Commodities and Gold

What Happened to Tilray?

I took a lot of grief for not liking Tilray Inc. (NASDAQ:TLRY) when it was the first high-profile cannabis stock to list on a U.S. exchange. Something about the company never sat right.

But the regret was short lived. If you waited just 60 days to buy in, you’re probably unhappy now. That includes most institutional investors, which need time and a track record before they allocate even a slice of their capital to an untested stock.

Tilray soared from an IPO price of $17 to a peak of $214 in those 60 days before the professionals could weigh in. This week, it formally broke below $17 and the ultimate bottom is unclear.

Shareholders who bought at $214 have suffered a 93 percent loss. It is no wonder dozens of the hedge funds that were so eager for a taste of U.S. cannabis have liquidated their positions and moved on.

The lesson here is simple. TLRY has lagged its peers because the typical investor can’t figure out what makes this stock worth picking when there are plenty of cannabis stocks on the market.

When it was unique on Wall Street, it had a special aura. Now that several Canadian rivals have joined the party on this side of the border, they’ve gotten their share of shareholder attention.

Until recently, this meant that they all moved together. More recently, investors have started taking a closer look at management as a differentiating factor between ultimate failure and success.

Canopy Growth Corp. (NYSE:CGC) has top executives from established global corporations calling the shots now. We know they can take the company beyond its origins into a deregulated world.

TLRY isn’t so lucky. If anything, news that the CEO now has a 17 percent stake in the company helped trigger another 5 percent slide this week while stocks like CGC were in much better shape.

I don’t have anything against TLRY’s management. I just don’t necessarily think they’re the long-term future this company needs.

And while the CEO’s vote of confidence in his own abilities should be applauded, it’s going to be hard for other shareholders to dislodge him if they decide it’s time to make changes.

Those changes are what’s given CGC a new burst of energy. In the new year, we might see other cannabis stocks deploy similar tactics and get some fresh air at the top.

In the meantime, I’m pleased that I’ve never recommended Tilray in my Turbo Trader Marijuana Millionaire Portfolio. We’ve had better success elsewhere. History will judge the results.

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis. Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Triple-Digit Trader, 2-Day Trader, IPO Edge and Inner Circle. Ms. Kramer, a Certified Fraud Examiner, has also testified as an expert in investment suitability, risk management, compliance, executive compensation, and corporate governance. Ms. Kramer received her MBA from the Wharton School at the University of Pennsylvania and her BA with honors from Wellesley College. Ms. Kramer has provided testimony regarding investment policy to the U.S. Senate and is a frequent speaker on the markets, portfolio management and securities fraud and compliance. Ms. Kramer is also the author of “Ahead of the Curve” (Simon & Schuster 2007) and “The Little Book of Big Profits from Small Stocks” (Wiley 2012).