The Canadian cannabis stocks we’ve weeded out have accumulated large short positions as the marijuana rally hits a 14-week high since its December 21 low
SmallCapPower | April 2, 2019: The Canadian cannabis stocks we’ve uncovered today have accumulated large short positions following the early 2019 rally. Fueled by the signing of the U.S. Farm Bill into law in late December, the sector-wide rally includes cannabis export developments in Israel and Colombia and Florida’s repeal on the ban of smokable flower in its medical cannabis program. This rally, however, has been accompanied by a spike in short interests. For reference, shares held short represents the outstanding shares that have been sold short, whereas short interest ratio takes the shares held short and divides it by the 30-day average daily volume of shares traded. This could also be a contrarian indicator as short sellers will eventually have to cover their positions, which could lead to a ‘short squeeze’ and stock-price jump.
*Share prices as at close March 29, 2019, data obtained from S&P Capital IQ
Cronos Group Inc. (TSX:CRON) – $24.55
Cronos Group operates two wholly-owned Canadian licensed producers and has distribution and production across five continents. The Company is focused on expanding its global footprint through building an international iconic brand portfolio and developing disruptive intellectual property. On March 4, 2019, Cronos announced that it had sold its minority interest in Whistler Medical Marijuana Corporation to Aurora Cannabis Inc (TSX:ACB). The transaction represents approximately 19% of Whistler’s outstanding common shares. Upon close, Cronos will receive approximately 2.5M common shares of Aurora with a total value of $24.6M as consideration for the transaction. On March 26, Cronos Group announced the close of its $2.4B strategic investment from Altria Group (NYSE:MO), the cigarette maker behind Marlboro. The Company also released Q4/18 financial results, reporting net revenues of $5.6M, compared to $1.6M from the previous year.
- Market Cap: $8.1 Billion
- 1-Month Total Return: -12.4%
- 30-Day Average Volume: 2.9 Million
- Shares Held Short: 4.7 Million
- Short Interest Ratio: 162.5%
Namaste Technologies Inc. (TSXV:N) – $0.67
Namaste Technologies is an international cannabis eCommerce company operating across 20 countries, which utilizes machine learning to provide patients access to medical cannabis products. Through NamasteMD.com, the Company’s integrated telemedicine application, Namaste connects patients with healthcare practitioners to provide them with online medical cannabis prescriptions. The Company’s wholly-owned subsidiary, CannMart, has received its ACMPR medical cannabis ‘sales only’ license from Health Canada, giving the Company access to sell medical cannabis online within Canada. On March 6, Namaste announced it entered into the edibles markets with a share purchase agreement to acquire 49% of the issued and outstanding shares of Choklat, an Alberta-based company, for $1.5M.
- Market Cap: $205.8 Million
- 1-Month Total Return: -36.8%
- 30-Day Average Volume: 4.2 Million
- Shares Held Short: 2.6 Million
- Short Interest Ratio: 63.0%
Village Farms International, Inc. (TSX:VFF) – $18.74
Village Farms International is a vertically-integrated greenhouse grower in North America, and the only publicly-traded greenhouse produce company in Canada. The Company focuses on producing and distributing fresh, premium-quality produce to national grocers in Canada and the U.S. from its ~9 million sq. ft. of its Controlled Environment Agriculture (CEA) greenhouses in British Columbia and Texas. On March 11, the Company announced that its 50%-owned joint venture Pure Sunfarms facility is now licensed for production.
- Market Cap: $893.2 Million
- 1-Month Total Return: +45.0%
- 30-Day Average Volume: 3.1 Million
- Shares Held Short: 2.3 Million
- Short Interest Ratio: 73.8%
Cannara Biotech Inc. (CSE:LOVE) – $0.205
Cannara Biotech is a cannabis company that is building one of the largest indoor cannabis cultivation facilities in Canada, and the largest in Quebec, with a total 625,000 sq. ft. of growing space. The Company is expected to produce high-grade indoor cannabis and cannabis-infused products for the international and Canadian markets. The Company’s subsidiary, Global shopCBD.com, has entered the U.S. CBD-hemp market through its eCommerce platform, which is intended to act as an aggregator and reseller of CBD-hemp product in the United States. On March 26, 2019, the Company announced it has closed a private financing for gross proceeds of $8.9M.
- Market Cap: $142.4 Million
- 1-Month Total Return: -4.7%
- 30-Day Average Volume: 1.9 Million
- Shares Held Short: 2.2 Million
- Short Interest Ratio: 115.1%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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