IB Net Payout Yields Model

HEXO: Cheap, But Integration Risk Is Concerning


  • HEXO announced a surprisingly large equity offering causing the stock to collapse.
  • The company sold at least 47.5 million units at just $2.95 per share while the stock traded above $7 as recently as June.
  • The stock is cheap here, but shareholders face massive integration risk.
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While cannabis stocks have traded weak since the February peak, HEXO (HEXO) tops the list with a massive 27.5% loss on just Friday alone. The company has turned a promising acquisition of private Canadian firm Redecan into a horribly timed fund raising. My investment thesis remains Bullish on the stock after this massive dip, though my view remains concerned about integration risks of the three acquisitions.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Update - Oct. 20

Sounds similar to the $CGC move that hasn't worked. The stock has been utterly destroyed, so possibly some upside exists. Just watching from the sidelines though. 

-HEXO (NASDAQ:HEXO) named Scott Cooper as its new President & CEO, effective immediately, after the company announced the departure of Sebastien St-Louis, Co-Founder and CEO, effective immediately on Oct.18.

-Most recently, Scott served at Truss Beverage, JV between Molson-Coors Canada and HEXO, where he served as President & CEO.

Finviz Chart

Update - August 31

Good sign that Redecan sees the current price as insanely cheap considering those shareholders got shares for $7 per share.

-Cannabis company HEXO (HEXO -0.8%) completed the acquisition of Canada’s Redecan in a $925M deal.
-At closing, HEXO paid the selling shareholders of Redecan $400M in cash and delivered 69.7M newly issued HEXO common shares.

Finviz Chart


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