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Larry Berman CFA, CMT, CTA Aurora Cannabis ACB-T DON'T BUY Nov 27, 2017

He does not know the company. The company is in play. Cannabis will be maybe 1% of the world when the industry matures. It is speculative right now. The competition from the illegal market is going to be high and will suppress price. The upside is limited in terms of industry demand. If you are going to play it, play the whole group (HMMJ-T).

Larry Berman CFA, CMT, CTA

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DON'T BUY

The cannabis sector has been thrashed and still not good value--no earnings, uncertain sales. Very risky and good luck to you. He doesn't see the fundamentals improving.

DON'T BUY

He feels all cannabis stocks are gambling stocks. A maturing debenture is expected to keep downward pressure on the share price. There is no assurance that any existing company will be a survivor -- it is simply too early. No one is making money in this space. Without being able to predict revenues and expenses, it is too risky. He would stay away from these.

BUY

They each have their own strengths. He would pick Canopy (WEED-T) because they are the 800 lb gorilla. Aurora has lots of news about balance sheet challenges but they have low costs that he thinks will still come down further.

DON'T BUY

He saw the bubble coming in cannabis. Take a look at the financial balance sheets and see how much money they owe. He owns one company in the space that also owns liquor stores. You will see more companies go under in this space. He only buys companies that have been around for 10 years.

SELL

Don't buy cannabis stocks here. Their earnings just aren't there. You can buy good value companies at discounts to book value so why go for this one. Move on. It is an opportunity to upgrade your portfolio.

HOLD

It's been a wild ride. The valuation across all the names are still quite high. With what we are seeing with legislation in the US, he would still tend to look at these. Stick with it.

DON'T BUY

Lots of opportunity in the US. Guilty of using easy money to build massive facilities. Big writedowns. Big equity offering. Doesn't see an imminent big export market. Longer term potential, but it's an outside probability.

DON'T BUY

Look at what the opportunity is. The US has increased medical and recreational use, plus favourable legislation. Doesn't have the strongest set of assets in the US, so he'd favour MSOs over ACB. Europe is the longer-range opportunity, where it has a foothold.

COMMENT

The problem is that parts of the world weed grows easily, so the economics don't work. The big opportunity will happen when the US legalizes weed federal, then weed shares will pop. If you're under water this, take the tax loss.

DON'T BUY

Avoid the sector. High risk, speculative. Doesn't see catalysts to drive the sector higher, especially if Republicans succeed in the US election.

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