The Canadian marijuana stocks we’ve dug up have accumulated large short positions as the cannabis rally hits an eight-week high since the December 21st bottom
SmallCapPower | February 20, 2019: The Canadian marijuana stocks we have weeded out 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. Additional developments that have helped sustain the sector-wide rally include Israel and Columbia, which both announced that the countries would allow cannabis exports, and Florida announcing it would repeal the ban on smokable flower in its medical cannabis program. This rally, however, has been accompanied by a spike in short interest. 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. For relative analysis, the Top 5 short interest ratios for the Big 5 Canadian banks at the moment average 1242%, with Scotiabank coming in with the highest ratio at 1980%, and Royal Bank of Canada having the lowest ratio at 404%.
*Share prices as at close February 15, 2019, data obtained from S&P Capital IQ
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Aurora Cannabis Inc. (TSX:ACB) – $9.30
Cannabis
Aurora Cannabis is a licensed distributor and producer of medical marijuana. The Company expects to have approximately 1,000,000 sq. ft. of licensed production space and produce 270,000 kg of cannabis annually. Aurora intends to convert several existing outlets, as well as develop new stores, for the sale of cannabis to the recreational market. The Company has signed supply agreements with 12 provinces and territories, making up over 98% of the Canadian population. On February 11, the Company announced its Q2/19 financial results. Aurora reported revenues of $54.2M, an 83% increase from the previous quarter.
- Market Cap: $9.3 Billion
- 1-Month Return: +10.7%
- 30-Day Average Volume 18.4 million
- Shares Held Short: 47.1 million
- Short Interest Ratio: 255%
Canopy Growth Corporation (TSX:WEED) – $62.81
Cannabis
Canopy Growth Corp is a diversified, multi-brand cannabis and hemp company, offering distinct brands and curated cannabis products with varieties in dried, oil, and soft-gel capsule forms. Through its extensive supply agreements with Canadian provinces, the Company locks in sales of 67,500 kg of product per year. With over 600,000 sq. ft. of production space, the Company has the largest licensed production platform in Canada. On August 15, Canopy Growth secured a $5 billion-dollar investment by Constellation Brands (NYSE:STZ) to establish a global position and development of cannabis-infused beverages. More recently, the Company was granted a license by New York State to process and produce hemp. The Company intends to invest between US$100M to US$150M in its New York operations.
- Market Cap: $21.3 Billion
- 1-Month Return: +9.3%
- 30-Day Average Volume 3.5 million
- Shares Held Short: 8.5 million
- Short Interest Ratio: 242%
HEXO Corp. (TSX:HEXO) – $7.39
Cannabis
HEXO Corp. produces, markets, and sells cannabis products in Canada. The Company is one of the largest licensed cannabis companies in Canada, operating over 1.3 million sq. ft. of facilities in Ontario, Quebec, and Greece, where it plans to establish a Eurozone processing, production, and distribution centre. On December 13, the Company released its first-quarter financial results of the new fiscal year. The Company reported $6.7 million in gross revenues and sales of $5.2 million of cannabis during the first two weeks of Canadian legalization.
- Market Cap: $1.5 Billion
- 1-Month Return: -2.6%
- 30-Day Average Volume 3.8 million
- Shares Held Short: 8.2 million
- Short Interest Ratio: 215%
Aphria Inc. (TSX:APHA) (NYSE:APHA) – $12.68
Cannabis
Aphria is one of Canada’s largest cannabis producers by licensed capacity. The Company’s Leamington greenhouse facility allows them to be a scalable, low-cost producer of medical marijuana. Aphria sells medicinal cannabis and its derivatives through retail sales and wholesale channels. The Company has over 1,100,000 sq. ft. of greenhouse facilities, subject to Health Canada approvals, and anticipates production quantities of 110,000 kg per year. On February 15, the Company announced that its Board of Directors has accepted and considered the report of the special committee of independent directors, which reviewed the allegations made against the Company in respect to its previously-completed acquisition of LATAM Holdings Inc. The committee concluded that the acquisition was within an acceptable range as compared to similar acquisitions by competitors.
- Market Cap: $3.2 Billion
- 1-Month Return: +27.8%
- 30-Day Average Volume 9.1 million
- Shares Held Short: 7.5 million
- Short Interest Ratio: 82%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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