CannTrust Holdings Inc (TSE:TRST) Threatening Key Highs On Perceived Acquisition Interest

Benjamin A. Smith
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The price action in CannTrust Holdings Inc (TSE:TRST) (OTCMKTS:CNTTF) (FRA:C9S) is showing signs of reinvigoration. After a pause from recent gains which saw prices consolidation into a range, the federally regulated licensed producer of medical cannabis is once again trading near key swing highs. Should this resistance give way, the charts suggest plenty of blue sky for additional price appreciation.

Currently, CannTrust is trading higher by $0.79 to $9.50/share (↑7.83) in the absence of news (as of 2:35pm). That matches the February 22 rebound high and May 8 swing high set on Tuesday. Just as impressively, volume is 703,129 shares—over 1.4x the average 3-month daily volume. On a mid-spring Friday with cannabis sector leadership on pace to close out the week with another moribund volume session, this is significant.

CannTrust’s strong performance today is mimicking that of MedReleaf Corp., which itself is up $1.42 to $24.48/share (↑6.16%). Of course, the potential consolation fervor kicked off last week when MedReleaf revealed it had contacted several large companies regarding a possible sale—including Aurora Cannabis Inc. In fact, both companies were halted simultaneously and issued dual press releases confirming the rumors were real.

Following MedReleaf’s confirmed acquisition shopping, investors pushed up prices in perceived ‘consolation prizes’ like CannTrust and The Hydropothecary Corporation. The former shot up ↑30.67% between May 3-May 8, while the latter appreciated ↑17.62%. The two companies are considered the most likely acquisition targets due to the more ‘reasonable’ valuations and strategic portfolio of assets.

Quite notably, The Hydropothecary Corporation is not participating in today’s rally with CannTrust. This, despite the two moving in tandem for much of the past seven sessions. THCX is down $0.07 to $4.90/share (↓1.41%)

CannTrust is actually mimicking the price action of MedReleaf quite closely in recent sessions:

If we back the charts up to the time of MedReleaf’s halt on May 3, the result is beyond uncanny. There’s definitely some level of correlation setting up, beyond the coincidental:

Certainly, while no conclusions can be drawn from the front end of the chart, the last few days have mirrored each other closely. If you buy into a connection of some sort, the next logical question is “why”?

We certainly don’t want to be the purveyor of any conspiracy theories, so readers can draw their own conclusions (if any). But with TRST and LEAF trading right near key swing highs, I wonder whether the old axiom “Where there’s smoke, there’s fire” applies in this case.

CannTrust Holdings Inc. CEO Brad Rogers talks about the company’s deal with Apotex Inc. Brad also reveals CannTrust’s low all-in cost per gram and highly automated cultivation process.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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bsmith@midasletter.com |

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