Since featuring negative comments in this column on the actual health of cannabis investments, we have had our share of criticism from “experts” and “pot advocates,” crying foul and claiming that our algorithms are worthless. What now, Gunga Din?
From day one we have been dead serious in declaring the business models of all public cannabis companies are inconsistent with sound investment practices, are overvalued and investors traps. Pointing exclusively to sale growth without regard to the bottom line had made some founders rich, while the rest of the herd big losers. Revenues are good when it generates a profit. Why create a dollar’s worth of sales, and pay a buck and a half for the effort? That’s the logic of management running these “successful by market capitalization” public companies.
Now for the news ….
Cannabis stocks were a sea of red on Monday, weighed down by Aphria Inc. (APHA) after it swung to a wide loss in the third quarter that outweighed a surge in revenue, fell 15% in early trade, after the Ontario-based company posted a C$108.2 million ($81.1 million) loss for its fiscal third quarter, or 43 cents a share, after a profit of C$12.9 million, or 8 cents a share, in the same period a year ago. ( Even last years “profit” was contrived by fancy accounting).
Revenue climbed to C$73.6 million from C$10.3 million in the first full quarter of Canadian legal cannabis. But the company sold less marijuana than a year ago—kilograms sold fell to 2,636.5 from 3,408.9, while the average retail selling price for medical cannabis increased to C$8.03 per gram from C$7.51, primarily because of higher oil sales. The average price for adult-use cannabis fell to C$5.14 from C$6.32, due to a shift to smaller package sizes.
The company said it took a C$50 million non-cash impairment charge on its Latam Assets that were acquired last September and later became the subject of a review by a special committee. That review was sparked by a report from short sellers Quintessential Capital Management and Hindenburg Research, who said the C$280 million deal involving companies in Argentina, Colombia and Jamaica raised red flags as their research suggested the assets were worthless.
You didn’t have to read it from high priced sources; we declared “the news” two weeks before Wall Street had a clue.
APHA by the numbers – $8.81 down from a 52-week high of $16.86
Market Cap (intraday) 2.2B
Trailing P/E - 152
Price/Book (mrq) 1.65
Financial Highlights - Currency in CAD.
Fiscal Year Ends May 30, 2018
Return on Assets (ttm) -11.84%
Return on Equity (ttm) -18.68%
Stock Price History
Beta (3Y Monthly) 4.16
S&P500 52-Week Change 8.50%
52 Week High 3 16.86
52 Week Low 3 3.75
50-Day Moving Average 9.83
200-Day Moving Average 9.39
Avg Vol (3 months) 6.63M
Avg Vol (10 days) 4.87M
Shares Outstanding 249.76M
% Held by Insiders 6.92%
% Held by Institutions 15.24%
Shares Short (Mar 14, 2019) 17.63M
Short Ratio (Mar 14, 2019) 3.1
Short % of Float (Mar 14, 2019) N/A
Short % of Shares Outstanding (Mar 14, 2019) 6.94%
Shares Short (prior month Feb 14, 2019) 17.76M
In conclusion: Our reporting is not arrogant or boastful. Nor to exaggerating our talents and accomplishments, or speak poorly about others to make our articles look better than what Wall Street reports. The simple truth -- our analytics and algorithms are transparent, our articles presented in plain views, our conclusions can be verified by other sources. If history is a guide --- we have provided are worth.
Remember: There's more honor in investment management than in investment bankers.