Cannabis short sellers created $432 million in December as stocks like with Aphria (APHA) were hit hard. The poor month for cannabis stocks brought short sellers into the dark for the year, with absolute mark-to-market profits of $231 million, based on data from fiscal analytics firm S3 Partners. The BI International Cannabis Aggressive Peers indicator has lost 54 percent for the entire year and 16 percent for the month.
While brief interest from the industry actually declined in December, decreasing by $505 million to its 10 most-shorted stocks, that was due to lower share prices instead of short sellers covering their positions, S3 said.
The Aphria Situation
Aphria is one stock that saw both an increase in short interestup 32 percent since Dec. 1, and amount of stocks earnings , up 72 percent.
Aphria stocks continued their decline on the final day of the year, falling up to 5.4 percent in New York and as much as 7.9 percent in Toronto as investors questioned a aggressive takeover bid for its Canadian bud producer from Green Growth Brands Ltd.. Hindenburg called the bid”non-credible” and raised questions about relations between the 2 companies. Aphria’s shares dropped 21 percent this month through Dec. 28.
But, other catalysts could shift momentum at the cannabis area, S3 said. Invest $1.8 billion in Cronos Group and Budweiser Bundle Anheuser-Busch InBev NV announced a research partnership together with Tilray Inc..
“If M&A activity continues in the cannabis industry we may see increased short covering boosting stock price performance,” Ihor Dusaniwsky, managing director at S3, wrote in an analysis. “Cannabis short sellers will probably be exposed to abrupt and outsized price moves because of M&A activity, which might dampen future short-term activity, but for today shorts are invited to the new year.”