Aurora Cannabis (Aurora Cannabis Stock Quote, Chart TSX:ACB) has been turning heads this year with its blockbuster deals and, as of yesterday, its soon-to-be listing on the NYSE, but current shareholders may want to get out now while the getting’s good, says James Telfser of Aventine Asset Management, who has concerns about the company’s focus on recreational crop production as opposed to other potentially more lucrative corners of the nascent cannabis sector.
On Tuesday, Edmonton-based Aurora announced that it had applied for listing on the New York Stock Exchange, saying that the move will open up the company to a wider swath of investors.
“Through our NYSE listing, Aurora joins an established group of mature global brands with improved access and exposure to an engaged international institutional investor audience,” said Terry Booth, CEO of Aurora, in a press release. “Aurora’s high-paced execution has made it one of the world’s leading cannabis companies. We have grown from being a licensed producer with a single facility, to a horizontality differentiated and vertically integrated global organization with a funded production capacity in excess of 500,000 kg a year, sales and operations on five continents, and a team of more than 1,500 employees.”
The announcement sent ACB to a high of $13.60 in trading, a 70 per cent increase over the past month and a 157 jump since mid-August.
But giddy shareholders might want to think about cashing out, says Telfser, partner and portfolio manager at Aventine, in conversation with BNN Bloomberg today.
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“Aurora Cannabis is interesting because they just went around and bought everything that they could possibly buy, and they’re going to start trading in the US,” says Telfser. “So from a trading mentality, maybe the stock does well in the short term, but long term it’s not the sort of name that we would like to be involved in if we were to be involved in this space.”
“You have to look at the medical side which is interesting, the retail side is interesting to us, and so there are a lot of other areas that we think are going to do really, really well down the road, again, waiting for the dust to settle and see where it goes,” he says.
“If I was owning shares of Aurora Cannabis today, I’d be taking some profits at these levels,” he says.
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