The Canadian cannabis stocks we’ve dug up have the greatest number of short positions in the Canadian cannabis space from the period of December 1, 2019 to December 15, 2019
SmallCapPower | December 23, 2019: As we head into 2020, cannabis stocks have yet to see a recovery. The Horizons Marijuana Life Sciences Index ETF (HMMJ) is down 62% since its 2019 high of $23.87 on March 26, 2019. Since then, cannabis stocks have also been under pressure from short sellers. According to financial analytics firm S3 Partners, the total short positions of the Top-20 most shorted cannabis stocks was ~3.2B as at December 18, 2019, a 7% increase from the ~$3.0B, in cannabis shorts as at December 9, 2019. As such, short interests remain elevated in the cannabis sector. Today we’ve weeded out four Canadian cannabis stocks with the largest short positions over the first two weeks of December. 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 price data as at December 20, 2019, data obtained from S&P Capital IQ
**Short data obtained from the IIROC Consolidated Short Report December 1, 2019 to December 15, 2019
***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
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The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) – $0.70
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 said it was unable to secure financing to complete construction at its facilities in Ancaster, Ontario and Valleyfield, Quebec.
- Market Cap: $218.9M
- 30-Day Return: -21.3%
- YTD-Return: -71.5%
- 30-Day Average Trading Volume: 4,239,670
- Shares Held Short: 32,283,688
- Short Interest Ratio: 7.6x
Canopy Growth Corporation (TSX:WEED) – $26.35
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. 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 Fall 2019, and has the capacity to extract up to 5,000kg of hemp or cannabis biomass per day. On November 14, 2019, Canopy Growth reported quarterly results, which were a disappointment as revenue decreased 15%, QoQ to $76.6M and missed the consensus estimate of $110.5M.
- Market Cap: $9,184.7M
- 30-Day Return: +12.2%
- YTD-Return: -28.0%
- 30-Day Average Trading Volume: 3,133,400
- Shares Held Short: 11,633,457
- Short Interest Ratio: 3.7x
Aurora Cannabis Inc. (TSX:ACB) – $2.95
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 November 14, 2019, Aurora reported Q1/20 financial results, highlighted by total revenue of 75.2M, a 24% decline over the previous quarter. Revenue missed analysts’ estimates of $95.5M for the quarter.
- Market Cap: $3,099.1M
- 30-Day Return: -15.7%
- YTD-Return: -56.5%
- 30-Day Average Trading Volume: 11,209,960
- Shares Held Short: 15,806,982
- Short Interest Ratio: 1.4x
HEXO Corp. (TSX:HEXO) – $2.64
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 December 16, 2019, HEXO reported Q1/20 financial results. The Company posted a $62.4M net loss on revenue of $14.5M, which missed consensus estimates of $24.4M and $16.1M. In addition, revenue was on the lower end of management guidance of $14.0M to $18.0M.
- Market Cap: $678.8M
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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