The Canada-listed cannabis stocks we’ve dug up have experienced the greatest change in shares held short in the cannabis space from the period of October 15 to October 31, 2019
SmallCapPower | November 13, 2019: As we head into the middle of November, downward pressure continues to weigh on cannabis stocks. On November 11, 2019, Organigram (TSX:OGI) announced Q4/19 revenue guidance, which was a disappointment to investors as revenue decreased for the second quarter in a row. For the quarter, its pre-announced net cannabis revenue of $16.3M was 35% lower than revenue in the previous quarter. With Canopy Growth Corp and Aurora Cannabis reporting on November 14, cannabis stocks could continue to slip. As such, short interests remains heavy in the cannabis sector. Today we have weeded out the four Canada-listed cannabis stocks that have seen the largest increase in short positions over the last two weeks of October.
*Share prices as at November 11, 2019, data obtained from S&P Capital IQ
**Short data obtained from the IIROC Consolidated Short Report October 15, 2019 to October 31, 2019
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Zenabis Global Inc. (TSX:ZENA) – $0.19
Cannabis
Zenabis was formed in January 2019, after a reverse-takeover of Bevo Agro Inc by Sun Pharm Investments Ltd took place. Zenabis is a licensed cannabis cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis owns four facilities intended for the cultivation of cannabis: Zenabis Atholville, Zenabis Stellarton, Zenabis Delta, and Zenabis Langley. On October 24, 2019, Zenabis announced that it was looking to raise ~$21.0M in a secondary rights offering to current shareholders at ~70% discount to 5-day VWAP as of the announcement day.
- Market Cap: $38.6M
- 5-Day Return: -7.5%
- 30-Day Return: -70.6%
- 90-Day Return: -87.2%
- 30-Day Average Trading Volume: 3,253,650
- Increase in Shares Held Short: +10,207,876
- Shares Held Short: 12,837,728
- Short Interest Ratio: 3.9x
The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) – $1.03
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 it was unable to secure financing to complete construction at its facilities in Ancaster, Ontario and Valleyfield, Quebec.
- Market Cap: $283.8M
- 5-Day Return: -2.8%
- 30-Day Return: -13.4%
- 90-Day Return: -67.0%
- 30-Day Average Trading Volume: 2,774,390
- Increase in Shares Held Short: +1,949,515
- Shares Held Short: 9,515,454
- Short Interest Ratio: 3.4x
Cresco Labs Inc. (CSE:CL) – $8.50
Cannabis
Cresco Labs focuses primarily on cultivating medical-grade cannabis, manufacturing medical cannabis products, and distributing products to medical patients and recreational users. Currently, the Company has one of the largest footprints in the U.S., with operations in 11 states, 23 production facilities, 56 retail licenses and 22 operational dispensaries. On October 8, 2019, the Company announced the closing of its acquisition of 100% membership interests in Gloucester Street Capital, the parent entity of Valley Agriceuticals. Valley Agriceuticals has one of the 10 vertically-integrated cannabis business licenses in the State of New York. On October 16, 2019, Cresco announced that it had received regulatory approval for five adult-use dispensaries in the state of Illinois, where recreational sales are expected to begin on January 1, 2020.
- Market Cap: $1,051.9M
- 5-Day Return: +6.3%
- 30-Day Return: +7.5%
- 90-Day Return: -28.5%
- 30-Day Average Trading Volume: 234,240
- Increase in Shares Held Short: +1,547,316
- Shares Held Short: 4,507,313
- Short Interest Ratio: 19.2x
HEXO Corp. (TSX:HEXO) – $2.81
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 in F2020 revenue guidance, citing uncertainties in the cannabis market. On October 28, 2019, HEXO reported Q4/20 financial results, 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: $722.2M
- 5-Day Return: +4.1%
- 30-Day Return: -16.1%
- 90-Day Return: -53.9%
- 30-Day Average Trading Volume: 2,824,930
- Increase in Shares Held Short: +1,299,706
- Shares Held Short: 8,745,185
- Short Interest Ratio: 3.1x
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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