Not Mr. Nelson Petz, just what he may look like when his Aurora Cannabis stake false to materialize.
note: It is our intent to evaluate every aspect of the cannabis and hemp industries to ensure we are not trapped by unforeseen events that would compromise the integrity of our business model. Only by examining the industries from the perceptive of an observer can we adequately understand the true dynamics of what is taking place. At FJC, we seek knowledge, the factor that doesn't really form part of human nature. Conflict, combat, the outcome of the combat, and, consequential, risk and chance are what gives rise to knowledge. Humans have certain properties and characteristics which are intrinsic to them. A corporation is an organism that requests knowledge and human nature to function. By understanding this relationship we are given a window into what should happen in the future. Ben Franklin said, "An investment in knowledge pays the best interest." We do just that; spend on gathering information that committing resources to purchase a fixed assets. WHEN WE COMMIT RESOURCES TO PURCHASE A FIT ASSETS OR PLOT A CORPORATION PATH, OUR PROBABILITY OF SUCCESS IS ALMOST CERTAIN. Failure is the key to success; each mistake made by the other guy teaches us something.
Aurora Cannabis (NYSE: ACB) sucked in a BIG FISH. The No. 2 marijuana producer in terms of market cap captured 20% of the Canadian recreational market in the last quarter. Aurora began shipping lucrative cannabis oils this week to Germany, the most important marijuana market outside North America. And now Aurora has hoodwinked a billionaire. The company has appointed Nelson Peltz as a strategic advisor to help it explore potential partnerships.
Who is Nelson Peltz?
Peltz is the founder and CEO of Trian Fund Management, a multibillion-dollar investment firm. Trian owns significant stakes in several big companies, including packaged-foods company Mondelez, consumer-goods giant Procter & Gamble, food-products wholesaler Sysco, and fast-food chain Wendy's. Peltz serves as chairman of the board of directors for Wendy's and is a member of the board for P&G and Sysco.
Peltz's background also includes serving as CEO of Triarc Companies. During his time at the helm of Triarc, the company owned Arby's Restaurant Group and the Snapple Beverage Group, among other businesses. Earlier in his career, Peltz was CEO of the metal-component manufacturer Triangle Industries.
In his current role, Peltz became known as an activist investor. He led Trian to invest in public companies that appeared to be undervalued, and then pushed the companies' management teams to implement changes to unlock their stocks' value.
Why this is a big deal for Aurora?
Aurora Cannabis has a lot going for it: The company claims an industry-leading production capacity, and its international operations rank among the best for Canadian marijuana producers. But unlike rivals Canopy Growth, Cronos Group, and Tilray, Aurora doesn't have a significant partner outside of the cannabis industry.
The lack of a significant partner has put Aurora at a competitive disadvantage, especially compared to Canopy Growth. A $4 billion investment from alcoholic beverage maker Constellation Brands provided Canopy with a significant cash stockpile to use in expanding; Aurora would love to have such an excellent cash position to fund its expansion efforts.
Aurora Cannabis hopes that adding Peltz as a strategic advisor will improve its prospects for landing a significant partner -- and it might find more than one.
CEO Terry Booth said that Aurora looks forward to working with Peltz to "further extend our global cannabis industry leadership by aligning Aurora with each of the major market segments cannabis is set to impact." The segments that Booth referenced include beverages, cosmetics, pharmaceuticals, and wellness products.
Peltz's comments confirmed that he plans to actively seek out partners for Aurora. He stated that his collaboration with the company would include "potential engagement with mature players in consumer and other market segments."
NOW FOR THE REST OF THE STORY.
Fundamentally, Aurora Cannabis is overpriced and leveraged beyond commonsense sense. With a market capitalization of $9.29 million and a genuine enterprise value of $2.77 billion (questionable on the high side), a book value of $3.44 ( currently trading for $8.99), a cost of cannabis production of their collective facilities is $2,750 per pound (retail pot, on average is $3,150 per pound), which includes approximately 34 percent represents carrying excuse taxes, etc., calculates a net of $2,079. Therefore, Aurora cannabis is losing $671 per pound. In total, it suggests that Aurora Cannabis is "dead-in-the-water.
As for projected value per pound, our SP+GTM algorithm predicts that marijuana will sell for $500 per pound within three years, making current production facilities obsolete.
Add to the mix - according to Statistics Canda, 90 percent of the total sales volume comes from the black market.
ps/ Mr. Petz, your names appears appropriate.