International Investing

Cannabis Corner: Aurora Shocks the Field

The cannabis wars took another big step toward resolution last night when the CEO of Aurora Cannabis Corp. (NYSE:ACB) retired a few days before the company’s earnings report.

The sudden resignation amounts to a surrender. He can’t turn the business around and is unwilling to spend more time trying.

And while fans of the company can argue that the strategy will not change because the now-former CEO remains on the board of directors as a lieutenant takes his place, “business as usual” here is not an ideal scenario.

ACB also preannounced a $1 billion accounting charge, cut 25 percent of its executive payroll and warned us that revenue is coming in at best flat compared to last year.

That last detail is the really hard one. I thought cannabis was one of the consumer growth markets of our age. If the second-biggest company in the space can’t expand its sales, something is seriously wrong with the business plan.

I see this as an opportunity to buy the dip on every other cannabis stock. Canopy Growth Corp. (NYSE:CGC) will exploit any weakness its rival’s management transition reveals.

Smaller cultivators become interesting as well. But I am not buying ACB here.

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis. Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Triple-Digit Trader, 2-Day Trader, IPO Edge and Inner Circle. Ms. Kramer, a Certified Fraud Examiner, has also testified as an expert in investment suitability, risk management, compliance, executive compensation, and corporate governance. Ms. Kramer received her MBA from the Wharton School at the University of Pennsylvania and her BA with honors from Wellesley College. Ms. Kramer has provided testimony regarding investment policy to the U.S. Senate and is a frequent speaker on the markets, portfolio management and securities fraud and compliance. Ms. Kramer is also the author of “Ahead of the Curve” (Simon & Schuster 2007) and “The Little Book of Big Profits from Small Stocks” (Wiley 2012).