Out Fox The $treet

HEXO has seen a massive rally this year following the stock price collapsing in December during a reverse split. The Canadian cannabis company has cut the adjusted EBITDA losses, but the company faces deteriorating sales due to the reduced spending levels. The stock has a minimal market value of $70 million, but the large convertible debt level makes the stock a Sell into the rally. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   HEXO  ( NASDAQ: HEXO ) has been on a hot streak since the stock collapsed following a reverse split in December. The Canadian cannabis company has substantially cut costs leading to a major dip in revenues in the last few quarters. My  investment thesis  is Bearish on the stock with a questionable path forward following a major restructuring. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for mor...

Tilray formed a strategic alliance with HEXO in an odd move to help keep a top Canadian cannabis competitor alive. HEXO just reported another weak quarter where revenues missed expectations, but the company did cut the EBITDA losses. The stock remains far too expensive trading at over 10x actual cannabis sales while the competition in Canada remains fierce. Looking for a portfolio of ideas like this one? Members of Out Fox The Street get exclusive access to our model portfolio.  Learn More » The biggest issue with the Canadian cannabis market has been too much cultivation leading to oversupply. The new  Tilray Brands  ( NASDAQ: TLRY ) has attempted to consolidate the industry with the acquisition of Aphria, but the sector continues to struggle as much as prior. The  new deal  to help keep  HEXO  ( HEXO ) in business keeps our  investment thesis  Bearish on Tilray Brands. Read the full article on Seeking Alpha.  Disclosure: No position m...

  HEXO reported weak FQ1 results for the period ending Oct. 31. The addition of the businesses of Redecan and 48North didn't improve the financials or move the company any closer to being cash flow positive. The stock isn't touchable with the senior debt overhang and another restructuring in the works. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.    Learn More » As with most consolidations in the Canadian cannabis space, the HEXO ( HEXO ) plan failed miserably. The LP acquired three separate businesses and cratered their stock in the process. My  investment thesis  remains Neutral on the stock following the collapse below $1 and too much uncertainty surrounding the business. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

  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. Looking for a portfolio of ideas like this one? Members of Out Fox The Street get exclusive access to our model portfolio.  Learn More » 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....

The Canadian cannabis industry forecasts cutting cultivation capacity by up to 800,000 kg, but the top 10 producers are still expanding existing production. Aurora Cannabis still expects to more than double production from FQ1 levels while the top 10 producers are still on path to swamp legal demand. Revenue estimates are getting to levels where the company would need to see further material price cuts to not exceed targets. The stock price target is $2 without further Canadian cannabis industry rationalization. The major problems facing  Aurora Cannabis  ( ACB ) is that too much of the Canadian cannabis industry hasn't followed their moves with cutting cultivation capacity for 2020 and beyond. A few companies had already cut production targets for various reasons, but the bigger players in the industry still appear full speed ahead with expansion while the industry is already over supplied. For this reason, my  investment thesis  thinks Aurora Cannab...

The Canadian cannabis industry saw a big boost in July sales of dried cannabis. The sales increase was swamped by additional supply pushing inventory levels in 30.5 times total sales for the month. Aurora Cannabis recently dumped a large amount of inventory on the wholesale bulk market at a low gross profit. The stock made a nice bounce off $4, but my stock view still remains bearish with a market cap of $4.5 billion and weak financials. The cannabis sector has taken a beating in the last few months as sector sales and regulatory issues have taken out some of the hot air in the bubble. The July sales and inventory data from Canada finally provides some positive data points for investors, but the market still faces supply rationalization issues not adequately addressed in the recent  Aurora Cannabis  ( ACB )  corporate update . The stock has made an initial bounce off the recent lows below $4, but the  investment thesis  is still tilted towards a ...

Despite all the excitement over cannabis stocks, the sector has generally traded flat since mid-September. My research has consistently shown that the industry can too easily add supplies to meet and actually far exceed market demand.