First Mariner Bancorp (OTCBB:FMAR) Drops On Bad News
First Mariner Bancorp (OTCBB:FMAR) was one of the few companies in the OTC markets that had some impressive financial results. The second half of 2013, however, didn’t go very well for them and things are beginning to look grim for their stock with recent news.
On Monday, an hour before market open, the company announced that it has filed for Chapter 11 bankruptcy, in term selling the bank. This was the first piece of news we heard from FMAR in almost 3 months and it came as a shock to investors.
Needless to say, the company stock began to slide down immediately after the session started and had lost a hefty 77.79% of its price by the end of the day on more than 15 times the tickers average, generating $828 thousand in trade value.
Yesterday’s session was similar, as FMAR dropped another 47% of its price, going below 10 cents per share, to a close at $0.08. We saw a massive 2.7 million shares switch hands during the session, which were only enough for a smaller $278 thousand dollar volume.
The discussion over investor forums is as heated as it can get and a lot of people think that FMAR might bounce back, because of money they think will be paid to the bank holding company. This will surely not be the case, because under the rule of absolute priority, creditors are paid before the shareholders and FMAR has liabilities of $1.1 billion.
This means that the $4.7 million that shareholders are hoping to be devided amongst them, getting the price per share to $0.25 with the 18 million outstanding shares, will go to the creditors and will be quite insufficient to clear the company’s debt.
FMAR, at the moment, might be an interesting play for some of the shorters at the moment, however, be sure to do your due diligence and weigh out the risks if you have any ideas of playing with fire.
Hemp, Inc. (OTCMKTS:HEMP) managed to stop its fall and regain some value with a good 15% gain yesterday generating $26.9 million in dollar volume. Cannabis Science, Inc. (OTCMKTS:CBIS) on the other hand is still sliding down and lost 6% of its price.
