Now they've also issued a poison pill to prevent someone buying them. Company doesn't seem to care about it's shareholders at all. I saw some articles dating back to 2016 where whistleblowers were complaining about being terminated for not agreeing with management to engage in channel stuffing at VA hospitals which was probably the tip of the iceberg. It's been awhile coming.

I think I remember something about this stock being posted here before too? Maybe that was you. Sorry this one went the way it did - before their accounting was found to be a fraud their numbers looked ok.

For the contrarian thesis in case you really don't want to sell: mdxg failed to regain compliance with the SEC because EY did not want to sign off on the accounts for reputational reasons. Small enough client that putting their name out there wasn't worth the risk and so didn't sign off so delisting was the end result. The company still has a valuable product line and a good customer for it (VA) along with valuable IP. Someone will want to buy them and in the meantime they are still a viable company. The poison pill was issued to prevent a company from buying them on the cheap while they deal with the delisting. At some point later on they will return to profitability and you will be able to sell your shares for more and/or a company will buy them out after the poison pill is retracted.

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Oak&Elm
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Re: Stock Delisted, what now?

Post by Oak&Elm » Thu Nov 08, 2018 8:28 am

Thank you jminv for your detailed response. I have bought and sold this stock several times over the last few years, I knew they were shady but they also had a great product line. Hopefully someone buys them and I can get my money out. FWIW the shares I own were purchased with previous gains in MDXG so although I don't like taking any loss this one would not sting as much.

quantAndHold
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Re: Stock Delisted, what now?

Post by quantAndHold » Thu Nov 08, 2018 9:11 am

Sorry to tell you this, but you are never getting made whole on this one. Someone can correct me, but I believe there has never been a case where a company’s stock was delisted and then relisted. It’s unlikely another company will buy them until they get their financial shenanigans sorted out, and then it will be for a lot less than $9/share. Usually companies that have been cooking the books aren’t worth much after everything is accounted for.

I don’t know, offhand, the mechanics of selling OTC stocks on Vanguard. You might call Vangaurd and ask. Worst case is you move the stock in kind to another broker and sell.

WonderingDope
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Re: Stock Delisted, what now?

Post by WonderingDope » Thu Nov 08, 2018 10:18 am

quantAndHold wrote:
Thu Nov 08, 2018 9:11 am
Someone can correct me, but I believe there has never been a case where a company’s stock was delisted and then relisted.
HealthSouth

jminv
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Re: Stock Delisted, what now?

Post by jminv » Thu Nov 08, 2018 11:10 am

Oak&Elm wrote:
Thu Nov 08, 2018 8:28 am
Thank you jminv for your detailed response. I have bought and sold this stock several times over the last few years, I knew they were shady but they also had a great product line. Hopefully someone buys them and I can get my money out. FWIW the shares I own were purchased with previous gains in MDXG so although I don't like taking any loss this one would not sting as much.
Just a caution since the contrarian thesis I put at the end of my post was just an example of how one could spin it. I personally wouldn't stay in it and would try to sell OTC. The momentum on this one is downward and at best it will flatline for awhile. I remember when you mentioned this one awhile ago in some thread and I looked at the company then out of curiosity. The company sounds like it was really rotten so there's probably a lot more problems lurking under the surface. It's also a really bad sign if a company is willing to engage in fraudulent activity when the other party is the federal government (VA). That's just asking for a response with an investigation being a given and a serious penalty likely to be the end result. Also,what happens if their end users decide they don't want to deal with the company because of all this news? It seems that they are overly reliant on one buyer: the VA. I'm not going to look into it in detail, but if there's a substitute (or near substitute) product, you might find that the buyers at the VA, for example, don't want to take the risk of buying from a company that made them part of a fraud and might be going under. Better to find an alternative supplier. Their sales would collapse and the company would be sold for even less to a buyer or a buyer waits for them to go into bankruptcy to buy their IP at firesale prices. Maybe the IP isn't even worth what one might think it is.

not4me
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Re: Stock Delisted, what now?

Post by not4me » Thu Nov 08, 2018 4:27 pm

jminv wrote:
Thu Nov 08, 2018 11:10 am

Just a caution since the contrarian thesis I put at the end of my post was just an example of how one could spin it. I personally wouldn't stay in it and would try to sell OTC.
I don't know anything about the company & will largely echo jminv's thoughts. I just found this to be an interesting situation.

1st thing I'd do is call Vanguard & understand what they will/won't do for you. It may be that all they'll do is transfer to another broker. This isn't necessarily a slack time of year, so you may be hard pressed to get it transferred & sold in order to count loss on 2018 taxes.

Jminv gave some realistic examples of what could happen & there are countless others -- some better, some worse. I get the sense that you somewhat feel you are playing with house money & are willing to ride it down...if so, you may want to stay put. Unless that is the case, I'd want to be positioned to be able to sell if I so chose & you may not be in such a position if you stay at Vanguard. & I would sell as soon as I could. If they are sold/taken private, etc, I would expect Vanguard would manage through that, but I'd ask now.

I did look at the company, etc briefly & that is what I found interesting. The short interest about a month ago was higher than the combined institutional & insider ownership -- quite unusual. Yesterday, last day listed, it fell ~30%. Today, after it opened lower, it rose 10+%, but now (still not end of trading day) it is down 10+% & over 10x average daily volume. So, I'm guessing there is a lot of short covering going on & likely more. In fact, I'd say that the real important information is not visible at this point. Interesting case

I won't speculate on which scenario is most likely, but it could spin out of control quickly for the common stock holder (I realize since it is down 70+% for the year that seems odd observation). Good luck !

athan
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Re: Stock Delisted, what now?

Post by athan » Thu Nov 08, 2018 4:33 pm

You can have OTC stocks in Vanguard brokerage accounts. I believe they charge a little over $50 to buy or sell. I could be wrong, but I currently own the stock AWLCF, which is a small energy company OTC.

To buy it originally, I had to call Vanguard. Since the initial buying, I have been able to buy and sell online.

123
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Re: Stock Delisted, what now?

Post by 123 » Thu Nov 08, 2018 4:40 pm

Many brokers will accommodate investors with worthless stock by buying the stock for $0 (zero) and thus allowing the investor to book a sale/disposition. Of course they charge the regular fee for selling.
The closest helping hand is at the end of your own arm.

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Oak&Elm
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Re: Stock Delisted, what now?

Post by Oak&Elm » Fri Nov 09, 2018 6:04 pm

Thanks everyone for the help, I was able to place a OTC limit order to sell at Vanguard without assistance, just like any normal trade. That was an $11k mistake. The next time I think about buying an individual stock I will remember how well this turned out

Tanelorn
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Re: Stock Delisted, what now?

Post by Tanelorn » Fri Nov 09, 2018 11:00 pm

Oak&Elm wrote:
Thu Nov 08, 2018 7:48 am
Save the boo's, I know it was a mistake. Regardless, my one stock MiMedix (MDXG) was just delisted and is now OTC. My Vanguard balance sheet shows $0 dollars. I was planning to sell when I got back to even at around $9/share but now I don't even know what my options are. Anyone else ever gone through this that can offer any advice?
Sell it now and don’t look back. I’m not tell you this because it’s an individual stock or it’s now OTC - those are fine and can work out well if you do your homework and catch a little luck. I’m telling this because it’s MDXG specifically. I have followed them for a while and was short (betting they would decline) for a while.

MIMedix is a real mess - no reported financials for how long, very bad management, 5+ years of restated financial audits going on, kicked off the stock exchange and out of all the index funds, etc, etc. you have no idea what you own and no one else does either because their accounting can’t be relied on and hasn’t been updated yet, but whatever it is, it’s not pretty. Here’s just two small examples of what you’ll find if you start doing due diligence on them:

https://seekingalpha.com/article/418552 ... ng-vehicle
Between the management resignations, high confidence of short sellers believing that MDXG is worthless, restatements of financials that will go all the way back to 2012 and pulling of all guidance, investors and traders should come into this stock with the assumption that it is a $400 million shell that should be used as nothing more than a trading vehicle. Who knows how much, if any, of MDXG's revenue and profits are based on completely legitimate business activity at this stage. In the long term, there is a great chance of further significant price declines and that the stock will be kicked to the OTC.

Short sellers discussing the firms troubles:
https://quoththeraven.podbean.com/e/quo ... in-oleary/

On a practical front, the stock is still actively traded OTC - it closed today at $2.80. You can sell it like anything else at Vanguard (no $50 surcharge either, that’s only for certain foreign ADRs), although their system may be a little confused from the transition to OTC. Don’t delay, the spreads and liquidity will get worse the longer it’s OTC, and very likely the price will too. If you can’t sell it via the website, call in and they can do it for you over the phone for sure.

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