Citron Takes Profits In Aphria, Shorts Cronos

Citron Research’s Andrew Left isn’t getting greedy on a bullish cannabis call that has turned out to be a home run. Aphria Inc APHA had a huge week on continued developments of a buyout by Green Growth Brands Inc GGBXF, and Left said he is taking profits on his Aphria stake.

Left’s Timely Call

In mid-December, Left said Aphria was the best-positioned cannabis company for a buyout or a major partnership.

“Even though federal legalization is around the corner, it will still take at least 18-24 months for the law to change which makes the Canadian Cannabis LPs the only game in town in the near-term,” the short-seller wrote in December.

Since that time, Aphria shares are up 71.2 percent in less than two months.

The latest surge in Aphria cane after Green Growth CEO Peter Horvath told Bloomberg he's open to negotiating the terms of the unsolicited all-stock buyout offer Green Growth made for Aphria in January. Green Growth offered to exchange 1.5715 shares of Green Growth for each share of Aphria in a deal that would value Aphria at around $2.1 billion. Horvath now appears open to potentially raising his offer.

Canada Stocks Overheated

After the news sent Aphria stock higher by more than 20 percent in two days, Left tweeted Friday he's taking profits.

“Canadian Weed has run too far moving into in US names,” he said.

Left also said he is short cannabis stock Cronos Group Inc. CRON, with the stock trading 70 percent hgher than the average analyst price target. He cited a CIBC report from January in which analyst John Zamparo said “sophisticated [cannabis] investors are beginning to shift capital to U.S operators.”

Aphria was up 9 percent at $9.51 and Cronos was up 8.3 percent at $21.31 at time of publication.

Related Links:

CIBC Initiates Coverage On Cannabis Stocks, Sees Bright Future Ahead

The Latest On Green Growth's Proposed Takeover Of Aphria