Shares of CannTrust Holdings Inc (TSE:TRST) (OTCMKTS:CNTTF) (FRA:C9S) staged an impressive ‘V”-bottom recovery this afternoon, on word the company may be uplisting on NASDAQ in the next 30-60 days. Such a move to unlock easier access to U.S. investment capital would be a very material event for the company, which is generally regarded as sizably undervalued to its peers. We explore further.
The “reports” come via tweet made by a credible cannabis watcher. User @todd_harrison—whom I follow and consider credible—has issued the following tweet this afternoon:
— Todd Harrison (@todd_harrison) September 6, 2018
As of yet, I have not been able to confirm the authenticity of the news independently—although judging by the reaction of CannTrust stock, the market has taken such news at face value.
Should the news indeed prove correct, absolutely nobody will be surprised. In fact, many investors have taken to social media is recent days, practically begging the company to uplist on a major U.S. exchange.
NYSE @canntrust do it for the exposure. Do it for the gains.
— March2Millions (@March2Millions) September 5, 2018
Yeah management is missing the boat on this one. Shareholders will never see the kinds of gains from any potential takeover or merger that they could see if they simply listed on the NASDAQ.
— Nick T (@NickTardif1) September 5, 2018
The general consensus seems to be that CannTrust is trading at a steep discount to peers such as Cronos Group Inc. and Tilray Inc., mainly because they don’t have unencumbered access to U.S. capital. From a fundamental viewpoint, it’s hard to reason against this argument. CannTrust would be the only profitable cannabis LP on U.S. exchanges should it uplist, and rates as solid from a cost, branding and operational perspective.
Furthermore, CannTrust doesn’t own a material portfolio of U.S. assets which would preclude a listing on U.S. exchanges. Such circumstances have likely prevented bigger peers such as Aurora Cannabis Inc. and Aphria Inc. from realizing their own uplisting themselves; although both companies have divested, or on the verge of divesting, all U.S. assets to remove obstacles for such an event.
Keep in mind that CannTrust also has an existing partnership with Apotex Inc., which could be viewed as highly desired to a U.S. investor base. Recently, the company announced it was accelerating its exclusive partnership with Apotex—the 7th largest generic pharmaceutical company in the world—and a global leader and innovator in the production and distribution of high-quality, affordable medicines. It is perhaps the most coveted pharma partnership in all of the cannabis sector, in fact.
Midas Letter will update this article as further official confirmation is received.
The Globe & Mail is reporting that Cannabis grower CannTrust says no guarantee of U.S. listing; weighing options. As a result of the mid-morning declaration, CannTrust is off about ↓10% from the morning highs.
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