Tilray's Largest Shareholder To Maintain Stake After Lock-Up Expiration

Tilray Inc TLRY stock was surging Friday after its largest shareholder announced it plans to maintain its position after the lock-up period expires next next week.

What Happened

Privateer Holdings, a major investor in the cannabis industry, said Friday that it plans to hold its position in Tilray after the lock-up period expires. The fund's position represents 75 million shares, or around 76 percent of Tilray's outstanding stock.

Privateer believes in Tilray's growth strategy and leading position in the cannabis industry, Managing Partner Michael Blue said in a statement. 

"Given this, we do not have plans to register, sell or distribute the shares Privateer holds in Tilray during the first half of 2019," he said. 

Why It's Important

TIlray went public in July 2018, pricing its IPO at $17 per share. The stock started trading at $23.50 and quickly gained traction, surging by over 1,600 percent by September. The stock has receded since then, but is still trading some 500-percent above the IPO level. 

Had Privateer decided to sell some stake, it would have likely triggered a sell-off in the stock and drop in valuation. The decision to hold the position is being taken as a positive sign by investors, who flocked to buy more stock following Privateer's announcement. 

What's Next

When Privateer does distribute Tilray shares, it will "do so in an orderly and deliberate manner to maximize tax-efficiency considerations for Privateer Investors," Blue said. The firm will also take into consideration the impact they might have on the company's float and will execute transactions in such a way to show their confidence in the company, he said. 

Tilray shares were rallying 23.74 percent to $99.49 at the time of publication Friday. 

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