Aurora Cannabis (ACB.TO)

They have been acquiring a lot of businesses. They are managing a growth profile. Bu you should be concerned about the dilution. There are concerns that they will do underwritings and go lower. He is short. He is long others in the space. Cannabis is quite different in Canada than in the US. You can’t do the edibles. You are just a grower/distributor and trying to develop a brand without advertizing. It is going to b a different approach for a number of years. The future growth is in the edibles. See HMMJ-T. The bulk of the group is at risk. We have not seen anybody process in bulk because it is still illegal to produce.

They are just serial acquirers that dilute existing shareholders. You want to own the acquired, rather than the acquirer.

Could they get in the NYSE? No reason why the NYSE wouldn’t let them on. He doesn’t invest in marijuana companies. Personally, he is short this one. They have been buying other companies, and many people are not happy receiving the stock. Market cap of $4.5 billion now. Massive overcapitalized industry now. Investors should be exceptional careful. They are buying things now and that usually doesn’t end well.

One of the leaders of the pack. Bubbly impression in terms of valuations as it is trading in multiples of potential sales and earnings. Institutional investors are staying out. He thinks there is going to be a shakeout in the whole space. Valuations could change very dramatically. Positive working capital. $40 million in sales. Could be one of the big “tobacco” companies in the future.

WEED-T vs. ACB-T. He would pick WEED-T. They are probably building a more sustainable diverse company.

These stocks have moved so much so quickly to the point that everything has to work out perfectly for them to go back to the levels they have been. The pullback of late has to do with the no announcement of the Government in terms of when it is going to be legalized. He is afraid of stocks like these. Depending on the reasons you bought it in the first place he would hold here.

He is only interested in Canopy (WEED-T). New technology has brought huge breakouts here. It is hard to know where it could be acquired.

WEED-T vs. ACB-T. He thinks the sector is extremely overvalued. In a 2019/20 recession, which he thinks is a possibility, companies with low quality earnings and an unclear future get hurt the most. These are two of the biggest players and to go with those. He can’t advise who will be the winner of these two.

They have a 20% stake in liquor stores (LIQ-T). They can focus on closing down less profitable stores. They were in retrenchment mode. It is a decent pivotal for the company to get into cannabis as well. It is speculative because they don’t move when they announce something. This could be an interesting choice.

He is constantly asked about cyber-currencies and cannabis. The sector as a whole has been incredible. The valuations do not make sense. They easy money has been made. It’s a great field to be in, it’s good to stick with the bigger players, it might be good to buy an ETF in this area. Fear and Greed are predominant in this sector, it is potentially profitable but very risky.

Rumours of Canopy, Aphria & Aurora merging or being bought by a tobacco company? There will be consolidation in this space down the road. These companies have done phenomenally well, but there's little to go on. Legalization may be pushed back from July 1. How will their products be branded? Lots of froth. Risky. There's no set, established market here. Positive trend is legalization in places like California, here and elsewhere. Don't buy if you expect M&A. The medical side is interesting if laws allow set doses by prescription. A lot of uncertainty. Be careful.

All these cannabis stocks are in a bubble and it is a sector that hasn't produced any profits yet. Down the road there are going to be some profits made, but there is going to be a lot of damage in this sector. This is like going to Vegas. You play them for trades. There is going to be a very unhappy outcome some time in the next year or 2 when reality comes back to the market. He would be very cautious. They more or less trade together as a group, so treat them as trades.

This has done very well, and if you can take some off so that you are playing with house money, that's what he would do.

It is one of the larger players. They have all had incredible runs. He cannot believe how well things have gone. He thinks we will end up with 5 players in the industry and he thinks this will be one of the survivors. They are in a dispute right now so he prefers the others of the large ones.

That’s a hard one to say. It’s one of the stronger stocks now but there’s going to be a lot of jockeying back and forth and buying out. Cannabis stocks are hot and the sector is performing well. He can’t say anything technical since he hasn’t seen a breakdown at this time. When a stock goes vertical like this one, it’s hard to determine the support level when it breaks down. The best way to look for an exit point is if it starts to underperform the market.