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Privateer Holdings Hits the Jackpot with $12B Tilray Stake
- mankash666 8y agoSomeone please explain this: Revenues in 2017: ~$21M, loss: $7.5M But, market cap: $27B Why?
- travisoneill1 8y agoA stock goes up when someone buys it and down when someone sells it. Valuations based on financial numbers work only if decisions to buy or sell are also based on that framework. In this case people are buying based on the felling that this is "the next big thing" without looking at the numbers. So, since people keep buying, the stock keeps going up. They will get slaughtered, but it will take time.
- blibble 8y ago> A stock goes up when someone buys it and down when someone sells it. this isn't true: to buy a share someone else has to sell it (with some exceptions) in reality the price depends on what the buyer and seller agree (electronically or otherwise) -- just like everything else you buy in general if demand is higher than supply the price rises, just like other markets
- travisoneill1 8y agoRight. Just easier to say buying a stock drives it up than buying a stock at the offer price removes liquidity at the lowest current offer price.
- danvoell 8y agoThere are a bunch of weed stocks with these same types of numbers. See weed.to and Aurora Cannibis. It's mostly speculation as to what the market might become. Like a startup forecasting numbers tends to be worth more than one that is actually in the market.
- jonknee 8y agoThere are not many shares available (mostly locked up by insiders) and the whole sector is the new bitcoin for retail traders. Call it the Robinhood effect. It's going to be ugly when it pops.
- avip 8y ago"Market cap" = #traded shares X share price. It does not reflect any real value short term, only the greed/fear state, or where we're at on hype cycle etc.
- hidenotslide 8y agoShort squeeze dynamics can cause a stock price to diverge significantly from fundamentals. There are limits to what can be arbitraged, and that may be what is happening in this case. https://www.marketwatch.com/story/tilray-is-the-poster-boy-of-short-squeeze-stock-candidates-heres-how-to-find-others-2018-09-19?siteid=yhoof2&yptr=yahoo https://www.marketwatch.com/story/tilray-is-the-poster-boy-o...
- megadethz 8y agoHow much can he get out from this? any way to hedge his exposure to this until lockup expires?
- winslow 8y agoCould do similar things to what Mark Cuban did to hedge his exposure of Yahoo stock after the purchase of his company. Basically shorting against your holding [1]. [1] https://www.quora.com/How-did-Mark-Cuban-save-his-wealth-from-the-dot-com-crash-He-sold-Broadcast-com-for-5-7-billion-in-Yahoo-stock-How-did-he-get-out-before-it-all-went-down https://www.quora.com/How-did-Mark-Cuban-save-his-wealth-fro...
- LanceH 8y agoIt's not shorting if you're holding, it's just and option.
- nostromo 8y agoPeople use “short” as a synonym for holding a put option all the time.
- notyourday 8y agoBeing a long on in the money PUT is called synthetic short.
- rhapsodic 8y ago>Could do similar things to what Mark Cuban did to hedge his exposure of Yahoo stock after the purchase of his company. Basically shorting against your holding [1]. I interpreted that article to mean that he shorted the sector (Internet) that his holding (Yahoo) was part of, but without appreciably shorting his actual holding. (less than 5% of the fund he shorted.) Had the Internet sector (and therefore the fund) went up while Yahoo went down, he could have lost from both directions.
- tw1010 8y agoWhy would he want to get out of it?
- deleted 8y ago[deleted]
- jiveturkey 8y ago> Citron Research said it remains short on Tilray, calling the stock’s surge “beyond comprehension” in a Tweet Wednesday. and > Tilray jumped as much 55 percent to in New York Wednesday to $240, giving it a value of more than $20 billion, higher than American Airlines Group Inc Q2 revenue up just a touch from Q1, but losses have doubled. Of course this could be growth spending. Up 60% today, which is absurd.
- zeusk 8y ago> > Tilray jumped as much 55 percent to in New York Wednesday to $240 It was at $295 prior to Liquidity halt today.
- ttul 8y agoSo, it got super high?
- stephengillie 8y agoDefinitely in the green.
- travisoneill1 8y agoHe better sell it quick!
- deleted 8y ago[deleted]
- CompelTechnic 8y agohttps://finance.yahoo.com/quote/TLRY/options?p=TLRY https://finance.yahoo.com/quote/TLRY/options?p=TLRY The stock moved up so much today that you can't see any calls that are out of the money or puts that are in the money on the main page of options on yahoo finance... (as of 3:16 PM ET)
- tantalor 8y agoIn English?
- kevmo 8y agoIt outperformed everyone's expectations.
- fudged71 8y agoand then crashed beyond everyone's expectations
- lowdest 8y agoPuts and calls are the two types of options contracts. They are created and trade in a range around the current price. Typically, this range is wide enough that it covers all moves of the underlying stock price. In this case, the price move exceeded what the professionals thought was even possible as a long shot bet.
- jeffreyrogers 8y agoAnd it opened at 233 and has traded between 150 and 300 today.
- vsah 8y agoThey added new strikes before open today, but I'm guessing yahoo finance wasn't designed to handle that.
- rdlecler1 8y agoThere was a Canadian VC that was banned for life at the US boarder for investing in a US cannabis company. Wonder if these guys will have problems.
- alexc05 8y agoHere's hoping saner among the electorate heads prevail and "life" winds up meaning 2 years (or hell... 47 more days)
- throwaway2048 8y agoIf you are an American citizen you can not be bared from re-entry, no matter how much they might want to do so.
- kurthr 8y agoWell, your US passport can be confiscated and declared invalid... then you can be denied entry. Happened this year to people born in the Mexican border.
- coolspot 8y agoContext for curious: https://www.snopes.com/news/2018/08/30/revoking-passports-us-citizens/ https://www.snopes.com/news/2018/08/30/revoking-passports-us... "Between the 1960s and 1990s, dozens of midwives were convicted on fraud charges for claiming that babies who were born in Mexico were actually born in Texas. Although the actual number of babies for whom fraudulent U.S. birth certificates were issued was small in comparison to those who were legitimately born on American soil, Brodyaga said the cases have been used by the U.S. government to cast suspicion on anyone whose birth was attended to by a midwife "
- sjg007 8y agoYeah this is suspect though and without due process so I bet after a few ACLU lawsuits and a couple Federal judges intervening then this will stop.
- stephengillie 8y ago> “Our long-term vision is if a patient walks into any pharmacy in any country in the world that has legalized cannabis that patient should be able to obtain a Tilray product. That’s our global goal,” Kennedy said in an interview this week from New York. Hopefully this doesn't signal the beginning of cannabis consolation. It's possible that the market will follow the model of the beer market, where a few large companies have bought out numerous microbrewers.
- jeffreyrogers 8y agoAnecdotally microbrewers seem to be doing fine. The city I moved from (pop. ~200,000) had ~10 microbrewers. The city I currently live in (few hundred thousand people as well) also has several. If small companies can't compete it'll be because they can't deal with the regulation or the business gets commodified and they can't compete on price since they don't have economies of scale, but the later doesn't seem likely to me.
- benbreen 8y agoIt's a reasonable analogy, but I gather that the regulatory demands are currently much higher for small cannabis producers. A close relative of mine is a small-scale producer and the restrictions, price drop, and delays from the legalization process have been making it hard for them to stay in business. Hopefully it gets worked out soon because I'd love for the ecosystem to end up looking like microbreweries, but I fear that it'll end up being more like other agribusinesses.
- nightski 8y agoAs someone who really enjoys beer, isn't part of the reason for that because of the incredible variety of styles and flavors that can be achieved with beer? It's such a versatile medium with a large range of quality differences. But as someone also who has never smoked pot or been that interested in it - is it anything like that at all? Or is the experience pretty generic (other than the obvious quality differences)?
- 8y ago
- cuboidGoat 8y agoSo, is Thiel going to be in trouble for this or is that threat only for small investors? http://fortune.com/2018/09/14/canada-cannabis-ban-us-border/ http://fortune.com/2018/09/14/canada-cannabis-ban-us-border/
- nlowell 8y agoI don't see any possible way for the fund to actually make use of the "value" here. It's just a pumped stock that's had trading halted 3 times in the past hour or so. They wouldn't be able to sell without crashing the price and I highly highly doubt price is going to remain so high over time.
- conjecTech 8y agoThe borrow rates are the highest I've ever seen - 500% annualized. They'll likely be lending a significant portion of their stake, which will net them a good return even if they never are able to liquidate the stock themselves.
- cs702 8y agoCurrent market cap: over $20 billion. Current quarterly revenues: under $10 million. Float: a measly 17+ million shares. Borrow rates: over 500% right now. Lots of momentum × tiny float = crazy market cap + crazy borrow rates. Doesn't seem... sustainable.
- superfrank 8y agoIt's not. Sure, the stock crossed $200 today, but it also touched $300 midday before it started to free fall and got halted three times in the last few hours of trading. If you bought in at the peak today, you lost 33% of your investment in about 2 hours. Getting in to TLRY right now isn't investing, it's gambling. Nothing fundamentally has changed about the business recently (AFAIK), but the stock is up 80% just this week and 500% in the last month. Seems to me, the run up the last few days seems pretty much driven by FOMO.
- curiousgal 8y agoIf only something similar in the beginning of the century happened before to teach us a lesson..
- gammateam 8y agohow to convert this to real money: STEP 1) Be large shareholder on the board, advisory or executive team, but not necessarily a founder. STEP 2) Call broker and tell them to turn off the borrow. This is the right way to squeeze the shorts, funding secured. STEP 3) Do a private placement at the new high price. This results in dilution or is sold from the company treasury in exchange for US dollars. Its a secondary offering at the "market price". "We’re going to figure out who did this and we’re going to take them down … provided someone pays us a fair market rate to do so.” “Easy, chief,” I said. “Any rate the market offers is, by definition, fair.” He laughed. “That’s why you’re the best I got, Lisowski."
- anonymous5133 8y agoThe price will crash even if he sells a tiny amount of it.
- hn_throwaway_99 8y agoI know this is somewhat tangential to the story, but with now it looking like there will be a bunch of newly-minted billionaires in the burgeoning cannabis sector, I can't help but think of all of the (largely poor and minority) people whose lives were ruined by marijuana charges. It's just kind of fascinating to me how we reserve the terms "drug dealer" mainly for (again, largely poor and minority) illegal drug sellers, but that very word "drug dealer" conjurs up more than illegality, but a real moral judgement that these are "bad people". But if you're rich and pulling on the levels of power to do it "correctly", you are a forward-thinking entrepreneur. Not really sure what my point is in posting this, but just I guess as a reminder that how we even talk about morality is subtlely guided by the structures of society that are not "right or wrong" in and of themselves, but just how powerful people set things up to benefit them.
- zipwitch 8y agoIn America this attitude (of seeing successful drug lords as talented entrepreneurs) has a long history, going back to early English colonization efforts. The English "settlers" in what is now Virginia were aspirational freebooters, hoping to follow in the footsteps of Cortez. When that failed hard, they eventually became what we would now call 'drug lords', with tobacco as their product of choice.
- forapurpose 8y agoSimilarly, rich-person's opioids are distributed legally (often) and are a drug treatment and addiction problem. Poor-person's opioids are criminal distribution and a law enforcement problem, treated in prison. Until sentencing reform, rich-person's coke (powdered cocaine) received much shorter sentencing than poor-person's cocaine (crack). The difference, IMHO, is between the familiar and the 'other', between us and them, between feeling safe and feeling alarm. If someone of my milieu does it, it's one deviation from a norm I understand; they aren't threatening to me; they have my empathy or even my secret envy for doing something exciting. If someone of an unfamiliar milieu does it, it could mean anything; will they rob me? Kill my family in a drug-fueled rage? Undermine the foundations of society? It creates fear and alarm.
- 8y ago
- rayvy 8y agoPersonally, this is starting to look like a pump scheme. Which is weird... Because Tilray supposedly has a decent business (just Google "seekingalpha Tilray"). But the price action to date has been (as others have noted) nothing short of insane. The CEO has been on a press tour the past few weeks which culminated in an interview on CNBC, and he's yet to even reference the stock price. Another commenter mentioned the craziest part, "You can't even buy $TLRY call options that are out of the money as of today" - meaning, absolutely 0 people foresaw the price action going this crazy. Why let it get this out of hand? It's a legit business doing legit business? Why do they need the stock price at these insane levels? The resulting burst of this bubble is only going to hurt the retail investors, and cannabis stocks in general (at least short term). Obviously my first answer is the ol' Jordan Belfort pump and dump, but outside of just pure greed, it seems Tilray hardly needs this to happen. I also learned via Bloomberg that the Tilray CEO, is a leading partner in the (private equity) firm that owns 75 million shares of unlisted Tilray stock. Which makes me wonder if he's working for Tilray, or for private equity (still). Something is just very, very fishy about this to me.
- sokoloff 8y ago> "You can't even buy $TLRY call options that are in the money as of today" Exactly backwards: All of the call options on $TLRY are in the money.
- rayvy 8y agoThanks for the catch, trying to make the edit.
- vsah 8y agoStill incorrect actually. There have been out of the money call options on TLRY all day.[0] OP got mixed up because someone posted about how Yahoo finance only had in the money calls, but that was Yahoo's fault alone. [0] https://www.nasdaq.com/symbol/tlry/option-chain?callput=call&money=out https://www.nasdaq.com/symbol/tlry/option-chain?callput=call...
- 8y ago
- sjg007 8y agoI am actually surprised the Feds allow the stock to be traded on a US exchange. I would think that there may be some regulations on the money raised (e.g. during an IPO) and transferred out of the country based on their industry.
- noobermin 8y agoI guess the "Thiel-backed" bit in the title worked as clickbait. It's not like Thiel had foresight, the Privateer people did. Or to extend it further, it's not like Privateer had amazing foresight either.
- antoniuschan99 8y agoThe news about Tilray today made me think about XRP or Ripple last year when it spiked to $4
- noddy1 8y agoYup, which was the perfect time to dump all your crypto bags.