Supreme Cannabis Company Inc. (The) T.FIRE

Debenture Arbitrage The Bear Case

[IndomitableFire]

The bears came out full force on Friday. Their top reasons:  debenture arbitrage (old news) and slightly overheated short term technicals. The bears barely have two legs to stand on at this point with the consumer market sending clear signals to investors that Supreme is leading the field in product quality giving them a competitive advantage in the marketplace to demand a $ premium for their product. 

This recent dip should be looked at as a buying opportunity and I think large institutions are thinking the same. Hence the overly dramatic downward pressure we are seeing on the stock just two days before earnings are released. It's fairly obvious after researching buy and sell orders that a handful of large entities are pressuring the stock down before earnings to accumulate shares at a lower level. They want a little more meat on the bone for the run that is to come.

Every informed investor knows Supreme has a full pipeline of milestones to be completed mid way through this year which will undoubtedly catapult it to new all time highs. Anyone in the know, knows that 2019 is the year Supreme breaks out. The debenture arbitrage play has been valid in the past but in my opinion will soon be unwound in spectacular fashion. Maybe this week if financial results are strong enough. 

Imagine all the new analysts initiating coverage and sending buy recommendations to their institutional clients. This should give Supreme enough momentum and their financiers enough confidence to let the stock rip and cash in their chips.  


Quick Capactiy and Revenue Notes: 

Current Capacity - 17,500 KG
Current 12 Month Revenue Run Rate: $105,000,000
Capacity by June 2019 - 50,000 KG
12 month future Run Rate by June - $300,000,000

Price Target by June 2019: $5-$7 for SPRWF 
Price Target by June 2020 - $10-$15 for SPRWF

[donaldmac]

Agree with your assessment  of the situation

[OptGreen]

Agreed IF, good to have you aboard...with the debenture arbitrage unwound should see the end for any need of the RS and shift the focus to the increasing sales and market share. With all the fuel in the pipeline to be rolled out by year's end, including even better quality product hitting shelf  later this year or early '20 your price targets look very doable, JMHO....Opt  

[theTransporter]

Guys - Debenture Arbitrage only works when the price is ABOVE the conversion price which in this case is above 2.45 which wasn’t the case.  This situation is quite rare in the present-day world, where algorithmic and program trading has proliferated to sniff out such arbitrage opportunities.

[IndomitableFire]

Got it, so whatever it is called, when the financiers of the bought deal short the stock to hedge their debenture risk. I thought it was debenture arb, but there must be a different name. They openly said they were short the stock in October to hedge their debenture risk.

[theTransporter]

It's the other way around.  They hedge their short with their debenture conversion price.  But it only works when the start the short at a higher price than the debenture conversion price (to cover their short).  Considering the only debentures have a conversion price of $2.45, the stock price must be above that for this to be a considered action for them.  Stock price hasn

[Tomharley]

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[BrokenKeyboard]

You will come to see soon enough that if you are not the low cost provider, then you need the best product to sustain high margins - investors love margins. 7Acres has consistent reviews as the markets top quality product, and word of mouth alone will sell it’s brand, as well as the Lot 16 and KK brands once released. The debenture arbitrage play is not going to survive for very long, it’s only a

[Go0B3r]

Their cost structure has been changing with each and every earnings report, so as far as I can tell the lads are in the driver seat there, and keeping a close eye on it.  it's the only way since there's no "How to grow Quality cannabis at scale for stupid" books out there.  It'll be a balancing act for at least another year... Next thing they need to work on is