Golden Leaf Holdings (GLH.C) goes all Hulk Smash


A few months back, I listened in on a call between insiders at Golden Leaf Holdings (GLH.C).

I’ve been a consultant with them for a while, but the outfit had been through some tumultuous times and some things went down that I didn’t necessarily agree with tactically, and short sellers were most assuredly taking advantage of this uncertainty to drive the stock down.

So I had to push back from the table, quit writing about them for a while, and just let the dust settle. I wasn’t alone.

On that call, the conversation was not happy. Financials were way late, people were concerned they might lose jobs, the regulators in Oregon were causing problems while trying to fix them, and the public face of the company was not positive.

But, amid all that, a solution was offered that I really liked. They’d do another financing, but at a way big increase to the market price. The thinking was, this would let the insiders demonstrate that not only were they in for the long haul, but they saw the company as so undervalued that they’d pay above the odds for more of it.

The conversion price for that offering was $0.30 per share, which was, at the time, 20% above market. It is not that way now.

Last month, it appeared GLH had weathered the worst of their problems. They’d caught up on their financials, and the blips and dips in their revs that had been such a talking point several months ago, finally came out on paper. The stock dropped as low as $0.25, which was a great point to get back aboard.

A few weeks back, I noted the stock had solidified in the 30’s and the shorters were getting squeezed.

Last week, I said:

To get to the greener pastures, the company is taking on some debenture debt at 10% interest, which isn’t happy times, and it has lowered the conversion price of its existing $9m in debt to keep earlier investors happy. That amounts to a potential dilution down the line that won’t be pretty – BUT – it will also bring in $8 million right now that will clean the books, pay for needed growth, get Washington State moving alongside the existing Oregon business, and renew the company’s branding focus which, I think, will be money well spent when more states open up and branding really matters.

Invest? Gun-shy, but it’s come back from $0.25 to $0.43 in recent weeks, so fortune favours the brave. I managed to average down to $0.35 over the last month, so I like where things are moving. Cautiously optimistic.

Today? If you’re a GLH shorter:


$0.59 per share. Fat volume. A 28% jump. A US listing approved. California coming and likely to open way up.

When I first started talking about Golden Leaf, it was a nascent company with a little revenue and a lot of promise – and it was at $1.

Today, it’s got brands and revs and regulatory issues behind it and the playing field opening way up, and it’s $0.59.

I had averaged down to $0.35. But I’m. Still. Buying.

— Chris Parry

FULL DISCLOSURE: I have been a consultant to this company and currently own, and am buying, stock.

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