The Canadian cannabis stocks we’ve dug up have the greatest number of short positions in the Canadian cannabis space from the period of October 4 to October 21, 2019
SmallCapPower | November 1, 2019: As we begin November, marijuana stocks continue to face downward pressure. Some of the main catalysts driving the selling pressure include: HEXO withdrawing revenue guidance for F2020 and cutting 200 jobs; MedMen announcing the termination of its PharmaCann deal, citing constrained capital markets; and Curaleaf renegotiating the acquisition of Select Brands for ~40% less than the original announcement. With Q3/19 financial results from large-cap Canadian cultivators pending, from companies such as Aurora Cannabis, Canopy Growth, and Tilray coming up in the second week of November, the cannabis sector could continue to see further downward pressure. Today we have weeded four Canadian cannabis stocks with the largest short positions through most of October.
*Share price data as at October 30, 2019, data obtained from S&P Capital IQ
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Aurora Cannabis Inc. (TSX:ACB) – $4.75
Cannabis
Aurora Cannabis is a vertically-integrated and horizontally-diversified cannabis company that is located in Edmonton, Alberta. Currently, the Company has a funded capacity that exceeds 625,000kg per year. Aurora Cannabis has sales operations in 25 countries across five continents. The Company has 15 global production facilities with 3 EU GMP certified, 40 clinical studies running or completed and over 77,000 medical patients served. On September 11, 2019, Aurora reported Q4/19 financial results, highlighted by total revenue of $98.9M, with $94.6M of cannabis net revenue. Total revenue missed management guidance of between $100M – $107M, but net cannabis revenue met guidance of between $90M and $95M. Aurora is expected to announce Q1/20 results on or about the 14th of November. Analysts are expecting the Company to generate $95.5M for the quarter.
- Market Cap: $4,886.6M
- 90-Day Return: -44.3%
- YTD-Return: -31.1%
- 30-Day Average Trading Volume: 6,812,450
- Shares Held Short: 21,924,402
- Short Interest Ratio: 3.2x
Canopy Growth Corporation (TSX:WEED) – $26.52
Cannabis
Canopy Growth is the largest cannabis company listed by market cap on the TSX and NYSE. The Company has the largest licensed production platform in Canada, with over 600,000 sq. ft. of production space. The Company has also secured the necessary agreements to export medicinal cannabis to Australia, Brazil, and Germany. On August 20, Canopy Growth announced that it has received a license from Health Canada for its KeyLeaf Life Sciences facility in Saskatoon, Saskatchewan. This facility is expected to be online in the Fall of 2019 and has the capacity to extract up to 5,000kg of hemp or cannabis biomass per day. Canopy Growth is expected to announce Q2/20 financial results in the middle of November. Analysts are expecting revenue of $110.5M.
- Market Cap: $9,225.4M
- 90-Day Return: -40.0%
- YTD-Return: -29.1%
- 30-Day Average Trading Volume: 1,696,620
- Shares Held Short: 11,790,132
- Short Interest Ratio: 7.0x
The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) – $0.97
Cannabis
The Green Organic Dutchman Holdings is a Canada-based cannabis producer with operations spanning from Ontario to Quebec. TGOD has already received the ACMPR cultivation and sales license but its two facilities are currently under construction. The combined production capacity of the two fully-funded facilities totals 1,643,600 sq. ft. and is expected to yield 219,000 kg of cannabis flower annually. On October 24, 2019, the Financial Post reported that TGOD was not successful in attempting to sell its Ancaster, Ontario facility through a leaseback program. This follows an announcement from October 9, 2019, when the Company announced that it was unable to secure financing to complete construction at its facilities in Ancaster, Ontario and Valleyfield, Quebec.
- Market Cap: $267.2M
- 90-Day Return: -69.3%
- YTD-Return: -61.4%
- 30-Day Average Trading Volume: 3,666,500
- Shares Held Short: 7,565,939
- Short Interest Ratio: 2.1x
HEXO Corp. (TSX:HEXO) – $2.97
Cannabis
HEXO is a consumer-packaged goods and cannabis experience company. It currently operates 2.4M sq.ft of facilities in Ontario and Quebec. The Company utilizes a hub-and-spoke business strategy that involves partnerships with Fortune 500 companies. Through this strategy, HEXO brings its brand value, cannabinoid isolation technology, licensed infrastructure and regulatory capability to established companies, leveraging its distribution networks and capacity. On October 10, 2019, HEXO withdrew its F2020 revenue guidance, citing uncertainties in the cannabis market. On October 28, 2019, HEXO reported Q4/20 financial results, which were highlighted by revenue of $15.4M and an operating loss of $60.7M (was $2.0M during Q3). Increased OPEX was a result primarily of increased operating expenses at $46.9M (was $24.0M in Q3/19) and lower gross margins, due to FV adjustment of biological assets.
- Market Cap: $763.2M
- 90-Day Return: -50.4%
- YTD-Return: -39.1%
- 30-Day Average Trading Volume: 3,215,620
- Shares Held Short: 7,445,479
- Short Interest Ratio: 2.3x
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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