RE:Verano ipoA few reasons:
1. PAST RUNUP
The company already saw a massive run up in the last 4/5 months with other announcements, and a lot of investors are leary that they have "missed the boat" when a stock has runup 7x steadily already (not realizing that there is still over a 100% of value still to be had).
2. IT IS RISING
The stock, despite everyone's concerns, IS STILL creeping up slow and steadily, but now people are just being cautious as the major event of the RTO is still pending (since I first "wrote" about them in Seeking Alpha they are already up 20%+)
3. LACK OF KNOWLEDGE
Some investors don't realize the following:
a. how large of a position SOL has in Verano
b. Verano s about to have an IPO via an RTO (or even understand what an RTO is)
c. Sol has a large interest in Bluma
d. that Bluma has runup
e. That Verano was 5-6x oversubscribed
f. That Verano, even at $2.88Bn is underpriced (like most IPOs) and will likely climb to $4Bn+
4. LACK OF COVERAGE AND FINACIALS
Small caps such as Sol have very little coverage and as such, there is very little information. Verano is private, and only those of us who have knowledge of the private company financials are aware of the valuation. The latest financials for Sol show a NAV of well under $200MM, and when the new NAV comes out in April/May, it will be marked up (pursuant to their accounting methods) which will show an NAV signifcantly higher. I suspect when Verano starts trading, everything will come to light and then when Sol produces its next round of financials, Sol will also have another runup
5. CONCERNS OF CONSUMATION
People are waiting for the shareholder vote to occur on January 27th at Majesta Minerals and for the British Columbia courts to confirm the merger on February 1st. Its a low risk, but most people are not used to this and just playing it safe.
6. ANDY DEFRANCESCO
The acting/interim CEO has historic accusations against him related to past transactions primarily with Aphria and some Latin American/Jamaican assets. The regulator and courts "exonerated" or "gave a free pass" to him (sort of) last year and some past investors are still leary of that whole situation.
7. COMPENSATION PACKAGE
The last shareholder meeting had a component related to "equity compensation" in that there was an amendment to the total amount of equity compensation (both Deferred Stock Units and Options) that could be allotted. I think some people may be waiting to see the new financials from SOL to see how that shakes out. This is one of the lower probability reasons I think, but it should be mentinoed.
I for one am not taking a side on that issue, but I am aware of the situation. A lot of people are still bitter and the stock tanked (and to add fuel to the fire, Andy's bonus which was contracted for 70% of the bonus pool earned him a large bonus payout while the stock was going down which some even more inflamed).
However, I am also aware that Andy has had many successes in his career (and "NO" I do not have any connection to him whatsoever), and since the courts acquitted him, I am not going to pretend that I know better than them. However, it is important to be aware of what happened and do your own research on this matter.
All of these are just a matter time to get over (with the exception of #6, and each person has to decide for themselves if they can get past that or not).
I for one have enjoyed the run up and am not going to cry about spilt milk
In the end, after running numbers, it is very clear that Sol should be trading north of $5 and I am happy to watch it continue to creep upwards toward that mark and beyond (should Verano trade closer to its peer group).
I hope that helps explain the situation a bit, and if you or anyone else have something to add, please do so....I want this to be an opportunity to make sure we all understand all the issues.