Quin­sam notes “tough en­vi­ron­ment” for cannabis stocks

Quin­sam Cap­i­tal Corp. has dis­cussed the re­cent de­cline in share price in cannabis-sec­tor stocks.

Stockwatch Daily - - FRONT PAGE - Mr. Roger Dent re­ports

QUIN­SAM CAP­I­TAL Corp. has pro­vided an up­date to its in­vestors in light of re­cent de­clines in the share prices of many cannabis com­pa­nies.

“There has been across­the-board weak­ness in cannabis share prices in re­cent weeks,” said Roger Dent, chief ex­ec­u­tive of­fi­cer of Quin­sam. “We think that the weak­ness has been caused by a num­ber of fac­tors. In some cases, shares were likely over­val­ued. We have also seen an im­pact from buyer ex­haus­tion due to the very large num­ber of new is­sues and tax-loss sell­ing. We have seen some dis­ap­point­ments in op­er­a­tional re­sults and we have seen an im­pact from the short-sell re­port on Aphria Inc. All in all, it has been a pretty tough en­vi­ron­ment in the sec­tor. “While the stock mar­ket has cooled, in our opin­ion the sec­u­lar growth op­por­tu­nity in cannabis re­mains in­tact. We re­main strong be­liev­ers in the sec­tor and con­tinue to find op­por­tu­ni­ties that we think are very at­trac­tive. Lower share prices im­prove the outlook for fu­ture per­for­mance.”

Quin­sam has been in­creas­ingly pleased with its de­ci­sions to exit many names over the last few months. Quin­sam an­nounced a num­ber of di­vesti­tures in its press re­lease of Oct. 24, 2018. Since that date, the com­pany made ad­di­tional di­vesti­tures in­clud­ing its re­main­ing shares in GTEC, C21, Next Green Wave and Biome. The com­pany com­pleted the sale of all of its Planet13 Hold­ings shares fol­low­ing its war­rant ex­er­cise. The com­pany also took prof­its in Green Growth Brands.

While Quin­sam has taken prof­its in a large num­ber of names over the last six months, it has added to two of its Cana­dian Ac­cess to Cannabis for Med­i­cal Pur­poses Reg­u­la­tions (ACMPR) hold­ings: Ndiva and Eve & Co. “In both cases, we see them as sound busi­nesses with at­trac­tive val­u­a­tions and the prospect of near-term cash flow gen­er­a­tion,” said Mr. Dent. “In the uni­verse of pub­licly traded Cana­dian ACMPR op­er­a­tors, these two to­gether with Sproutly are cur­rently the most in­ter­est­ing op­por­tu­ni­ties we see.” Quin­sam con­tin­ues to fo­cus most of its new in­vest­ments on op­por­tu­ni­ties out­side of Canada.

Largely due to delays brought on by the large vol­ume of new is­sue ac­tiv­ity and as­so­ci­ated back­logs with list­ing ap­pli­ca­tions, some of the liq­uid­ity events that the com­pany high­lighted in its press re­lease of Oct. 2, 2018, have been de­ferred. How­ever, at this time, the com­pany cur­rently ex­pects all of these liq­uid­ity events to pro­ceed in ei­ther the fourth quar­ter of 2018 or Q1 2019. “We ex­pect Quin­sam to see a solid num­ber of liq­uid­ity events in Q1 2019,” said Mr. Dent. “Given that our re­sults de­pend on fu­ture mar­ket ac­tiv­ity, we do not fore­cast our per­for­mance. How­ever, we can say that at present we ex­pect our in­vest­ments to strongly out­per­form the cannabis sec­tor in Q4 2018. We note that our quar­ter to date in­cludes some large wins in­clud­ing Acreage, Xan­thic/Green Growth Brands and Can­namer­ica. At the same time, we have seen some of our win­ners give back part of their gains, in­clud­ing Sproutly and Rocky Moun­tain. Re­gard­less of the Q4 re­sult, our shares trade at a strong dis­count to our net as­set value and our is­suer bid has been an ac­tive buyer, with 570,000 shares pur­chased in Novem­ber, 2018,” said Mr. Dent.

About Quin­sam Cap­i­tal Corp.

Quin­sam is a merchant bank based in Canada that is fo­cus­ing on cannabis-re­lated in­vest­ments. The com­pany’s merchant bank­ing busi­ness may en­com­pass a range of ac­tiv­i­ties in­clud­ing ac­qui­si­tions, ad­vi­sory ser­vices, lend­ing ac­tiv­i­ties and port­fo­lio in­vest­ments. Quin­sam in­vests its cap­i­tal for its own ac­count in as­sets, com­pa­nies or projects which the com­pany be­lieves are un­der­val­ued and where it sees a vi­able plan for un­lock­ing such value. The com­pany does not in­vest on be­half of any third party and it does not of­fer in­vest­ment ad­vice.

We seek Safe Har­bor.

Peter Bilodeau, Terry Dale Booth, Roger Arnold Dent, Hugh Ross Ged­des, An­thony Ralph Rood­en­burg, Eric Szus­tak, Adam Kel­ley Szw­eras

(QCA) Shares: 119,292,644

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