Here's a summary. Full write up below.
>Over the last week a handful of geniuses in the Burryologists subreddit cracked a code from a Michael Burry tweet that hypes a cannabis penny stock called Kush Co that's about to uplist to Nasdaq via merger with Greenlane GNLN.
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>Right now Kushco trades at 1x sales / 1x book which is as low as you'll see for a company that's EBITDA positive, not in debt, has good mgmt, and tracking a rapidly growing industry like US cannabis. Greenlane, the company its about to merge with, is similarly cheap. Basically this is an deep value play combined with a near-term Nasdaq catalyst.
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>Most US cannabis companies like Curaleaf / Green Thumb etc are "plant-touching" so they have to trade on a small Canadian exchange called the CSE and have almost 0 institutional investment. Kushco and Greenlane aren't plant-touching so post-merger the combined entity will be added to Nasdaq. "Ancillary" cannabis stocks like Kushco, Greenlane, GrowGen, and Scotts Miracle Gro are the "picks and shovels" of the industry; they're a bet on the space instead of a horse in the race.Hedge funds can't buy Kushco yet but will be able to once it uplists to Nasdaq. The agreement says the merger will happen in "late Q2 or early Q3" which means any day now. There's a shareholder vote on the merger expected to be announced soon.
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>For years Kushco hasn't had access to serious capital since it hasn't been large enough to list on a major exchange, then in late 2019 we had the vape crisis which ultimately was caused by unrelated black market vapes but still took a toll. Now Kushco is outta debt and EBITDA positive and about to join a major exchange where hedge funds will be allowed to buy it. It'll also be over 2x as large ($170m today; $360m after the deal), which'll also mean more hedge funds will be able to buy it.
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>Valuation for its most comparable peers GrowGen and Scotts Miracle Grow are 5-6 times higher than Kushco's & Greenlane's. Since GrowGen joined Nasdaq in December 2019 it's up 10x. With the scale and access to capital this merger will bring, I think Kushco should be about to re-rate.
Props to Redditers Bernardsman and JohnnytheBoneless in the subreddit Burryologists who were the first people to connect these dots. Something he didn't cover that I'll cover here is some background on the US cannabis industry. Key to have that context.
So Michael Burry of Big Short fame sometimes speaks in code (which
... keep reading on reddit β‘Hello everyone! A freshman hereπ Can somebody explain/guess why kshb stock has been going down after merge with gnln? I mean, after all the dd's about them going up, the whole group has been very quiet..
Hello All,
What are your thoughts on the FDA's decision on vapes? I know JUUL is the company the FDA isn't too happy about. They had a history of reportedly targetting minors for usage, and I remember when the news broke last week about the FDA's potential of banning vaping / taking some sort of action on it, GNLN actually rallied. I know KSHB is 1 of 4 distributors licensed with the CCELL technology, and the reason why the vaping crisis occurred was because of bad cartridges from China. (Thanks u/Johnnytheboneless) So my question is, if the FDA decides to take some action on Vaping, would it actually benefit Greenlane and kshb? What are the potential actions that can happen?
Over 99% of Greenlane and over 97% of KushCo votes were FOR approving the proposed merger.
I got a phone call from +18334977396 asking me to vote on the approval of the KushCo merger. I called them back and it appears they have a dedicated phone line to vote.
KSHB/GNLN arb 15%
the final exchange ratio of 0.3016 shares of Greenlane Class A common stock for each share of KushCo common stock
http://archive.fast-edgar.com/20210831/A4B2T22D8C22P2Z2222N2MZZKTCF72T2D232/
Vote was approved 5 days ago, so final order should be issued in just a few days.
https://ir.kushco.com/news-events/press-releases/detail/287/kushco-holdings-receives-stockholder-approval-to-merge-with
First some definitions and background.
Merger arbitrage is an investment strategy that seeks to profit from the uncertainty that exists during the period between when an acquisition is announced and when it is formally completed.
In order to profit from the arbitrage, an investor would simultaneously short GNLN and buy KSHB in the same account. When the merger is complete the KSHB shares will convert to GNLN at the reported ratio of 0.3016 shares of GNLN for every KSHB share. Since you can't be both long and short GNLN shares in the same account, the converted GNLN shares would cancel out the shorted shares, and you are left with no shares but keep the 15% arbitrage gap profit.
For every 1000 shares of GNLN shorted, 3316 shares of KSHB would need to be purchased
KSHB climbed 3% at market open today. It held at that level until news of the Greenlane merger record date (occurring on July 1st) made the rounds. It then climbed higher and closed 7%+ above the opening price.
Notably, the total number of trades today was 1600+ which is the highest since quarter begin (April 1). I think we'll see a lot of trading activity this week given how important the merger vote will be. In fact, if you think KSHB is undervalued with a solid margin of safety, this is probably the most important week in terms of investing in the stock. If you're confident that the merger will go through and the uplisting will have a strong positive effect on KSHB's shares, this is one of the last "ideal" weeks to be getting into the stock before it takes off and becomes overpriced/overvalued.
I was curious to see if there was any data suggesting that Burry's tweets might be having an impact on the trading of KSHB. Interesting to see how flat the volume was going into June followed by the sudden post-tweet spikes but, hey, draw your own conclusions!
https://preview.redd.it/b931z6kfh7871.png?width=947&format=png&auto=webp&s=0f133de5b21955bbd0311b958ce3d64d51d33b8d
[new] James Clarke (7/6/2000 12:33:59 AM, 13999595):
This company generates enormous free cash flow with very little capital investment. They've done it for a very long time. I kind of know this company - in that I know people who know it, but not enough to invest without further research. What I do know is that I would not have bought it at 50 and would not be selling it now. I think the value is somewhere in between - but probably closer to the 50 than the 29. Actually the tech I have my eye on is EFII, though I still haven't bought it. I just need to find some time to read the financials. I was happy to see the tech downdraft take this one down some today. I'm still not in tech, though I'm close to buying a couple. I've been buying things like SYM, NC, CAT, LANC, SNH. Just sold the last of my REIT fund today into strength. Maybe they go higher, but they hit my target, and if they go higher I have no regrets.
[new] Madharry (7/6/2000 7:38:18 AM, 14000174):
Update: After netting out cash and the market value of its remaining investment in ABGX-the market cap of CEGE's core business has now risen to $2 a share. ALSC got trashed along with the entire semiconductor field as the SOX index dropped over 10%. When was the last time an index dropped 10% amid shortages of their products?
[new] Craig Bartels (7/7/2000 9:07:52 PM, 14011822):
I opened a substational position at $21 average a few months ago...I usually don't average up(unless shorting), but this could be an exception to the rule. CEGE on briefing.com today: 10:49 ET \*\*\*\*\*\* Cell Genesys (CEGE) 31 5/8 +1 3/4: Picking biotech stocks can be a tricky endeavor as many companies are losing money and it is difficult for many average investors to understand the complexities of the science involved. Although Cell Genesys currently has one of the largest patent portfolios in the gene therapy field including more than 230 issued or granted patents and over 320 pending patent applications, Briefing.com continues to like CEGE less for its patent portfolio, but more for its cash position. Briefing.com highlighted this company a month ago in a stock brief. Although the stock is up 27% since then, CEGE continues to offer an inexpensive way to buy Abgenix (ABGX 137 11/16 +7 5/16) which has been a biotech darling. CEGE holds about a 12% stake in Abgenix, which is valued at $665 million, or about $19.71 per CEGE share. Add in CEGE's cash position of approximately $250 million, which
... keep reading on reddit β‘Hey wrinkle brains! Any insight on this having big, little or any implications for KSHB?
KSHB released an announcement today for the merger. A special meeting is taking place on July 1st.
Check your email and make your voice heard!
KushCo Holdings ($KSHB) and Greenlane Holdings ($GNLN) are planning to merge.
The companies supply products and services to the marijuana industries. They don't sell it. Consider them the picks and shovels not the miners.
There's been some chatter that Michael Burry (from the big short fame) sent Tweets alluding to $KSHB. You can search the Reddit forums for the lovely conspiracy behind it.
Either way, $GNLN is Nasdaq listed and has options so if you like to make wild bets, this could be your next play.
Greenlane and KushCo announced their intent to merge back in March 2021. They are finally to the point of voting to approve the merger with the goal of closing the transaction in the third quarter of 2021.
In case you aren't aware, both of these companies provide products and services to the cannabis industry. Neither of them touch the plant so they don't have the same restrictions as some of the other companies in the industry who do.
Together, they should create one of the largest suppliers to the industry. Both firms are trading at sales discounts compared to peers in the industry. Check some of the other boards for full DD regarding their valuations and insights related to major investors expressing interest.
Neither stock has yet had a huge run-up pre-merger so now is a good time to place these on watch.
They've created a website to track the merger progress here: https://greenlanekushcotogether.com
Of note, Burry has also tweeted about prison overcrowding.
https://preview.redd.it/5qudq4pb2t871.png?width=825&format=png&auto=webp&s=113aba710aae38a6423aa0f0b3da6289917b55ab
They showed video that looked like it was taken at The Promontory apartments. The victim was transported in critical condition.
Simple play - they provide ancillary weed products from custom packaging to vaporizers. They got pretty fucked in 2020 from importing issues with China, eliminating their hemp trading business, cut out some other fat - and even despite all of those things only lost 1 cent per share last quarter.
They upped their guidance in the most recent call and are working on up-listing to the NASDAQ. Looking at turning a profit by the end of the year, snapping up long term contracts with suppliers, expanding into new territories among other things.
Also from a technical perspective, they barely touched some new 52 weeks highs today but are chilling right below a major breakout level. If my left testicle is any indication, Iβm feeling something.
Only shares on this bad boy but seems like an overlooked play considering the excitement around the space right now.
Knowing Saves Half the Battle
More on that here. https://www.reddit.com/r/pennystocks/comments/oac0dm/kushco_kshb_michael_burry_psyops_uncoded_deep/
Has anyone dug into the fundamentals of KSHB? It's an ancillary cannabis company that supplies the US industry mainly with vapes, child packaging, and other supplies. Trades at 1 times book and 1 times sales and is about to uplist to Nasdaq.
Amusing story behind this one but I'm just interested in fundamentals. Any takes on this one?
Kushco KSHB - Michael Burry Psyops Uncoded. Deep dive on a cannabis penny stock about to uplist to Nasdaq. (A transmission from the Burryologists.)
/r/pennystocks/comments/oac0dm/kushco_kshb_michael_burry_psyops_uncoded_deep/
Submitted June 29, 2021 at 08:15PM
