RE:RE:RE:Supreme - still severely undervalued The only covenant the company would need to be concerned with, I believe, is maintaining a $15m+ cash pile at all times, which leaves them $5m+ to work with
johnale wrote:
ya that would be bold, but I'm not sure BMO would be too happy about that. Definitely need to look at those debt covenants to see if it's even possible.
But even 1 mil at .20 would clear 5mil shares.
With all the volume, I wonder if another LP would buy on the open market clearing shares from time to time.
almost a game of cat and mouse - knowing MM is moving those shares, and them able to purchase at a lower price than they would have in a one time transaction.
it's just that the volume of shares is very large - and up to now - retail hasn't jumped on board. (Until the last 2 days) Funds/LP may have been the buyer.
Obviously I don't know, just guessing.
WealthBuilder99 wrote: Thanks for laying this out John. Supreme has been undervalued for a long time. Eventually something has got to give. As the Oracle of Omaha states: "in the short run, the market is a voting machine, in the long run it's a weighing machine."
Which brings up another idea i've long been contemplating. If Supreme is about to hit positive cash-flow and MMCap is looking to sell their equity, would it not be very accretive to use up to half their $20m cash pile and buy back up to 50mm shares. This demonstration of confidence would surely buoy the stock and give them greater ability to raise capital at higher equity prices should they ultimately need the capital. It is admittedly a bold move as companies typically prefer to maintain a war chest, and not long ago was running their ATM. It is also perhaps irresponsible to buy back shares while they carry a fair-sized debt load. I need to take another look at their debt covenants but I don't think it would interfere. Thoughts?
johnale wrote: Recent upgrade to Aphria by analysts - and a deep dive article got me thinking.
cronos/canopy trade 18-21X CY21 EV/Sales - (see note at end)
If the top 5 LPs garner that - whats the next 5 LP's get as supreme is top 9/10 LP in rec market.
Well OGI is the weakest link - Has an EV about 535mil and CY21 ~89mil gives them 6X Today.
FIRE - At 6x CY21E(62mil net rev) = 372mil - ~71mil debt = 301 Market Cap.
Implies fire should be trading at .60cents today.
** the convertible debt converts to shares at .45 (At fires discretion) which removes 35.7mil debt from the calculation and increases the Outstanding shares. ultimately it works out to .54 cents/share.
Thats TODAYS value if we have the same metrics as OGI.
With an ebita positive/cash positive quarter - we should easily justify this value. If we clear 14mil - we would be on pace to surpass 62mil CY21E and possibly thus higher value.
Cantor Fitzgerald analyst Pablo Zuanic increased his 12-month price target on Aphria to C$26, from C$15.25. He says the Aphria x Tilray merger has a 70% upside. The primary reason that Cantor has upgraded Aphria is due to the large disconnect in valuations between Aphria and Canopy Growth/Cronos. Both Cronos and Canopy Growth trade between an 18-21x CY21 EV/sales multiple while Aphria x Tilray trade at a 13x multiple despite the combined entity holding a 20%/#1 market share position in Canada.