“Trust takes years to build, seconds to break, and forever to repair.”
We have received many inquiries about CannTrust with subscribers asking what to do. The shares have declined by 50% in the last week as Health Canada announced their investigation into illegal cannabis sales.
Yesterday the shares of CannTrust (NYSE: CTST) spiked up 18% to US $3.06. Don’t be fooled by a one day upward move. No, things are not turning around for CannTrust and all forgiven and forgotten. The company and all those involved in this coverup are in very serious trouble and the really bad stuff is yet to come. This was merely a dead cat bounce and an opportunity to get short.
Some of our thoughts on possible outcomes:
Anyday, many C-level, senior management and directors will (be forced to) resign.
Formal OSC, SEC, and DOJ investigations will commence and be announced against the company and officers.
The trading in the shares will likely be suspended by the SEC and OSC to “protect the public”.
This is not a case of “oops we made a mistake”, fraud has been committed.
To date, 13 class action lawsuits have been filed against CannTrust. Look for this number to increase dramatically and look for some personal lawsuits to be launched. Lawsuits alone could bury the company.
Health Canada will want to set the standard for the cannabis industry by imposing a hefty fine and penalty. They will come down very hard on the company likely yanking their licence for a considerable period of time and requiring a brand new slate of directors and officers.
We see a valuation of US $100M or US $0.75 per share as being fair. Lots of room on the downside in the near-term. A US $1.00 takeunder by an LP is a possibility.
Saw this sad but true statement: “If You Can’t Trust CannTrust Who Can You Trust”