Slow news day on the medical marijuana front, with a lot of companies having rolled out updates prior to or during the Next Gen (
CSE:C.N,
Stock Forum) Vancouver investors conference Wednesday.
Affinor Resources (
CSE:C.AFI,
Stock Forum) was among the few listed companies posting an update today – posting two in fact – as they elevated vertical farming guru
Nick Brusatore to Executive Chairman of the Affinor Board of Directors, and announced plans to buy a B.C. growing company that Brusatore owns a 51% stake in, which it expects to receive an MMPR.
Brusatore will receive 2.55 million Affinor shares as part of the deal with 10% of that having been paid up-front and the remainder due when the company gets an MMPR approved.
Important to note: An expectation of getting a growers license is not the same as having one. But hey, 98% of the companies in the sector are living in the ‘we’re pretty sure we’re going to be able to do business’ game. And should the company not get its MMPR, Affinor is still in great shape with other aspects of its business.
In fact, assuming they get their weed growers papers in order, the beauty of the Affinor play, like Abbatis bioceuticals, is they’re really locking down their own supply as they seek to build products that can be sold at a premium.
Something to take note of is that Affinor goes to some lengths to say in their news release that they have a commitment to championing production “for value-added projects in Canada.”
This is something I’ve been talking about a lot of late, in that companies who are only growing to sell to registered patients are focusing on a mondo small and largely bottlenecked market with a distinct lack of margin going forward. My mantra in this respect is, do you want to be growing coffee or selling lattes?
My presentation at GreenRush went into detail on this, and has been talked about a lot in the days since. I’ve got a long list of brokers who want a copy of my slide deck, and a whole lot of CEOs and IR folk who want to sit down and chat about what was said.
In my time covering mining and tech, this was never at risk of happening, whether it be in an up or down market. But the weed market is in a different phase than most because, like the opening minutes of a Hunger Games, every company is out of the gate and sprinting hard, looking to grab whatever weapon is available to help them avoid getting their throat cut.
The weed sector was admittedly overhyped over the last few months as daytraders pounded on every door, and is now struggling to get past the ‘overhype fall-off’ and through the ‘trough of disappointment’ on its way to the next phase: The slow build.
What I heard from an abundance of conference goers, both on the investing side and the pubco side, was that they were hearing the message that it’s time to get real about building a business.
Satori Resources (
TSX:V.BUD,
Stock Forum) has been hamstrung of late, unwilling to tell their story for fear of being trade-halted for a change of business process for 60 days, which has led many (myself included) to stick them in the ‘no plan’ territory.
CEO Jennifer Boyle told me yesterday she’s just not been in a position where she felt like she could tell shareholders about what options she’s exploring, as the Venture exchange has been digging through every release for any careless wording that would warrant confirmation she’s a weed company and no longer a mining company.
But that hasn’t stopped her taking meetings which, by all indicators, appear to be plentiful. In fact, after I wrote as much yesterday afternoon, Satori shares jumped 22% today, the biggest jump in the sector, which tells me what Satori investors have wanted all along is an indication there’s a plan beyond a ticker symbol.
She can’t say it, but I can: Satori is a weed company. Yes, it’s going to continue to engage in mining deals, because it has to, and those deals may actually make some cash for the company. Boyle tells me she’s spoken to one mining major recently about the possibility of growing weed in one of that company’s ‘d-list’ mine shafts, and she says she’s still in talks regarding other mining plays.
But the market wants Satori to be a weed company. In fact, it wants it bad. Whether she knew what she was doing when she got her ticker symbol or not, Boyle’s V.BUD is worth cash money, so she’s being pitched a lot of plans from a lot of companies that, really, want to be associated with those three letters more than they do her.
But, much like other execs I’ve heard from in the wake of the GreenRush conference, she’s changing gears and stepping back from the “I’ll listen to anything” approach, and moving forward with due diligence on the one or two best plans she’s heard. That means, in her words, “We got sidetracked from our initial focus, which is similar to what [Papuan Precious] is doing on the service and product side. We got pulled back to the grow side because we have an amazing grow team that we’ve been in talks with in that space. But I think I walked away [from the conference] last night looking back at our original focus as being the right path, right now.”
She continued, “It’s clear looking at all those companies at the conference that there’s a big gap between the real companies and everyone else. I looked at what Naturally Splendid has done and they’ve done a great job, but that’s a long term play - it's something we've looked at, but I'm not sure I have the shareholder base to wait that retail process out happily.”
I overheard brokers telling Jennifer at the GreenRush after party that she needed to rollback her 55 million shares to be more attractive to big players, but she was having none of it.
“I’m attractive enough,” she said. “Don’t need it. We’re doing deals. I’m in meetings all day.”
I asked what she’d say if she could speak to every potential investor, and she said, “That we’re being pitched constantly and we’ve seen a lot of bad deals, some good ones, and now’s the time to get moving and get aggressive on the best of those opportunities.”
Lest you figure that I’m in the bag for Satori, or that she’s a client of Stockhouse, let’s be clear; I have no dog in the Satori fight.
Also, I should be clear that Jennifer is nuts. She’s one of those Venture types that is always whirring, always dealing, always taking calls and not taking any shit. I’d invite her to a dinner party in a heartbeat because you need to have a mouthy broad in the room keeping the alpha males in check.
But there may be many who feel her grassroots, shoot from the hip, ‘I’m the shortest one in the room but I’ll take you all, ya bastards’ approach isn’t the best way to run a potential multinational company.
But unlike many personalities on the Venture, she’s not in the game to pump her ego. I asked if, if a partner wanted to buy her out and run with her company with her as a minority shareholder, she’d listen to offers. The ‘yes’ came out before I’d finished my sentence.
“If they’re bigger than us, if their team is more stellar than ours, they can knock themselves out. Do your thing, make use all rich.”
So what do I think of Satori as an investment opportunity? Tough question.
It’s cheap. It’s unpredictable. Volatile. It could go anywhere. It could end up in a JV with a monster, or it could bump around the dark room that is the weed sector, only to find themselves alone when the lights go on.
Right now, my money goes in companies that are ‘next stage’. I want to see revenues on the hill, I want to see versatility, I want to see experienced management and pension-friendly possibilities. To that end, Affinor fits the bill more than Satori.
But Satori is the wildcard, the symbol of the weed sector, a touchstone stock that first time weedco investors gravitate towards, and her clear goal is to make money, both for herself and for her shareholders, so deals will likely be done in the short term.
Done with who? Done when? Will a trade halt be involved? Can’t help ya, bro.
All I can say, and I owe Satori investors this much for giving them a kicking for the last few months… it’s not SadStori anymore. It’s ContinuingStori.
IN BRIEF:
Pan American Fertilizer (
TSX:V.PFE,
Stock Forum) got
trade-halted today and, with their
financials in weird shape, I’m not sure it’s the good kind of trade-halt.
The online
#Wolfpack social media weed stock buying group is under attack from shorters again with their 'unicorn' pick Vapor Group (VPOR) being cut down, even as results come in that show the company to be in decent shape. I've watched that stock come down from $0.30 to $0.08 in the last month and figure, if you're into the OTC side of the sector, it's one to consider. Full disclosure: I'm in.
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