Despite the terrible move the cannabis sector is experiencing today, we started to see some positive signs for certain marijuana stocks.
This week a report was released that mentioned 5 cannabis companies that insiders were buying at current levels. Generally, insider buying is a positive sign in the industry as management feels confident in the company itself as well as the price of the shares at current levels.
Specifically for OrganiGram Holdings Inc. (OGI), last week the company’s CFO, Paolo De Luca, purchased 6,495 shares at an average cost of $4.68 per share. This follows purchases by two directors (Sherry Porter and Derrick West) for a total of 4,450 shares at an average price of $5.69 per share last month.
Now, although insiders are buying shares, this does not mean that it’s an instant green light to start taking massive positions in the cannabis sector. At the end of the day, insiders are investors too and could potentially be wrong, although it’s nice to see that company executives do have faith in their companies. However, we believe this to be a very positive sign.
There are many other positive factors going for OrganiGram. The company will boast 113,000 kgs of cannabis production per year by the end of 2019 and currently owns the world’s largest indoor cannabis cultivation facility equipped with level 3 growing technology. They are also one of only three licensed producers that have distribution agreements in all 10 provinces across Canada. While OrganiGram plans to profit in the near term on the Canadian market and the fact that it’s still not oversupplied just yet, we do see that market eventually becoming saturated and many companies will struggle to keep increasing revenues.
Luckily for OrganiGram, they have been focusing on the international market as well with two strategic partnerships. First, they have Eviana which is a CBD company based out of Serbia. Eviana will supply OrganiGram with hemp for CBD processing and their strategic location will all for possible supply to the European market. OrganiGram also has its foot in the door in Germany with its partnership with alpha-cannabis Pharma GmbH. With over 5000 pharmacies across Germany OrganiGram looks to supply the German market while using their partner Eviana’s facilities for the production of cannabis extracts.
We see OrganiGram as a solid mid-cap diversified play on the North American and international cannabis markets, and it is one of the top stocks on our watchlist for the rest of 2019 and beyond.
We will be watching for further signs of continued insider buying to signal further strength in OrganiGram and the cannabis sector.
OGI shares were trading at $2.81 per share on Thursday afternoon, down $0.34 (-10.79%). Year-to-date, OGI has declined -21.25%, versus a 18.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
