Aurora Cannabis (TSE: ACB)(NYSE: ACB) made news in the marijuana markets today when it announced that it would be selling its remaining shares of Green Organic Dutchman (TSE: TGOD). Owning just over 10.5 percent of all outstanding shares, Aurora confirmed that it would be selling all of its remaining 28.8 million shares it owned of the company for a total price of $86.5 million.
The mass selloff of a relatively small company’s shares sent Green Organic Dutchman’s stock price tumbling with investors wondering what to do in light of the drop. Many are looking at Aurora’s decision as a sign to get out while others think it could be a buying opportunity. However, this move isn’t particularly surprising when looking at the historical relationship between the two companies. Around a year ago, Aurora’s chief corporate officer stepped down from TGOD’s board of directors and since then, Aurora has consistently reduced its existing investment in the smaller company. The decision to completely end the relationship isn’t a shock to many industry experts following the situation.
“We evaluate our investment portfolio on a regular basis to make sure it continues to align with our investment strategy and corporate priorities. When we acquired Whistler Medical Marijuana Corporation – an iconic and premium organic cannabis producer – our interest in TGOD became less important to our core strategy,” commented Aurora CEO Terry Booth on the decision to share its stake in TGOD. “Our return on our TGOD investment is significant and will add non-dilutive capital and further enhance our strategy to remain a dominant force in the global cannabis industry.”
Shares of Aurora Cannabis ended up dipping by 2.25 percent over the course of the day. Like most other cannabis stocks, Aurora has seen a significant downturn over the past three months, losing around 25 percent of its market cap during that period. While this is pretty close to what the industry has seen, with benchmark index’s such as the Horizons Marijuana Life Sciences ETF losing 24.8 percent during that same period, it’s still a troubling decline for Wall Street’s favorite pot stock.
As for Green Organic Dutchman, shares of the company fell hard, shedding over 16.5 percent of its value over the course of the day as investors backed off the company now that Aurora has liquidated its stake. TGOD is also planning to upgrade to a listing on the NASDAQ in the future this year, so having a bit more available liquidity now that 10 percent of its total shares are back on the market could useful for the small cannabis company in a number of ways. TGOD could also see a major comeback in mid-October when Canada legalizes CBD derivative products such as edibles, beverages, and topicals for recreational consumption.
Aurora Cannabis Company Profile
Aurora Cannabis Inc., headquartered in Edmonton, Canada, cultivates and sells medicinal and recreational cannabis through a portfolio of brands that include Aurora, CanniMed, MedReleaf, and San Rafael ’71. Although the company primarily operates in Canada, Aurora has expanded internationally through medical cannabis exporting agreements or cultivation facilities in more than 20 countries. – Warrior Trading News
