Since the year began, the marijuana industry has seemingly done no wrong. Following the legalization of recreational marijuana in Canada in mid-October, Wall Street is projecting that global weed sales could top $50 billion in roughly a decade’s time. And with a compound double-digit annual growth rate comes some very lofty expectations from investors.
The Horizons Marijuana Life Sciences ETF, the very first cannabis exchange-traded fund to list in Canada, and a fund that currently holds about four dozen pot stocks of various weightings, is up 63% year to date through this past weekend. With few exceptions, investors have been able to blindly throw a dart at marijuana stocks since Jan. 1 and come out a winner…
Pessimism is peaking with these three marijuana stocks
However, a precipitously rising market is also a recipe to draw short sellers out of the woodwork. Over the past month (through the end of February), quite a few pot stocks have seen a modest uptick in short interest. Aurora Cannabis, the projected largest producer at peak annual output, has seen the number of short shares held by pessimists rise to 72.08 million (as of Feb. 27), up from 71.03 million four weeks earlier. The same is true for the largest pot stock in the world, Canopy Growth, which had its shares short increase to 22.56 million from 22 million on the dot over the same four-week period. On a percentage basis, though, these increases in pessimism are relatively mild.
That, however, is not the case for three other pot stocks, which have seen their short interest skyrocket over the noted four-week time frame.
Village Farms International
Village Farms International (NASDAQ:VFF), which uplisted to the Nasdaq exchange earlier this year, has seen its short interest more than double since the end of January. Using data from the Toronto exchange (since the move to the Nasdaq was recent), Village Farms’ short shares have risen from around 600,000 at the end of January to 1.44 million by the end of February.
The increase does make some degree of sense with Village Farms’ stock rising by 342% just since the year began. Uplisting does help the company improve visibility and liquidity, so that may have helped its share price a bit. The bigger lift, though, comes from the completion of Pure Sunfarms’ first sales…
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