Cannabis

Canopy Growth Corp (CGC US) short interest is $1.29 billion; 26.39 million shares shorted; 11.38% of float; stock borrow is 13.65% bp fee. WEED CN short interest is $355 million; 7.28 million shares shorted; 3.14% of float; stock borrow is 12.40% bp fee  Canopy Growth is the  is the most shorted stock in the Cannabis sector.

The 10 major shorts in the Cannabis sector, which make up over 95% of all shorts in the sector, were down $28 million in mark-to-market losses today, bringing year-to-date losses to $1.02 billion.

Short sellers have been covering some of their Tilray short positions over the last week. With shares shorted down 292k shares, -7.72%, as Tilray’s stock price declined by 14.24% over that same time period. Shares shorted are 3.49 million shares, $287 million of Short Interest. This is the lowest level of shares shorted since early December.

TLRY US\CN short interest is $286 million; 3.43 million shares shorted; 33.24% of the float with a stock borrow rate on existing short positions at 182% fee (per annum).

There is very little stock loan available in this name and there is not enough stock available for any large short sales.

The mergers and acquisition activity in the Cannabis Sector continued today with Green Growth Brands Ltd. offering $2.1 billion in a hostile takeover of Aphria Inc (APHA). This follows Altria Inc’s announced $1.8 billion investment in Cronos Group (CRON); Constellation Brands purchase of 5.5% of Canopy Growth Corp (CGC); Molson Coors Brewing Co’s joint venture with HEXO Corp (HEXO); and Anheiser-Busch Inbev’s research partnership with Tilray Inc (TJRY).

Author: Ihor Dusaniwsky

Both Tilray Inc (TLRY US) and Aphria Inc (APHA US) were mentioned as attractive short plays at Whitney Tilson’s recent conference. Chris Brown of Aristides Capital LLC maintains that cannabis is in actuality a commodity business and therefore most cannabis related stocks are overvalued, and in the case of TLRY overvalued by over 40%. Fabriel Grego of Quintissential Capital expects “massive” asset write-offs at Aphria relating to South American company acquisitions which are “largely worthless.”

The weeklong rally from last week’s lows has taken a bite out of the $93.7 billion of mark-to-market profits, +11.12%, short sellers have earned since the beginning of October. Over the last week the S&P 500 index increased by 3.31%, the Nasdaq by 4.3% and the Russell 3000 by 3.23%. The S3 Blacklight platform tracks over 8,000 U.S. domestic equity shorts worth over $825 billion, which incurred mark-to-market losses of $23.3 billion, or -2.86%, over the last week.

New Age Beverages Corp (NBEV US) short interest is $46.17 million, with 12.75 million shares shorted, for 24.30% of float.

Stock borrow fees are easing as more lendable inventory are hitting the street. Stock borrow fees averaged a 36% fee over the first three quarters of 2018, hit a 120% fee in late September, and averaged over a 46% fee in early November. They have now dropped to 27.69% fee. Average NBEV short interest for the year has only been $21 million, but those short sellers have paid just over $7 million in stock borrow costs.

Cannabis stocks rallied over 8% yesterday on euphoria that Attorney General Jeff Session’s resignation would bode well for U.S. cannabis policy. Today, clearer minds prevailed and cannabis stocks gave back most of yesterday’s run-up when investors realized the likelihood that there would be short term legislative changes to federal cannabis policy was unlikely.

NBEV real-time short interest:   11.55 million shares short / 55.8% of float / $58.7 million at risk betting on a share decline.

New Age Beverages sells teas and water, but more notably announced recently, it’s ready to launch cannabis-based drinks.