Short seller not backing down
On December 6, Aphria’s (APHQF) short seller, Hindenburg Research, released its Part 2 on what it found to be further malice in the company’s acquisition efforts. In that report, Hindenburg Research pointed to another acquisition made by Aphria by the name of Liberty Health Sciences. According to the research, this acquisition showed a 5 million Canadian dollar gain to Aphria’s insider in a matter of six days.
Further, the report pointed out that Aphria’s CEO, Vic Neufeld, was also a part of the “discount round” in which Aphria purchased companies at overpriced valuations. Even more damning was the short seller’s observation that the SEC had alleged that the individuals that Aphria purchased companies from were involved in pump and dump schemes.
According to Hindenburg Research, Aphria acquired Nuuvera, which also included people connected to the newer allegations attached to the latest round of assault by Hindenburg Research.
When a company acquires other companies at a price in excess of fair value of net tangible and intangible assets, the excess is reported as goodwill. In the above chart, we see Aphria’s goodwill has increased significantly to 522 million Canadian dollars from just about 1.2 million Canadian dollars year-over-year. While there could be nothing wrong with this, an impairment of goodwill in the future will likely raise more questions about the company.
Market Realist will continue to track the developments on Aphria. In the meantime, visit Market Realist’s healthcare sector for ongoing updates on other companies (MJ) such as Canopy Growth (WEED), Aurora Cannabis (ACBFF), and Tilray (TLRY).