Short seller strikes back
While the market was digesting Green Growth Brands’ takeover proposal for Aphria (APHA) last week, short seller Hindenburg Research struck back and slammed the takeover proposal.
On December 28, short seller Hindenburg Research released an update on Aphria’s recent takeover bid from Green Growth Brands. Hindenburg Research called the takeover bid a “circus.” Hindenburg Reasearch also called the takeover bid “merely an epic next step of Aphria’s brazen shell game.” The short seller views the latest development as “non-credible and likely an attempt to generate the appearance of demand in the hopes of spurring credible offers.” To learn more, read Hindenburg Research Slams the Latest Takeover Bid for Aphria.
Hindenburg Research claimed that Green Growth Brands is a related party to Aphria. Green Growth Brands has investments from Aphria’s passive investment in Green Acre Capital Fund.
A short seller makes money when the stock goes down—unlike a long investor who makes money when the stock rises. Cannabis stocks (HMMJ) including Aurora Cannabis (ACB), Canopy Growth (WEED), and Tilray (TLRY) have seen their fair share of declines in 2018, which makes them attractive to short sellers.
In a press release on December 28, Aphria responded to Hindenburg Research. Aphria said, “As previously disclosed, Aphria holds a passive investment in Green Acre Capital Fund II, which we understand has invested in numerous emerging cannabis companies, including GGB. The independent committee is comprised of directors with no relationship to Green Acre Capital Fund II or GGB.”
Next, we’ll discuss why GMP Securities upgraded Aphria to a “buy” rating.