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Thank you to Hippd for steering me in the direction of shorter term calls, which I added to my 2021 and 2022 bunch.
March, 2020 $2 calls up 44%, whereas January, 2022 $2 calls up just 14%.
Yes, I agree. if you lower your voice and use spell check, your words would be worth 10 X what they are now: 0
10 X 0 = ....
Melt up. My options are doing backflips
A respectful message to the shorts.
Aphria Raised to Neutral From Underperformer by CiBC
8:15 am ET January 15, 2020 (Dow Jones)
Coincidentally, I recently raised my twin daughters rating from underperformer to neutral as well. :)
In any case, the direction is clearly UP.
From Barchart
Organigram Hlds Inc (OGI)
2.16 -0.07 (-3.14%) 01/14/20 [NASDAQ]
POST-MARKET 2.80 +0.64 (+29.63%) 19:59 ET
BARCHART OPINION for Tue, Jan 14th, 2020
Overall Average:
100% SELL
Think this might change tomorrow?
Going up 20% after hours, at least temporarily. We'll see how it responds tomorrow.
Copied and pasted from Barrons, except for my commentary.
Aphria Reports a Cannabis Sales Disappointment, But Says Demand is Strong -- Barrons.com
10:39 am ET January 14, 2020
By Bill Alpert
Sales fell at Canadian pot producer Aphria from its August to November quarters, rudely disappointing the company's fans -- and punishing its shares.
(I am not rudely disappointed)
In its Tuesday morning announcement, Aphria blamed a change in Germany's reimbursement for medical marijuana, while trimming its guidance for sales in the fiscal year ending February by 11%. But on an early Tuesday conference call, Aphria's executives insisted that consumers would be eager to buy its products when a new production facility comes online in a few weeks.
(Yeah, find the most negative words to describe APHA's statements)
"Our sales growth to-date has been more limited by our internal supply than by demand," said Chief Financial Officer Carl Merton. "Our brands continue to just demonstrate very, very strong sell through and significant levels of demand."
But investors fumed at Aphria's 4% sequential sales drop and its guidance cut, knocking 8% off the stock when it opened Tuesday and sinking it to $5 in recent trading. The S&P 500 index is down 0.1%.
(Are you fuming? I am not fuming)
See our story on 2019's pot plunge: Is the Pain Over for Pot Stocks? Investors Can Look Forward to a New Year.
Analysts had expected November sales of about C$130 million (U.S.$100 million), but Aphria reported C$121 million. The biggest cause of the shortfall was a 9% drop in revenue from Germany, which Aphria blamed on seasonality and the change in the government's reimbursement model. Canadian sales rose 9%, to C$34 million. While the company reported a couple of million in positive cash flow, it suffered a net loss of C$8 million.
The company's downward guidance was also disappointing. Aphria had previously expected sales for the fiscal year ending February would total about C$675 million. Now it anticipates that sales will fall within a range of C$575 million to C$625 million.
Among the causes of the shortfall, said CEO Irwin Simon, were Ontario's scarcity of retail stores, Alberta's temporary ban on vapes, Germany's reimbursement, and the timing of the license for Aphria's new production facility.
But Simon was confident that consumers would snap up the output from the Aphria Diamond facility when it starts up next month. The Leamington, Ont., greenhouse can more than double the company's pot production -- adding 140,000 kilograms a year to the 110,000 from Aphria's first big greenhouse.
Simon boasted that his company was ahead of rivals in shipping the vape products allowed by Canada under the so-called Cannabis 2.0 regime, which took effect in December. Aphria also just received European approval to sell medical marijuana in any European Union country where it's legal.
Despite its revised outlook, the company noted that it has almost C$500 million in cash and expects to report over C$35 million in cash flow for the fiscal year ended February.
Nevertheless, there's a lot of pot being produced in Canada at new facilities opened by Aphria and its larger rivals Canopy Growth (CGC) and Aurora Cannabis (ACB). Inventories of dried flower at the country's provincial wholesalers are substantial, and both Canopy and Aphria have found themselves with big internal inventories of cannabis oil.
On Tuesday's call, Canaccord Genuity analyst Matt Bottomley asked if investors should worry about price erosion.
"We continue to see very strong sell-through of all of our brands," Simon responded. "I don't foresee the same concerns with price compression that I think a number of our competitors do."
(Hey, Bill, did you use your thesaurus to find words with negative connotations to describe statements made by APHA Execs? They "insisted", "boasted" and "blamed." Bill makes them sound like a bunch of petulant 3 year olds.
And investors? Apparently we are all "rudely diappointed" and "fuming" while "suffering")
What BS, Bill.
Glad I sold 80% of my January 17 $5 calls yesterday for a nice profit (110%). Finally learning to take some profits. Should have sold it all.
You maybe should have paid a little more. IMO, any buy now will yield great returns over the next months and years.
Me too. Ironically, today going up was far more stressful than the typical red down day that we all have sadly gotten used to. I'll try my best to get used to green again.
Aphria: Best-Positioned In Canada To Outperform In The Second Half Of 2020
Jan. 13, 2020 3:35 PM ET|3 comments | About: Aphria Inc. (APHA),
Cornerstone Investments
Aphria has one of the best balance sheets in Canada with ~$550 million cash after the recent $80 million bank financing.
With Diamond facility fully licensed, Aphria now has the second-largest installed capacity in Canada with 255,000 kg annually.
Aphria is our top pick in Canada heading into 2020 due to its financial strength, large capacity, and reasonable valuation.
Welcome to our Cannabis Earnings series where we break down the latest earnings to help you focus on the most important topics.
Introduction
If the year of 2019 can be described as a "comeback" year for Aphria (APHA), then we think the stock will be on the offensive this year. The new management team has quietly turned around the company by positioning it as one of the best-capitalized players in Canada. With the second-largest completed capacity - funded capacity became meaningless after stumbles at Aurora (ACB) and Green Organic Dutchman (OTCQX:TGODF) - Aphria is shaping up to be a long-term survivor in the Canadian market.
Second-Largest Capacity
Aphria has emerged as the second-largest producer by installed capacity based on our estimates. Aurora has suspended its Aurora Sun and Nordic 2 constructions, significantly cutting its capacity behind Aphria. Meanwhile, Aphria has successfully completed construction and licensing at its Diamond facility adding 1.3 million sq ft of growing space and 140,000 kg of run-rate annual capacity. Only Canopy (CGC) has a larger capacity, but it has paid dearly for its BC Tweed greenhouse assets as we analyzed before. Aphria also secured a partner for its Diamond facility which provided professional input on greenhouse construction and operation. As a result, the company avoided costly delays and cost overruns that have been prevalent in the industry.
We think Aphria has achieved two competitive advantages with the latest completion. First of all, Aphria now has the second-largest capacity in Canada which affords it the ability to capture dominant market share. Secondly, Aphria has been able to achieve its capacity without significant dilution. Aphria didn't require third-party investments and secured cheap non-dilutive debt financings to help finance its constructions. For example, Aphria borrowed $80 million against its Diamond facility with a floating interest rate of ~6% initially. The last financing before this was a US$350 million convertible senior unsecured notes issued in April 2019. The convertible notes bear an interest rate of 5.25% and have a conversion price of US$7.82 vs. the current price of US$4.94. We think Aphria's ability to achieve attractive financing terms is a major competitive advantage, especially during the current downturn which made capital scarce for cannabis companies.
Aphria has $464 million of cash at the end of August 2019 which excludes the $80 million recent debt raise. Canopy and Cronos (CRON) both received multi-billion dollar investments from outside investors, and Aphria is the best-capitalized among those without such an investment. Aphria is also nearing the completion of its Extraction Centre of Excellence and it has spent $48 million out of a total budget of $62 million. As a result, we think Aphria has one of the most mature operational profiles in Canada and should incur limited amounts of capital expenditures in the future. The company was waiting for the Diamond license before it could submit an amendment to allow for the co-located extraction center. Aphria's ability to complete most of its facilities last year provided a greater degree of flexibility for the company in 2020.
We think Aphria is well-positioned in 2020 to compete in Canada because its scale will likely put the company closer to profitability. Aphria was one of the few profitable cannabis companies in Canada before legalization. In the last quarter ended on August 31, 2019, Aphria reported a positive adjusted EBITDA of $1.3 million from cannabis operations. For the next few quarters, we expect margins to suffer initially from the commissioning of Diamond but it should improve once the facility enters full production. As a result, we expect 1H 2020 to remain noisy but improvements should be evident in the second half.
Aphria, currently, trades at EV/Sales of 14x based on its cannabis operations. The distribution business has extremely low margins, and we value the distribution business no more than the original acquisition price of $27 million (Aphria acquired CC Pharma in January 2019 for €18.92 million). Aphria is cheap relative to Canopy at 23.5x and Cronos at 24.4x, but it trades at a premium relative to Tilray (TLRY) at 9.5x and Aurora at 10x. Overall, we think the valuation is reasonable given Aphria's superior operational capacity and financial strength relative to Tilray and Aurora.
Looking Ahead
Aphria has emerged from 2019 as a stronger and more mature cannabis company. The company executed in 2019 by completing all its greenhouse facility construction while retaining ~$550 million of cash after the latest financing. As many Canadian companies face cash shortfalls and curtain capacity expansion, Aphria has the luxury to continue investing while operational efficiencies lower production costs. We are turning slightly more positive on Aphria's 2020 outlook based on discussions above. However, we think Aphria's fate remains subject to the health of the overall Canadian market. We, currently, do not foresee material improvements in Canada until the end of 2020 given Ontario's decision to allow up to 20 new retail stores per month. As a result, we think the first half of 2020 will see limited improvement in Aphria's financial results given the ramp-up at Diamond and continued oversupply in Canada. However, we think Aphria is one of the best-positioned to benefit from any potential improvement in the Canadian market. As a result, Aphria is our top pick in Canada heading into 2020.
https://seekingalpha.com/article/4316561-aphria-best-positioned-in-canada-to-outperform-in-second-half-of-2020?dr=1&utm_medium=email&utm_source=seeking_alpha
Chickened out: Sold 80% of my Jan 17 2020 calls for a 110% profit.
Waiting on the February and April $5 calls, as well as the 20201 and 2022.
Yes, still got a ways to go to make grapes out of some of my shriveled raisin calls.
You also :) I remember everything.
LOL. My January 17, 2020 $5 calls are up 97% today. LOL LOL LOL
Careful, smarty pants. You might choke on your LOL's. You don't respect Uncle Tonoose.
Just out: New analyst with a very positive outlook:
"ACB strong like bull"
Analyst: Uncle Tonoose
"CGC strong like bull"
Analyst: Uncle Tonoose
Well, I've been down so Goddamn long
That it looks like up to me
Well, I've been down so very damn long
That it looks like up to me
Yeah, why don't you shorts
Come on and set us free
I said, analysts, analysts, analysts
Won't you break your lock and key
I said, analysts, analysts, analysts
Won't ya break your lock and key
Yeah, come along here Mister
C'mon and let the poor boy be
I love organic. I like more companies than I can afford to buy at this sector low... or rather yesterdays sector low. I have chosen to load up on the beaten down, but optionable Canadian LP's for the ride back up to sanity.
Well, I've been down so Goddamn long
That it looks like up to me
Well, I've been down so very damn long
That it looks like up to me
Yeah, why don't one you people
Come on and set me free
[Verse]
I said, analysts, analysts, analysts
Won't you break your lock and key
I said, analysts, analysts, analysts
Won't ya break your lock and key
Yeah, come along here Mister
C'mon and let the poor boy be
Thank you. One more song before my breakfast. Adapted lyrics in italics
These are the days my friend
We thought they'd never end
We'd sing and dance forever and a day
We'd live the life we choose
We'd fight and never lose
For we are not so young and almost sure to have our way
La la la la la la
La la la la la la
La la la la La la la la la la
Best time to buy, Canadian MJ sector wide recovery way overdue
I am very optimistic for 2020
From trading View:
Entry level $5.55 = Target price $7.33 = Stop loss $5.05
Indicators are recovering from oversold conditions.
Very deep retrace has been held by monthly horizontal support.
Expectations are very low so any positive news could result in a great rally.
Safer entry level is above weekly resistance and Point of control. (red line)
Short interest = 13.34 %
https://www.tradingview.com/chart/DRI/aGBMROQt-Expectation-low-for-Aphria-Inc/
yeah...
Aurora Cannabis Stock Has Tanked So Far in 2020. Why an Analyst Says It's Time to Buy. -- Barrons.com
11:54 am ET January 13, 2020 (Dow Jones) Print
By Connor Smith
Aurora Cannabis stock has lost more than a quarter of its value from the start of the year. An analyst at Cantor Fitzgerald thinks the recent pullback makes it a good time to buy the shares.
The back story. Aurora Cannabis (ticker: ACB) stock has fallen nearly 76% in the past year, and 27% so far in 2020. Two analysts lowered their neutral ratings and price targets to $1 last week, noting concerns about the firm's ability to generate cash to pay off debt.
Aurora was down 4.2% to $1.58 on Monday morning while the S&P 500 index was up 0.4%. The ETFMG Alternative Harvest exchanged-traded fund (MJ), viewed as a de facto proxy for the pot industry, was up 2.5%.
One of the company's greenhouses appeared in an online sale listing, though the company clarified it was nonoperational and came with its acquisition of MedReleaf. The company said last month Chief Corporate Officer Cam Battley, one of the more public-facing executives in speaking with media and investors, was leaving the company.
Cantor Fitzergald analyst Pablo Zuanic wrote in a note earlier this month that strategic advisor Nelson Peltz should help the company find a chief executive officer who will bring greater financial discipline.
What's new. Zuanic wrote on Monday that the recent stock decline is a reaction to analyst downgrades and "misperceived matters."
"The CCO departure was good news, in our view; a planned asset sale is being done pretty much at book value; and debt covenants imply positive EBITDA by mid-year," he wrote.
He also argues trends have not worsened, noting conversations with management where they reaffirmed their prior outlook for the December quarter. They're also confident sales will ramp up in the second half of the fiscal year, with help from newly introduced cannabis derivative products like edibles and vapes.
"We would make use of the recent pullback (ACB -30% 30d vs. -10% for the group)," he wrote, referring to Canadian cannabis peers. "The poor liquidity makes the stock sensitive to downgrades (some done despite the absence of new catalysts/news) and misplaced market chatter."
Looking Ahead. Zuanic expects positive Ebitda by the June quarter, and operating expenses as a percentage of sales to start coming down.
His fiscal 2020 sales estimate of 338 million Canadian dollars (US$259 million) is well below consensus estimates at C$395 million, and is 32% lower than consensus for fiscal 2021. On the other hand, his adjusted Ebitda estimate is C$132 million for fiscal 2021, compared to consensus at C$77 million.
Excluding Canopy Growth (CGC) and Cronos Group (CRON), which have investors in big U.S. firms, Aurora deserves a premium to its average peers, given its improving cash flow picture, Zuanic says. Plus, he thinks a potential consumer packaged goods partner, or a well-known CEO, would drive upside.
Write to Connor Smith at connor.smith@barrons.com
(END) Dow Jones Newswires
As my teenage daughter says when I try to give her advice, "watch and learn."
May well turn green today.
"You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done
Every gambler knows
That the secret to survivin'
Is knowin' what to throw away
And knowin' what to keep
'Cause every hand's a winner
And every hand's a loser"
Bought some more Jan 17, 2020 $5 calls when APHA dropped into the low $.4.80's again this morning, adding to my mostly longer term 2021 and 2022 $5 calls. Up 54% so far today on the June 2020 calls. Not too late to get in..
You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done
Every gambler knows
That the secret to survivin'
Is knowin' what to throw away
And knowin' what to keep
'Cause every hand's a winner
And every hand's a loser
I like the drop. Bought some more cheap June 2020 and january, 2022 $2.00 calls when ACB touched $1.50.
Mu favorite fish is salmon which swim upstream.
??????
Perhaps other MJ companies will follow their lead. Consider this ACB
OTC DISCLOSURE & NEWS SERVICE
Trulieve Files Lawsuit against GRIZZLY RESEARCH LLC for Libel
Press Release | 01/10/2020
TALLAHASSEE, Fla., Jan. 10, 2020 (GLOBE NEWSWIRE) -- Trulieve Cannabis Corp. ("Trulieve" or the "Company") (CSE: TRUL) (OTCQX: TCNNF), a leading and top-performing cannabis company in the United States, announced today that it has filed a lawsuit in Florida state court against GRIZZLY RESEARCH LLC (“Grizzly”) alleging, among other claims, defamation for publicly disseminating false and libelous statements about Trulieve to manipulate the stock price and further its own financial interests. On December 17, 2019, Grizzly published a false, misleading, and unsubstantiated report. The Complaint demonstrates the defamatory, false and misleading nature of the report. The Company posted a summary of these claims and responses on their website.
“This lawsuit represents Trulieve’s firm stance against such false and misleading reports,” said Trulieve CEO, Kim Rivers. “We will work tirelessly to fight back against these fraudulent claims in a legal setting. The truth matters deeply to the Trulieve team, and we are proud to champion honesty in our industry and hopefully prevent this firm from using slander in an attempt to manipulate stock prices in the future. We will protect our brand by ensuring that the trust between Trulieve and its shareholders, as well as customers, is never called into question.”
Trulieve will prosecute this lawsuit to the fullest extent and is seeking a retraction of the false and misleading report, as well as compensatory, special, and punitive damages, attorneys’ fees and interest.
Percentage down off of 2019 highs;
TGODF: 88%
CBWTF: 85%
HEXO: 85%
ACB: 84%
CNPOF: 77%
OGI: 75%
CGC: 60%
APHA: 53%
Percentage down off of 2019 highs;
TGODF: 88%
CBWTF: 85%
HEXO: 85%
ACB: 84%
CNPOF: 77%
OGI: 75%
CGC: 60%
APHA: 53%
Percentage down off of 2019 highs:
TGODF: 88%
CBWTF: 85%
HEXO: 85%
ACB: 84%
CNPOF: 77%
OGI: 75%
CGC: 60%
APHA: 53%
From IR. Nothing much new. Actually sounds a little like one of my posts. :)
"Thank you for reaching out to the Investor Relations team at Aurora. We apologize for the delay in the getting back to you; while we understand your frustration we do ask for your patience as we have worked through a high volume of inquires received over the holidays which has resulted in slightly longer response time.
First off, it goes without saying that the volatility that we have seen in the market is an industry wide issue, not one that is isolated to Aurora. Aurora’s share price has been affected by many factors, a number of which are out of our control (e.g. industry news). That being said, we have also announced a number of changes and decisions over the past few weeks which were made to right size our near term operations to current market conditions, reduce our short term capital expenditures and overall, stream line our business. As a company, we endeavor to provide our shareholders with regular updates, both in press release format (such as our recent corporate update) as well as regular IR blog posts to provide shareholders with greater insight into the company’s day-to-day operations. As I am sure you are aware, I cannot provide you with details as to the future plans of the company, outside of what we have already stated publicly. However I’m happy to review why Aurora is uniquely positioned to weather the current market issues noted above.
With that being said, Aurora’s management team has worked incredibly hard to build an industry leading seed-to-sale business. First, Aurora operates industry leading, state-of-the-art cannabis facilities that produce premium quality cannabis at ultra-low costs, resulting in an our strong gross margins of 58% in Q1 2020. Leveraging high-tech automation in our facilities, our cost per gram during the past quarter was $0.85, an industry leading metric that validates the power of our purpose-built facilities. Aurora’s strength lies in its highly efficient production capabilities and its delivery of industry-leading gross margins. Our margins are core to our future success and will allow us to secure our financial future while continuing to strengthen our operations.
Now a trusted and established supplier of high-quality medical and consumer cannabis products in Canada, Aurora is leading the development of markets around the world. Aurora has established itself as the industry partner of choice securing several supply agreements in the EU and beyond. These supply agreements speak to our ability to navigate complex regulatory systems, build relationships, and execute on the incredible opportunity beyond our borders. Today, the Company has sales and operations in 25 countries across five continents and we continue to monitor the global cannabis markets closely and believe our global expansion to date has positioned us extremely well to capitalize on nascent markets as they emerge.
With respect to R&D, aside from the 40 clinical trials underway with our clinical research team, Aurora has also entered into an exclusive global partnership with the UFC to carryout advanced clinical research on the uses of hemp-derived CBD products in athlete wellness and recovery. The products developed through this partnership will be launched under Aurora’s newly formed high-performance sports brand ROAR Sports. ROAR will also be designated as the official CBD product of UFC.
As announced in the December 23, 2019 press release, we launched regulated vapes, edibles and concentrates in Canada. The new Cannabis 2.0 market represents a promising opportunity for Aurora and we are prepared to supply the market with range of premium products that consumers have come to expect from Aurora. Initial product varieties will include chocolates, gummies, cookies and mints as well as vapes."
Posted this yesterday but not one response, as everyone was laser focused on the $1 call instead.
Why Aurora Cannabis’ (TSX:ACB) Stock Price Could Double in 2020
The Motley Fool
Mat Litalien, MBA
January 9, 2020
The last year was nothing short of catastrophic for the Cannabis industry. In a year that saw the S&P/TSX Composite Index post its best year since 2009, the Canadian Marijuana Index had its worst year on record.
In 2019, the Canadian Marijuana Index lost approximately 55% of its value. After a couple of bullish years — 2016 and 2017 — the cannabis industry is in now in a multi-year down trend.
In late January of 2018, the Canadian Marijuana Index peaked — and it’s been downhill ever since. True, there have been a few spikes, but the downward trend remains intact.
What makes 2019’s poor performance stand out? The lack of spikes. Since early February, the Index has cratered, setting at levels not seen since 2017. In effect, most of the gains from 2016 and 2017 have effectively been wiped out.
It’s no secret that the industry has been mired in chaos. The new fashionable trend? Oust leadership. Boards of directors are beginning to realize that they need seasoned business veterans at the helm of these corporations. To illustrate this, here are the most recent leadership changes.
This week, Supreme Cannabis (TSX:FIRE) replaced CED Navdeep Dhaliwal with board member Colin Moore on an interim basis. It’s worth noting that Mr. Moore served as head of Starbucks Canada. In October, co-founder and former CEO John Fowler also departed.
In December, Aurora Cannabis (TSX:ACB)(NYSE:ACB) asked former chief corporate officer Cam Battley to step down.
Canopy Growth Corp’s (TSX:WEED)(NYSE:CGC) pushed out founder and former CEO Bruce Linton this past summer.
Former president of CannTrust Holdings (TSX:TRST)(NYSE:CTST) Brad Rogers was dismissed following its downfall.
Aphria (TSX:APHA)(NYSE:APHA) CEO Vic Newfeld stepped down from his role last January and former president Jakob Ripshtein was asked to resign in March.
Taking this into account, five of the largest cannabis companies in the country to start the year (2019) have undergone a change in leadership.
So much change afoot can be a worrisome sign; however, I believe it is a step in the right direction. A good number of these CEOs were also company co-founders and ill equipped, lacking the necessary experience to take these companies to the next level.
With this in mind, and pessimism at an all-time high, it may be time to look at pot stocks once again. Although I still believe the industry is speculative at best, it is now trading at much more reasonable valuations.
One stock that could rebound in a big way is Aurora Cannabis. As the market leading producer, Aurora still has outsized potential. Similarly, despite trading volume dropping across the industry, Aurora remains the highest traded cannabis stock on the TSX Index. This is good news, as there remains considerable interest in the stock.
In 2019, Aurora lost 60% of its value, a much bigger drop than fellow market leaders Aphria (-20%) and Canopy Growth (-33%). Thanks to this underperformance, it is now one of the more attractively priced pot stocks, as it trades at only 9.37 times sales and below book value (0.57). In fact, this is one of the lowest price-to-book values among all TSX-listed cannabis stocks.
Now that Cam Battley has stepped down, Aurora can take the next step forward. Should the company be successful in luring a seasoned executive from the consumer products industry, it could the catalyst that this company desperately needs.
Such a hire would bring instant credibility, and investors would have more confidence in the company’s ability to operate as an efficient entity. It could well spark a big rebound and a double in 2020.
No source, just BS sauce
$1 target or $4 target? Pick a number
Why Aurora Cannabis’ (TSX:ACB) Stock Price Could Double in 2020
The Motley Fool
Mat Litalien, MBA
January 9, 2020
The last year was nothing short of catastrophic for the Cannabis industry. In a year that saw the S&P/TSX Composite Index post its best year since 2009, the Canadian Marijuana Index had its worst year on record.
In 2019, the Canadian Marijuana Index lost approximately 55% of its value. After a couple of bullish years — 2016 and 2017 — the cannabis industry is in now in a multi-year down trend.
In late January of 2018, the Canadian Marijuana Index peaked — and it’s been downhill ever since. True, there have been a few spikes, but the downward trend remains intact.
What makes 2019’s poor performance stand out? The lack of spikes. Since early February, the Index has cratered, setting at levels not seen since 2017. In effect, most of the gains from 2016 and 2017 have effectively been wiped out.
It’s no secret that the industry has been mired in chaos. The new fashionable trend? Oust leadership. Boards of directors are beginning to realize that they need seasoned business veterans at the helm of these corporations. To illustrate this, here are the most recent leadership changes.
This week, Supreme Cannabis (TSX:FIRE) replaced CED Navdeep Dhaliwal with board member Colin Moore on an interim basis. It’s worth noting that Mr. Moore served as head of Starbucks Canada. In October, co-founder and former CEO John Fowler also departed.
In December, Aurora Cannabis (TSX:ACB)(NYSE:ACB) asked former chief corporate officer Cam Battley to step down.
Canopy Growth Corp’s (TSX:WEED)(NYSE:CGC) pushed out founder and former CEO Bruce Linton this past summer.
Former president of CannTrust Holdings (TSX:TRST)(NYSE:CTST) Brad Rogers was dismissed following its downfall.
Aphria (TSX:APHA)(NYSE:APHA) CEO Vic Newfeld stepped down from his role last January and former president Jakob Ripshtein was asked to resign in March.
Taking this into account, five of the largest cannabis companies in the country to start the year (2019) have undergone a change in leadership.
So much change afoot can be a worrisome sign; however, I believe it is a step in the right direction. A good number of these CEOs were also company co-founders and ill equipped, lacking the necessary experience to take these companies to the next level.
With this in mind, and pessimism at an all-time high, it may be time to look at pot stocks once again. Although I still believe the industry is speculative at best, it is now trading at much more reasonable valuations.
One stock that could rebound in a big way is Aurora Cannabis. As the market leading producer, Aurora still has outsized potential. Similarly, despite trading volume dropping across the industry, Aurora remains the highest traded cannabis stock on the TSX Index. This is good news, as there remains considerable interest in the stock.
In 2019, Aurora lost 60% of its value, a much bigger drop than fellow market leaders Aphria (-20%) and Canopy Growth (-33%). Thanks to this underperformance, it is now one of the more attractively priced pot stocks, as it trades at only 9.37 times sales and below book value (0.57). In fact, this is one of the lowest price-to-book values among all TSX-listed cannabis stocks.
Now that Cam Battley has stepped down, Aurora can take the next step forward. Should the company be successful in luring a seasoned executive from the consumer products industry, it could the catalyst that this company desperately needs.
Such a hire would bring instant credibility, and investors would have more confidence in the company’s ability to operate as an efficient entity. It could well spark a big rebound and a double in 2020.
Some posters seem to dismiss income from CC Pharma because it is primarily a distributor of pharmaceuticals AT THIS TIME. It is a distinction without a difference. Aphira's plan is to use CC to distribute it's MJ products throughout Germany and the the rest of the EU, as more and more countries legalize medical marijuana. The income generated by CC Pharma will remain a substantial portion of APHA's revenues and profits for years to come. It was one of the best investments made by any MJ company in the past 2 years.
Aphria Completes Acquisition of CC Pharma, Leading German Pharmaceutical and Medical Cannabis Distributor
Jan 09, 2019, 03:00 ET
LEAMINGTON, ON, Jan. 9, 2019 /PRNewswire/ - Aphria Inc. ("Aphria" or the "Company") (TSX: APHA andNYSE: APHA) today announced that it had completed its previously announced acquisition of CC Pharma GmbH ("CC Pharma"), a leading distributor of pharmaceutical products, including medical cannabis, to more than 13,000 pharmacies in Germany, as well as throughout Europe. The Company continues to strengthen its end-to-end cannabis operations and infrastructure in Germany.
"As one of the most promising medical cannabis markets in the world, Germany is a top strategic priority for Aphria. With today's acquisition of CC Pharma, Aphria is creating a German and ultimately pan-European platform that brings together demand, supply and distribution." said Vic Neufeld, CEO of Aphria. "We're excited to welcome the CC Pharma team and the pharmacists they serve to the Aphria family."
Dr. Manfred Ziegler, Managing Director of CC Pharma, added, "We're thrilled to be joining forces with Aphria. Access to Aphria's innovative products creates significant opportunities for CC Pharma's customers to experience more medical cannabis treatment options."
CC Pharma is a leading importer and distributor of EU-pharmaceuticals for the German market. Founded in 1999, today it has over 230 employees and offices in Germany, Denmark, Poland and the Czech Republic. CC Pharma holds 318 active German national pharmaceutical licenses and 692 active EU pharmaceutical licenses, and also operates a production, repackaging and labeling facility at its headquarters in Densborn, Germany. During 2018, CC Pharma generated revenue of approximately €262 million, with EBITDA of approximately €10.5 million.
"Through a series of deliberate and strategic partnerships, investments and appointments over the past 18 months, Aphria is a front runner in the German medical cannabis market," said Hendrik Knopp, Managing Director of Aphria Germany. "CC Pharma's shared values, deep relationships and local regulatory and logistical experience are a perfect complement to Aphria's expertise. One of our first steps will be to create a new division of CC Pharma dedicated to medical cannabis."
In addition to today's acquisition of CC Pharma, other previously announced strategic milestones for Aphria and its wholly owned subsidiaries in Germany include:
A significant supply agreement to provide CC Pharma approximately 1,200 kilograms of medical cannabis products, exported from Canada and Denmark to Germany.
A 2018 investment in Berlin-based Schöneberg Hospital, a first step in Aphria's plans to build and operate pain treatment centres throughout Germany.
The construction of a state-of-the-art, GMP certified cannabis vaults (5,000 kg storage capacity), in Bad Bramstedt, Germany, to be completed by late spring 2019.
The start of construction of a Research and Development indoor growing facility in Neumünster, Germany, in preparation for in-country cultivation.
Aphria paid €18.92 million in cash to the former shareholders of CC Pharma with an earn-out multiple on future EBITDA of up to another €23.5 million, if certain performance milestones are met.
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