Green Organic Dutchman Holdings Ltd (OTCMKTS:TGODF) Takes a Big Left Hook

Green Organic Dutchman Holdings Ltd (OTCMKTS:TGODF) Takes a Big Left Hook

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The story surrounding Green Organic Dutchman Holdings Ltd (OTCMKTS:TGODF) is a thickening plot by the day. This is a laggard cannabis play that has, at times and especially recently, seemed to show signs of turning it around and heading into the thick of the space. But the action over the past week has cast a dark shadow on that idea, and it goes back to one of the themes that has really defined this stock over the past two years: Aurora’s strategic investment.

The big point is this: Aurora Cannabis (TSX:ACB) has been an active strategic investor, but has seemed to be interested in divesting that interest in part or in whole at several points, the latest being last week. TGODF has been optimistic in its corporate communications, suggesting that the transaction whereby Aurora reduced its interest was nothing but positive because it returns more to the company in terms of how leveraged it is to its own production. But the market seems to be working along a different line of reasoning: why wouldn’t Aurora want to keep its interest intact?

Green Organic Dutchman Holdings Ltd (OTCMKTS:TGODF) is a research & development company licensed under the Access to Cannabis for Medical Purposes Regulations (“ACMPR”) to cultivate medical cannabis.

The Company carries out its principal activities producing cannabis from its facilities in Ancaster, Ont., pursuant to the provisions of the ACMPR and the Controlled Drugs and Substances Act (Canada) and its regulations.

The company grows high quality, organic cannabis with sustainable, all-natural principles. TGOD’s products are laboratory tested to ensure patients have access to a standardized, safe and consistent product. TGOD has a funded capacity of 116,000 kg and is building 970,000 sq. ft. of cultivation facilities in Ontario and Quebec.

The company has developed a strategic partnership with Aurora Cannabis Inc. (TSX:ACB) whereby Aurora has invested approximately C$78.1 million for an approximate 17.5% stake in TGOD. In addition, the Company has raised approximately C$290 million dollars and has over 5,000 shareholders. TGOD’s Common Shares and warrants issued under the indenture dated November 1, 2017 trade on the TSX under the symbol “TGOD” and “TGOD.WT”, respectively.

According to company materials, “The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) is a publicly traded, premium global organic cannabis company, with operations focused on medical cannabis markets in Canada, Europe, the Caribbean and Latin America, as well as the Canadian adult-use market. The Company grows high quality, organic cannabis with sustainable, all-natural principles. TGOD’s products are laboratory tested to ensure patients have access to a standardized, safe and consistent product. TGOD has a funded capacity of 170,000 kgs and is building 1,382,000 sq. ft. of cultivation facilities across Ontario, Quebec and Jamaica.”

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As noted above, TGODF just announced that Aurora divested more of its interest in the company, dealing its position to a consortium of banks. According to the release, “The block trade was executed on September 3 after market close. A total of 28.8 million shares were exchanged at a negotiated price of $3.00 per unit.  The Edmonton-based company still retains a large number of TGOD warrants equivalent to approximately 5% of the Company’s fully diluted shares.”

The announcement helped to sink shares of TGODF about 15% on large volume. But the stock is still above its recent lows and may be worth a look for traders seeing some positives ahead over the larger time frame.

“Aurora has been an excellent partner during TGOD’s initial development phase; their investment played an important role in our success. The relationship added significant value across multiple areas of the business, including the initial design and construction of our Canadian facilities,” commented Brian Athaide, CEO of TGOD. ” This is the right next step in the relationship as both companies mature and our respective strategies evolve.  It also improves TGOD’s revenue and margin potential on the sale of our premium organic cannabis,” added Athaide.

Now commanding a market cap of $628M, TGODF has a significant war chest ($122.7M) of cash on the books, which compares with about $32.5M in total current liabilities. TGODF is pulling in trailing 12-month revenues of $7.2M. In addition, the company is seeing recent top-line growth, with sequential quarterly revenues growing at 20.4%. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $TGODF 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 $TGODF, either long or short, and we have not been compensated for this article.

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