Newstrike Resources Ltd, Small Cap SI Leaders Surge On Market Turnaround
Newstrike Resources Ltd. (CVE:HIP) (OTCMKTS:NWKRF) (FRA:0N8) and other short interest leaders were among the top percentage gainers in the cannabis space today. As usual, small caps took their cue from Canopy Growth’s substantial rebound, helping pare losses which surpassed 25-percent over a four day span.
On a percentage basis, Newstrike Resources bounce-back stands out. The southern Ontario cannabis operator jumped ↑15.68% just one day after we presented a neutral bottom call case. It’s certainly welcome news for a stock which has been crushed like no other since January’s euphoric sector highs.
As elucidated yesterday, Newstrike Resources had been down ↓22.38% since June 22, mirroring Canopy Growth’s swoon and moderately underperfoming the small cap cannabis space in general. It’s deeply oversold condition was bordering on epic proportions, considering it’s strong cash position, branding appeal and modestly-sized, but operational grow facilities in Brantford and Niagara.
Adding kerosene to today’s move was likely a good heaping of short covering. According to the ShortData.ca, Newstrike Resources was the 4th most shorted issue on the Toronto Venture Exchange as of June 18, 2018. Although the $23.77 million in notional short positioning represents a small proportion of the overall float (perhaps 2.5-3.5% aggregate), there may enough fodder to materially impact prices on a limited scale.
|Company Name||Symbol||15 Jun 2018||31 May 2018||Net Change||% Change||
% Total Traded Value
|OGI||OrganiGram Holdings Inc.||35,678,992||15,531,983||20,147,009||56.47%||21.668|
|KBLT||Cobalt 27 Capital Corp.||29,474,605||3,975,161||25,499,444||86.51%||48.199|
|THCX||The Hydropothecary Corporation||27,983,905||42,619,505||-14,635,600||-52.30%||16.883|
|HIP||Newstrike Resources Ltd.||23,774,318||21,120,613||2,653,705||11.16%||50.82|
|N||Namaste Technologies Inc.||9,905,703||9,064,101||841,602||8.50%||20.84|
|EMH||Emerald Health Therapeutics, Inc.||9,517,614||16,150,417||-6,632,803||-69.69%||19.299|
With the company plunging in recent days—and with the company completing its round-trip from pre-CanniMed acquisition levels—a material bounce was both due and logical. Under those auspices, we’re glad to have bottom-ticked the market.
Namaste Technologies Inc. was another solid winner today. The online retailer of medical cannabis delivery systems jumped $0.20 to $1.52/share (↑15.15%). Beyond the minor short covering factor, Namaste announced its intention to commence a normal course issuer bid to repurchase up to 10% of its public float. That represents a buyback of 25,308,136 common shares, totaling approximately 8.9% of the company’s issued and outstanding common shares on a fully diluted basis. Namaste’s board of directors believes that market price of the common shares does not adequately reflect the company’s underlying value.
Namaste Technologies Inc. CEO Sean Dollinger talks technology with Midas Letter’s James West
While this news is obviously noteworthy on a company-specific level, it’s one of the few instances where a cannabis company has pledged to repurchase their own stock due to inadequate valuation multiples set by the marketplace. By all accounts, most of the sector is considered richly valued and deeply forward-looking. Should the summer selloff deepen, it will be interesting to see whether additional companies follow suit.
Overall, all classes of the cannabis spectrum litter the Top 10 gainers list today. Practically everyone participated, but there were some exceptions.
|Newstrike Resources Ltd.||0.59||0.08||15.69%||3.74m|
|Namaste Technologies Inc.||1.52||0.20||15.15%||2.09m|
|Cannabix Technologies Inc||2.23||0.28||14.36%||1.45m|
|Isodiol International Inc.||0.42||0.05||13.51%||9.45m|
|Canopy Growth Corporation||40.51||3.58||9.69%||10.92m|
|MYM Nutraceuticals Inc||1.50||0.10||7.14%||393.96k|
|Emerald Health Therapeutics Inc.||3.92||0.23||6.23%||649.41k|
|OrganiGram Holdings Inc||5.35||0.30||5.94%||842.31k|
|InMed Pharmaceuticals Inc.||0.76||0.04||5.56%||287.82k|
Premier cannabis dispensary MedMen Enterprises Inc. finished off $0.34 to $4.33/share (↓7.28%), despite the news it was imminently opening a marquee location in the heart of Downtown Las Vegas. The store will be remodeled and rebranded with MedMen’s signature design, with a grand reopening scheduled for mid-July.
A select snippet of small cap names, including Green Thumb Industries Inc., Maricann Group Inc. and Emblem Corp. also failed to heed Canopy Growth’s lead on the day.
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