Canadian Cannabis Stocks with Big Short Positions

The Canadian cannabis stocks we have weeded out have the largest short interests in the sector

SmallCapPower | July 30, 2018: Over the last month, cannabis stocks have seen a consistent decline in their prices on increasing volumes. The Horizons Marijuana ETF has declined by 15.4% in the past 30 days, suggesting an industry-wide correction. Today, we have weeded out some Canadian cannabis stocks that have the greatest short interest as a percentage of float. This is calculated by dividing the total amount of shares being sold short (betting the price will decline) by the total amount of shares on the market. This ratio is useful for gleaning market sentiment about whether or not a stock’s price will rise or fall.

Aurora Cannabis Inc. (TSX:ACB) – $6.85

Aurora Cannabis is a licensed producer and distributor of medical cannabis. ACB expects to have just under 1,000,000 sq. ft. of licensed production space and plans to produce at least 270,000 kilograms of cannabis annually. The Company also has 20% ownership interest in Liquor Stores N.A., the dominant alcohol retail chain in Western Canada. It intends to convert several existing outlets, as well as develop new stores, for the sale of cannabis to the recreational market. Additionally, the Company has signed a supplier agreement with the Province of Québec to supply cannabis for the province’s adult consumer market. Aurora has also embarked on an aggressive international expansion strategy that aims to have operations and/or sales in Germany, Denmark, Italy and Australia. On June 20, 2018, the Company announced its plan to spin-off its U.S. assets into a new company, Australis Capital. On July 25, the Company closed the world’s largest cannabis transaction by acquiring MedReleaf for roughly $3.2B in stock.

  • Market Cap: $3,882.2 Million
  • Short Interest as % of Float: 8%
  • 1 Month Total Return: -27%
  • YTD Total Return: -29%

Invictus MD Strategies Corp. (TSXV:GENE) – $1.34

Invictus MD Strategies is a Canada-based company licensed to produce medical cannabis under the ACMPR. As of 2018, Invictus estimates its production capacity to be 27,000 kg/year. The Company has outlined plans to reach 98,000 kg/year capacity by the end of 2019, following the expansion of its facility to 825,000 square feet. KISS front man, Gene Simmons, is involved with Invictus as its Chief Evangelist Officer.

  • Market Cap: $126.6 Million
  • Short Interest as % of Float: 4%
  • 1 Month Total Return: -16%
  • YTD Total Return: -16%

Green Organic Dutchman Holdings Ltd. (TSX:TGOD) – $5.48

Green Organic Dutchman Holdings is a Canada-based cannabis producer with operations in Ontario and Quebec. The Company’s facilities are under construction, but have already received ACMPR cultivation and sales licenses, in addition to receiving an oil extractions license in May 2018. TGOD aims to be the lowest cost producer in Canada by accessing the lowest power rates in Ontario and Quebec. The combined production capacity of the two facilities totaling 970,000 sq. ft. is expected to be 116,000 kg of cannabis flower. TGOD’s management team has ample experience in consumer packaged goods, which will likely be advantageous following legalization. The Company also has a large catalogue of licensing agreements for cannabis infused food and beverage products. Compared to its peers, TGOD has a large cash reserve that it is using for facility construction and its many R&D projects.

  • Market Cap: $1,257.9 Million
  • Short Interest as % of Float: 4%
  • 1 Month Total Return: -16%
  • YTD Total Return: 41%

Canopy Growth Corp. (TSX:WEED) – $32.79

Canopy Growth is the largest cannabis company listed by market cap on the TSX and NYSE. To position itself in the Canada’s recreational market, the Company has secured agreements with the Provinces of Quebec, Prince Edwards Island, New Brunswick, and Newfoundland & Labrador to supply their adult consumer market with high-quality cannabis. The Company has the largest licensed production platform in Canada, with over 600,000 sq. ft. of production space. To further solidify their leading position in the market, the Company expects to have up to an additional 5,000,000 sq. ft. of production over the next 12 months. The Company has also acquired the necessary agreements to export medicinal cannabis to Australia, Brazil and Germany. On June 20, the Company completed a $500M convertible senior notes offering.

  • Market Cap: $7,144.6 Million
  • Short Interest as % of Float: 3%
  • 1 Month Total Return: -20%
  • YTD Total Return: 10%

Aphria Inc. (TSX:APH) – $10.45

Aphria is Canada’s third-largest cannabis producer by licensed capacity. The Company’s Leamington greenhouse facility provides them with the opportunity to be a scalable, low-cost producer of medical marijuana. By January 2019, Aphria expects to increase its total licensed greenhouse growing space to 1,000,000 sq. ft., increasing its annual production capacity from 9,000 kilograms to 100,000 kilograms. The Company currently has 44,000 sq. ft. of production space. On June 6, 2018, the Company announced the construction of a $55M cannabis extraction centre, expected to process 200,000kg/y. On the same day, APH announced a $225M private placement at $11.85/share.

  • Market Cap: $2,424.5 Million
  • Short Interest as % of Float: 3%
  • 1 Month Total Return: -18%
  • YTD Total Return: -44%

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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