Aphria Inc (TSE: APHA) (FRA: 10E) has received a surprising ally today as it seeks to break away from unfortunate denunciations of denunciations.
At this point, there is hardly any need to recapitulate what these allegations imply. Monday's report from Hindenburg Research titled A game of shells with a cannabis business next door portrays everything that readers need to know about the subsequent tenor of "research." While the allegations initially struck as lightning, subsequent declarations Quintessential Capital Management Founder Gabriel Grego, that Aphria's actions are worthless, along with discrepancies in various details of the research, have significantly lowered credibility.
Log in Citron Research, which surprisingly appeared to support Aphria's overall value proposition. The low-market player tweeted his support this afternoon, characterizing APHA as "compelling across all metrics," while simultaneously suggesting that "stockpile should be $ 10." Perhaps more relevant to investors was the promise of ", implying that additional support is coming. It was an unexpected turnaround in the ongoing saga between Aphria and Search Hinderburg, whose statement hit the joint as a sledgehammer this week.
Congratulations to $ CRON. One floor was established – time to rethink all the evaluations. $ APHA is attractive in all metrics. Cdn footprint too big to ignore. Look beyond the noise, see $ 10. More details to come.
– Citron Research (@ CitronResearch) December 7, 2018
Almost instantaneously, the tweet caused the fish to temporarily raise APHA by about nine percent.
"Congratulations to $ CRON. One floor was established – time to rethink all the evaluations. $ APHA is attractive in all metrics. Cdn footprint too big to be skipped … stock should see $ 10. More details to come. " pic.twitter.com/YhkrGjR8ps
– Benjamin A. Smith (@ BenjaminA_Smith) December 7, 2018
Regardless of the early gains – which were fleeting anyway – the involvement of Citron Research potentially gives Afra something much bigger: someone to refute Hindenburg's claims about their side. Not just that, but another short-seller specialized in making your target look bad. It's a great opportunity to let two snakes strangle each other with opposing views, while Aphria slowly loosens the public spotlight. The old P.T. Barnum saying: "There is no negative publicity" can be applied in the entertainment world, but not in public finances.
Recall also that Citron had already released three bearish calls in individual cannabis names (Tilray, Namaste, Cronos), making the optics of the carrier more attractive. Whatever is coming down the boom is not coming from a squad of known cheerleaders or paid search.
With Citron Research entering the fray, Aphria has an additional megaphone to plead his innocence. The company's CEO, Vic Neufeld, has already promised to counter the line-by-line charges, which are expected to be delivered next Wednesday. Together with Andrew Left's team, this should help stifle Hindenburg's narrative of insane and greasy business, the useless assets of LATAM and the company's misconduct.
In light of Altria GroupInvestment of US $ 2.4 billion in peer Cronos Group Inc., the reputation among Canadian LPs definitely matters. Given high billions of dollars of multinational CPG money entering space, Aphria will protect its reputation at all costs. Fortunately, he will receive additional help in that regard.
In the end, the potential transfer of Aphria is probably the scenario we all crave. Aphria obviously wants to focus on getting back to business; regulators probably do not want to have anything to do with a scenario where fraud is not proven and collateral actors are plentiful; Hindenburg has already made money and is probably shifting attention to other victims. If Aphria can tighten governance, initiating internal change and improving best practices, maybe everyone can make their way happy.
While this may not prevent shareholders' lawsuits from being filed, they may take years to complete. At that time – assuming that the processes have merit -, the revenue / profit curve of & hockey stick & # 39; of Aphria can heal many evils. Meanwhile, the main agenda, I imagine, is to keep regulators under control and boost investor confidence within pre-crisis limits.
Unexpectedly, Citron Research may just be the equipment to help Aphria get out of the choppy waters.