Today was a busy day for what has become the black sheep of the cannabis industry. Aphria Inc (NYSE: APHA)(CSE: APHA) – one of Canada’s largest cannabis companies – received mixed news today regarding accusations leveled against them from short-sellers. Bloomberg issued a report today that supported the companies LATAM acquisitions, while also refuting some of the skeptical concerns from short-sellers.
Last month, Quintessential Capital Management (QCM) and Hindenburg Research published a 30-page report calling Aphria’s LATAM acquisitions “worthless” and a complex scheme to funnel shareholder money to key insiders involved on both sides of the transactions. However, Bloomberg said that one of their reporters visited a farm in Jamaica which the report supposed to be abandoned, instead finding an actual growth operation taking place.
“Off a dirt road outside Kingston, Jamaica, 300 marijuana plants sit in manicured rows,” said the report. It went on to state that “The truth, as uncovered by a tour of the Jamaican countryside and the back streets of Buenos Aires by Bloomberg, is more nuanced. In the nascent world of global pot investing, assets can be hard to document and even hard to value, though first-mover advantage may hold big rewards.”
Additionally, the report went on to mention comments from Scotiabank analysts who suggested that the price Aphria paid for their South American assets to be reasonable. “These transactions indicate to us that Aphria’s purchase price of $193 million CAD for Columbia, Argentina, and Jamaica is, at the very least, rational and perhaps even relatively inexpensive,” said the quote.
On the other hand, other analysts have gone to reduce their ratings for Aphria stock since the turbulent Green Growth Brands takeover bid. Haywood analyst Neal Gilmer reduced his target price by $17 to $13 per share, while adding that he felt extremely confident that GGB’s offer would result in a successful takeover attempt.
Hindenburg Research posted several tweets on January 6th, culminating in their conclusion that “None of our core allegations around the shell game have been addressed by anyone. Sometimes people miss the forest for the trees, but we appreciate when our report is tested.” Neither Hindenburg nor QCM have responded to Bloomberg’s recent report, although the latter did mention their website was down due a hack attempt (while alluding that the attackers might have some relationship with Aphria).
At the same time, Liberty Health Sciences, a company that QCM and Hindenburg reported as having insider connections with Aphria, announced that for the sake of “corporate governance practices” Aphria insiders within the board of directors will be stepping down. This includes Aphria CEO Vic Neufeld as well as co-founder John Cervini.
In response the plethora of news today, Aphria shares remained relatively the same, dropping only 1.6 percent.
Aphria Inc Company Profile
Aphria is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Headquartered in Leamington, Ontario – the greenhouse capital of Canada – Aphria has been setting the standard for the low-cost production of safe, clean and pure pharmaceutical-grade cannabis at scale, grown in the most natural conditions possible.
Focusing on untapped opportunities and backed by the latest technologies, Aphria is committed to bringing breakthrough innovation to the global cannabis market. The Company’s portfolio of brands is grounded in expertly-researched consumer insights designed to meet the needs of every consumer segment.
Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents. –Aphria
