By all accounts, 2021 is gearing up to be an even stranger year than 2020 for stocks, traders and anyone looking to make a buck off the markets. We’ve got three stocks here with disparate stories, each having made their lucky investors money, and on that note, it’s time for a long overdue cannabis rundown.
First, we have Gaia Grow (GAIA.C), which is a southern Alberta-based hemp grower and now retailer of its own lines of CBD-infused cannabis 2.0 products.
Gaia Grow closed at $0.09, marking a triple since their February 5th low of $0.025. Unlike others in this roundup, there’s not much of an explanation for it. They haven’t put out any news since November and there’s been no material developments to suggest why people have been getting in. But they have and since this is the age of WallStreetBets, competing with Wall Street hedge funds, we have to look at the probability that Gaia’s sudden fortune is the same as Tilray’s (TLRY.Q) rise and crash last week. Another option is a quicky glance at their balance sheet:
Total assets: 5,531,998
Total liabilities: 422,484
Total shareholder equity: 5,109,514
No debt and a little over a million in cash to spend.
Maybe people are just in because it looks like a good bet. Stranger things have happened.
Our second highlighted company today, itself up incrementally today, but substantially over time, is SOL Global Investments. (SOL.C)
If you’re wondering what SOL, this is what you’ll find at the bottom of any press release.
The acquiror is a diversified investment and private equity holding company engaged in the small and mid-cap sectors. The acquiror’s investment partnerships range from minority positions to large strategic holdings with active advisory mandates. The acquiror’s seven primary business segments include retail, agriculture, quick-service restaurant and hospitality, media technology and gaming, energy, and new age wellness.
If that doesn’t make sense, allow me to explain:
The CEO’s name is Andy DeFrancesco and he brokers deals with weed companies and takes some of their stock in the mix. He’s built something of a sneaky reputation for, as equity guru’s own Chris Parry said, “buying cheap early stage assets and selling them on at late stage prices to clueless cannabis CEOs are ignorant at best, and pumpy at worst.” That’s… yeah. Sneaky.
But along the way, he’s made some excellent deals and managed to make his shareholders a lot of money.
For example, in December, he helped broker a deal with US multi-state operator (MSO) Verano (VRNO.C) to RTO and go public on the CSE. DeFrancesco took a 12% stake in Verano for SOL with a value of USD$360 million at the time.
He saw an immediate return from the Verano bet as it took SOL’s price from $0.40 to $3.00, when Parry originally wrote the story in December. Here’s what else he said:
Even after that crazy run, and with its Verano stake worth a potential $360 million, SOL Global’s market cap right now sits at just US$128 million.
This means SOL’s share price could rise 200% and still not have any of its other assets or cash priced in, assuming Verano holds its value after the RTO.
Verano completed their RTO two days ago and debuted on the CSE at $31.40. They closed trading today at $31.99. It’s looking like it’s going to hold.
As for SOL Global’s market cap? $297 million right now with the price at $5.46. Two-months ago? $2.62.
You may not like DeFrancesco’s methods, but you have to tip your hat to his results.
Last, we have long time former equity guru client, World Class Extractions (PUMP.C), which hasn’t been having much luck lately.
For some companies it’s helpful to think of 2020 as a rebuilding year. For World Class, the leadership of which also headed up plucky extractions weedco Quadron Cannatech in healthier times, it was a matter of finding new avenues for revenue.
World Class’ primary interest is in cannabis and hemp extractions. They extract THC and CBD from hemp and cannabis biomass at industrial levels, both for themselves and as a third-party extractor for participating client companies through their proprietary ethanol and CO2 extractors, THE BOSS, THE BEAST and THE BIG BOSS.
But they’ve realized in the past year, especially with the pandemic cutting off cannabis distribution at the knees in Ontario, there’s room for cannabis delivery services. They purchased a controlling interest in Pineapple Express Delivery and started extracting revenue from its ongoing business.
The company has gone unrecognized and disregarded by a largely apathetic market tired of excesses, and endured a long range of flat trading and penny-and-a-half closes. We blew the horn for these guys in one of our year-end articles, noting they have the necessities to be successful in the space, except for one key component: luck.
It’s possible that the January effect may have given this company a little bump to get rolling, but we’re halfway through February now, and the bump to $0.045 on respectable volume could suggest a turnaround in PUMP’s fortunes.
—Joseph Morton
