Commodities and Gold

Consolidation in the Air

As much as it grieves me to say it, my favorite cannabis stock, Aphria Inc. (NASDAQ:APHA), soared 18% this week and is now in positive territory year to date.

While I love to see performances like this, it’s bittersweet because it took reports of a potential merger with Aurora Cannabis Inc. (NYSE:ACB) to get the bulls running.

ACB has a lot of cash but dim strategic prospects. It needs to consolidate in order to keep its commanding position within the cannabis industry and theoretically buy its way to a profitable scale.

I’ve been looking for that consolidation for months now. So far, the biggest developments have been non-viable cultivators pulling the plug or losing their public stock listings. Either amounts to the same thing in the cannabis business today.

When we see winners realize that it’s better to cooperate than compete, we’ll see truly beneficial deals materialize. Unfortunately, that probably means strong players like APHA stop being anything but parts of a larger whole.

I like APHA. I prefer its “no funny business” medicinal approach to cannabis to the speculation and daydreaming that drive the recreational market.

For that great medicinal business to get absorbed into a recreationally-oriented company would be almost tragic, if not for the fact that APHA’s management would get to dictate the terms of their partnership.

In that scenario, shareholders would cheer. For now, it’s simply nice to see this stock making money.

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).