Why is the recently fired CEO of Canopy Growth (CGC) buying even more shares?

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August 20, 2019 5:47pm NYSE:MJ

NYSE:MJ | News, Ratings, and Charts

From Eric Bowler

Former Canopy Growth Corp (CGC) CEO Bruce Linton announced today that he’s buying more shares of CGC, seeming to catch investors off guard once again.

It does seem like an unorthodox move following a high-profile firing, but then again, Bruce Linton curated his marijuana poster boy status by making such splashes in the news media.

During his CNBC interview this morning he was true-to-form with sound bites. When asked why he bought more shares from the company that fired him, he said, “We have an awesome team there and when it’s cheap you buy more.”

And in an email sent to BNN Bloomberg, Linton said that Canopy Growth “continues to execute on the emerging opportunity for increasingly sophisticated global and national recreational and medical products… This is a vision and dedication exercise that is designed to reward shareholders over a huge and rapidly emerging market.”

When CNBC reporter Andrew Ross Sorkin pressed him as to why he got fired, Linton said, “I was one person. If I was that important to the company, the company is not that key… It was a right time for them to make the change, and it was the right time to buy the stock.”

Was it the right time to buy the stock?

Just because the former CEO says it’s the right time to buy a stock, doesn’t mean that investors will actually buy in. After all, Linton still has a lot to gain by making statements like these because he holds close to 2.5 million shares of CGC stock. Also, Linton said he bought more shares, but did not specify how many.

CGC stock first took a nosedive a few months ago after Linton’s departure, and then got battered again last week following a disappointing fiscal Q1 earnings release. Nonetheless, Linton still made some compelling points about why he thinks people “misunderstood” the quarter.

“There’s this big headline number, but when I look at stocks and look at quarterly announcements, I really don’t care about the noncash affecting things. … I just look at the actual losses and where they spent their money. It wasn’t that big, and what they spent it on was intellectual property and growth,” he said.

He added that CGC’s footprint spans 16 countries and 4,000 employees. Linton also said that Canopy Growth holds more intellectual property in their portfolio than “any other company.” CGC is the world’s largest cannabis company by market value. 

Linton says he believes August can present a seasonal buying opportunity for cannabis stocks, when stocks become “cheap.” He said that cannabis stocks are often driven by retail trading and defined by high-volume. However, when traders typically go on vacation in August, cannabis stocks tend to fall.

Linton also anticipates that upcoming regulatory changes will send cannabis stocks higher in the fall. For example, the Canadian government has already approved the rollout of new cannabis product categories, such as edibles. Those products will be available in Canadian retail markets come the fall.

Canopy Growth Corp. (CGC) was unchanged in after-hours trading Tuesday. Year-to-date, CGC has declined N/A%, versus a 9.14% rise in the benchmark S&P 500 index during the same period.

This article is brought to you courtesy of ETFDailyNews.com.

About the Author: Eric Bowler

eric-bowlerEric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.

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