21 May Watchlist 👀
Today we are watching…
1. Aurora Cannabis (#acbc)
It’s safe to say that pot stocks are no longer flaunted as crown jewels of an investment portfolio, but that didn’t stop a small mania from developing late last night for Aurora. The company completed an acquisition of Reliva, an American CBD company, giving it access to the American CBD industry. Its stock spiked 31%, but that did little to repair 90% losses already experienced this year. Reliva shareholders receive shares in Aurora as part of the workout, and some investors are shorting Aurora on the basis that all those shareholders will opt to liquidate straight away, and get out of a weed business that’s lost its puff!
2. L Brands (#lbrand)
This retailer controls Victoria’s Secret and has been doing its best to keep its balance sheet secret as well amid this coronavirus crisis. Investors care less about revenue and profit misses on the income statement (L Brands missed both revenue and profit), and more about what that means for servicing debt and short-term bills. If a company needs more money, the money must be drawn from a credit line, or raised from issuing more stock. These developers force a stock downward, so some market players have bailed on L Brands simply because of the unknowns. The good news for shareholders is that same-store sales increased again for the fourth quarter on the bounce.