Pot Stock Plunges 30% After Short Seller Exposes "Elaborate Shell Game"

It's been another volatile session for pot stocks broadly.

(Click on image to enlarge)

Day traders could be forgiven for feeling dazed and confused on Monday (for once, it may not have been due to overindulging in their favorite "commodity"). Shares of Tilray, Cronos and other pot stocks fluctuated between gains and losses - while shares of Aphria, another large Canadian pot stock plunged - following two scathing presentations from short sellers during a conference in New York City organized by famed short seller Whitney Tilson.

In what was probably the highlight of the Tilson conference, analysts from Hindenburg Research joined with the founder of Quintessential Capital Management to share their case for shorting Aphria, the fourth largest Toronto-listed pot stock by market cap. During their presentation, the companies accused Aphria of playing a "shell game" with international assets that the analysts argued were largely worthless.

According to Bloomberg, Leamington, Ontario-based Aphria has raised about C$700 million ($531 million) over the past four years and is the fourth-largest cannabis stock by market value.

In his presentation, AQM founder Gabriel Grego alleged that Aphria has created a mechanism to siphon off investor capital and transfer it to company insiders via "investments" in South America and the Caribbean. According to Grego, Aphria purchased these investments from shell companies controlled by Aphria insiders for "significantly higher" prices than had previously been paid. "Our target price is zero," Grego said.

1 2 3
View single page >> |

Disclosure: Copyright ©2009-2018 ZeroHedge.com/ABC Media, LTD; All Rights Reserved. Zero Hedge is intended for Mature Audiences. Familiarize yourself with our legal and use policies every time ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.