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Friday, November 27, 2020

Will Aurora Cannabis Inc (OTCMKTS:ACBFF) End Up King of the Hill?

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We always pay attention to Aurora Cannabis Inc (OTCMKTS:ACBFF) because this is a stock that has been a huge mover in the Canadian cannabis patch, and may be the most aggressive market share consumer in the space right now. Just a couple days after moving to acquire MedReleaf Corp. (TSX: LEAF) (OTCQB: MEDFF), the rampage continues.

As a perfect case in point, the company just announced that, further to the Companies’ press release of September 18, 2017, Aurora has exercised its right under a private option agreement with Charles and Angela Holmes. According to the company’s release, “pursuant to this agreement Aurora has purchased an aggregate of 10,754,942 additional Hempco Shares (50% from Charles Holmes, 50% from Angela Holmes). Following the transaction, Aurora’s ownership interest in Hempco now stands at 52.7% (50.12% on a fully-diluted basis).”

Aurora Cannabis Inc (OTCMKTS:ACBFF) is a licensed producer of medical marijuana pursuant to the Marijuana for Medical Purposes Regulations and operates a 55,200 square foot expandable state-of-the-art production facility in Alberta, Canada.

ACBFF’s wholly-owned subsidiary, Australis Capital Inc., seeks to be an active participant in the U.S. Cannabis market. Aurora is trading on the Canadian Securities Exchange under the trading symbol “ACB”. The company is headquartered in Vancouver, Canada.

According to company’s materials, “Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations. The Company operates a 55,200 square foot, state-of-the-art facility in Mountain View County, Alberta, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third a 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island. In addition, the Company holds approximately 9.6% of the issued shares (12.9% on a fully-diluted basis) in leading extraction technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing an investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1%. Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union, based in Germany.”

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“Hempco plays an important role in our strategy to secure access to low-cost raw material for the potential production of CBD extracts once new legislation is in place allowing whole (hemp) plant utilization,” said Terry Booth, CEO. “Furthermore, this is a strategic partnership that also helps us develops a broader portfolio of value added products for the health supplements market. By taking control, we will be able to more closely integrate Hempco’s operations with our own and drive growth.”

Diane Jang, CEO of Hempco, added, “Aurora provides us with a large, financially strong and long-term stable shareholder, whose capabilities and networks will enable Hempco to accelerate development. With our new Nisku plant coming online, multiple distribution channel initiatives being implemented, and new products coming to market, we are rapidly developing a strong foundation for growth and expansion.”

Recent action has seen roughly flat action for shareholders of the name during the trailing week, but a major positive reaction to support appearing at the 200-day simple moving average to close last week. Moreover, the stock has registered increased average transaction volume recently, with the past month seeing 76% over the long run average.

At this time, carrying a capital value in the market of $3.16B, ACBFF has a significant war chest ($231M) of cash on the books, which is balanced by about $2.6M in total current liabilities. One should also note that debt has been growing over recent quarters. ACBFF is pulling in trailing 12-month revenues of $42M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 211.1%. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $ACBFF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $ACBFF, either long or short, and we have not been compensated for this article.

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