The Canada-listed cannabis stocks we’ve identified have seen recent insider selling during the past three months
SmallCapPower | November 21, 2019: Insiders are defined as any person with access to key company information before it is released to the public. Insiders include individuals such as officers, directors, and relatives. Since insider ownership and trading may cause changes in share prices, government bodies require companies to report this information, giving investors a sense of insider activity within a company. It is important to know which insiders to pay attention to, as insiders with proven track records should be watched more closely for the best insights into a company. The four Canada-listed cannabis stocks we have weeded out today have experienced significant insider selling recently, which may or may not be a cautionary sign for existing shareholders.
*Share price data as at November 19, 2019, data obtained from S&P Capital IQ
**Data on insider buying obtained from System for Electronic Disclosure by Insiders (SEDI)
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Trulieve Cannabis Corp. (CSE:TRUL) – $15.26
Cannabis
Trulieve is a seed-to-sale operation in the state of Florida, with plans to acquire additional facilities in Massachusetts, California, and Connecticut. The Company claims to be the largest, fully-licensed medical cannabis company in the State of Florida, with over 1.6M sq. ft of cultivation space yielding ~55,000 kg annually. Trulieve is in the process of constructing an additional 72,000 sq. ft, which would increase production capacity by 10,000 kg. TRUL also has a network of 37 dispensaries selling branded products, with a total of 240 stock keeping units (SKUs) and over 203,600 patients as of August 31, 2019. Trulieve is anticipating having 44 dispensaries open by year end. During September, Cultivation Manager George Hackney, Chief Information Officer Jason Pernell, and board members Richard May & Michael O’Donnell, sold 300K, 347K 125K, and 295K shares, respectively at a price of US$8.36. The insider selling netted the executives 2.5M, 2.9M, 1M, and 2.5M, respectively.
- Market Cap: $1,683.9M
- 30-Day Return: +20.4%
- 90-Day Return: +40.7%
- 90-Day Average Trading Volume: 296,190
James E. Wagner Cultivation Corporation (TSXV:JWCA) – $0.27
Cannabis
James E Wagner Cultivation is a cannabis production company located in Kitchener, Ontario, which specializes in aeroponic cultivation. Aeroponics is the process of growing plants in an air or mist environment without the use of soil. The Company has a patent pending for its aeroponic growth system known as ‘GrowthStorm’, which provides optimal growing conditions throughout the plants’ life cycle. The Company’s Kitchener facility is 15,000 sq. ft. and can grow 1,500 kg of cannabis per year. A second, 345,000 sq. ft. facility is currently being retrofitted with a projected capacity of 28,000 kg per year. On September 20, 2019, numerous James E. Wagner executives cashed in their stocks options. CEO Nathan Woodworth (350K shares), COO Adam Woodworth (375K shares), CCO Laura Foster (150K shares), and CIO Dan Bexon (150K shares) each used their options to buy shares at $0.46 and immediately sold them on the open market for $0.60. The transaction netted each of the executives 49K, 52.5K, 21K, and 21K, respectively. However, each of these transactions was minor compared with their overall share count.
- Market Cap: $26.3M
- 30-Day Return: -31.3%
- 90-Day Return: -53.3%
- 90-Day Average Trading Volume: 64,500
The Supreme Cannabis Company, Inc. (TSX:FIRE) – $0.65
Cannabis
The Supreme Cannabis Company is based in Canada and focuses on selling to the wholesale sector for the medical cannabis market in Canada. Through its subsidiary, 7ACRES, the Company operates a 440,000 sq.ft cultivation facility outside of Toronto. The Company’s portfolio also includes: 1) Blissco Cannabis Corp, a premium cultivator in British Columbia; 2) Truverra Inc., a global medicinal cannabis brand and licensed cultivator; 3) Cambium Plant Sciences, a plant genetics and cultivation company; 4) Medigrow Lesotho, an southern Africa-based cannabis oil producer; 5) Supreme Heights, an investment platform that works on CBD brands in the UK and; 6) a brand partnership and licensing deal with Khalifa Kush Enterprises Canada. On October 20, 2019, founder John Fowler sold ~1.5M shares, at an average price of ~$1.08/share, netting him $1.5M. In addition, he exercised 250K options at $0.41, immediately selling them on the open market for $1.08, netting 167.5K. In total, Mr. Fowler cash out ~1.65M. On October 29, 2019, it was announced that Mr. Fowler resigned from the executive team at Supreme.
- Market Cap: $230.3M
- 30-Day Return: -19.8%
- 90-Day Return: -54.0%
- 90-Day Average Trading Volume: 1,300,180
Aphria Inc. (TSX:APHA) – $5.68
Cannabis
Aphria produces and sells medical and recreational cannabis-derived extracts in Canada. The Company currently has a 1.1M sq. ft Leamington greenhouse facility, called Aphria ONE, which yields ~100,000 kg per year. Additionally, the Company has a premium cannabis brand named Broken Coast, produced in a 4,500 sq. ft facility in British Colombia that yields ~7,000 kg annually. Aphria reported Q1/20 financial results on October 15, 2019, before markets opened. Results were highlighted by EPS of $0.07 on net cannabis revenue of $30.8M and net revenue of $126.1M, which was mixed compared with consensus estimates of $131.1M in net revenue and EPS of ($0.03). Management also reiterated F2020E revenue guidance of $650M to $700M and adj. EBITDA of $88M to $95M. On November 4, 2019, the Company announced that it had received a Health Canada cultivation license for its Double Diamond facility in Leamington, Ontario. This adds 1.3M sq. ft of cultivation space with an estimated annual yield of ~130,000 kg, bringing Aphria’s total capacity to 2.4M sq. ft with a yield of ~240,000 kg annually. At the end of October Chris Mastronardi, CEO of the Double Diamond JV, cashed out 452,488 Aphria shares at an average price of ~$6.65, netting him ~$3M cash.
- Market Cap: $1,434.0M
- 30-Day Return: -3.3%
- 90-Day Return: -30.1%
- 90-Day Average Trading Volume: 2,370,150
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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