As a value investor, one of the most important things you can do is look at the management team of a company to determine how well the company will perform. Cannabis is said to be an industry that will grow to be a $500 billion industry. Cannabis is disrupting alcohol, tobacco and pharmaceuticals and will take revenues from these different industries. But, in order to get there, the companies involved need to create and brand these products with a global perspective and they need the talent that is capable of doing this with a global perspective.
Tilray (TLRY) has just added four new executives to their ranks that will enable to company to reach their global branding and distribution goals. These individuals bring a lot of high level experience to the company:
Greg Christopher: Executive Vice President of Operations. Greg Christopher has over 30 years of supply chain and operations having worked with the multi-national company Nestle SA having recently worked for Nestle Canada. Greg will oversee strategic development for Tilray’s global operations.
Rita Seguin: Executive Vice President for Human Resources. Rita Seguin has worked for both Senior Vice President of Human Resources for Diagio North America and Glazers Wine & Spirits Distribution. This experience will be instrumental in bringing on key individuals for Tilray to expand into the global role the company plans on taking.
Dara Redler: General Counsel. Dara Redler has worked as Vice President and Senior Counsel for Coca-Cola North America. In her role as Tilray General Counsel, Dara will oversee the strategic global growth of Tilray.
Charlie Cain: Vice President of Retail. Charlie Cain has worked as Vice President of Concept Development and Franchising for Starbucks Corporation. Charlie brings more than 15 years of retail experience to Tilray.
Tilray is a cannabis company incorporated in the United States, headquartered in British Columbia, CA and has operations in Australia & New Zealand, Germany, Portugal, and Latin America. The company has multiple products that are either THC based, CBD based, or a hybrid of both. Being able to bring these products to a global market is crucial in the competitive cannabis industry. This industry is just starting out and so a company will want to focus on its efficiency and being able to get its supply chains in order. Having key players with the experience these four bring to the company will go a long way to do so.
Does Tilray Have Value?
Tilray has been the subject of a lot of debate as to how expensive the company’s stock is relative to the value they can bring to future growth. The company’s stock shot upwards in spectacular fashion after its first IP offering. Initially, the stock moved from the initial public offering of $17.00 to $300.00 in a very short period of time. Since then, the stock has settled down.
The initial moves garnered a great deal of attention for pot stocks. This drew in a lot of outside investors looking for more spectacular moves. Now, Tilray needs to prove their current stock price has merit. Adding crucial talent to management will go a long way for the company to solidify itself within the industry, earn its share of the growing revenue base and ultimately provide value to the company. For me, I have been hyper-critical of the current valuation of Tilray’s stock. However, while I have taken short positions on the stock - and been quite profitable on moves downward - I am waiting for my next move. I believe the stock should be trading around $25.00 - $35.00 per share; it is 2-3 times that price.
It is my contention that the company does not have enough resources to produce enough cannabis and earn enough revenue to merit its current stock price and market capitalization. While the new management will add a great deal of expertise to create a global business, the company remains constrained with their limited production capacity and potential revenue they could earn.
However, this does not mean an investor should simply sell the stock short, either. Tilray stock has remained lofted and stubborn despite many being aware of the hype with Tilray. There is a limited number of shares that are traded openly; the float. This may be the reason the stock has remained stubbornly high. I keep a sharp eye towards the total volume of Tilray stock traded and the insider trades to see if those that are holding the stock remain committed to holding for longer periods of time. From here, we will see if Tilray expands their capabilities and is able to justify their market capitalization, a touchy issue with investors like myself.
Check out the articles in this category focused on cannabis stocks. By gaining a strong foundation in both the fundamentals and technical details usually involved in cannabis stocks, you’ll be able to invest with greater confidence.