Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

More short-sellers are placing bets that marijuana stocks are headed downward as five cannabis stocks hit the latest short-sellers lists published by The Globe and Mail.

The five were: Aphria Inc., Canopy Growth Corp., Cannabis Wheaton Income Corp., Medmen Enterprises Inc. and Delta 9 Cannabis Inc. Short-sellers’ bearish views on the fledgling industry thus appear to have acquired more conviction in recent weeks.

Of course, the legalization of cannabis in Canada and several states within the United States creates a substantial commercial opportunity. But short-sellers seem to be saying that the run-up in marijuana stocks over the past 18 months may be overestimating the growth potential.

Story continues below advertisement

The first graphic shows the top 20 Canadian companies in terms of the percentage of shares on loan as of June 12. Shares on loan serve as a proxy for short sales because short-sellers have to first borrow shares in order to sell. These data are supplied by global data firm IHS Markit from their daily surveys of brokers in the securities-lending market.

Investors shorting a stock borrow the shares from a broker, sell them and hope to replace the shares that they’ve borrowed at a lower price in the future and pocket the difference. It’s a bet that a stock’s price will drop.

Badger Daylighting Ltd., Quebecor Inc. and First Majestic Silver Corp. once again topped the table. Badger Daylighting’s first-mover status in hydrovac trucks (used for earth excavation) is facing rising competition; Quebecor is a media company where the short interest may largely reflect arbitraging/hedging of its convertible debentures; and First Majestic Silver Corp. is a Mexico-based silver miner with some past execution miscues and a large acquisition to digest.

Most of the other incumbents saw changes in their rankings. Some of the increases in short positions were registered by Canadian Western Bank, Maxar Technologies Ltd. and WestJet Airlines Ltd. Canadian Western Bank is based in Alberta where the risk of loan losses has grown because of the underperforming economy; Maxar Technologies is diversifying away from a slowing satellite business into digital Earth imagery – while carrying a heavy debt load; and WestJet Airlines is dealing with higher fuel prices and increased competition from discount carriers.

Two new faces in the first list are cannabis firms Aphria and Canopy Growth. Aphria, one of the lower-cost growers, has seen its stock slide this year after a big run-up in 2017. Canopy Growth is considered the dominant firm in the sector but its valuation is rich and uncertainties abound, such as government regulations and a potential for a supply glut from the plethora of new producers rushing in.

The second graphic ranks the 20 Canadian companies with the highest cost to borrow their shares. The cost to borrow is another way to gauge bearish sentiment. It is particularly useful when the number of shares available for borrowing is small and short-sellers reveal their bearish sentiment less through the number of shares sold but by how high they bid up borrowing costs.

Concordia International Corp. and Street Capital Group Inc. are at No. 1 and No. 3 on the list, respectively. Concordia International is a going concern as it attempts a transition to a new business model. As a mortgage lender, Street Capital is exposed to the Canadian housing sector, where some observers say prices have increased to untenable levels.

Story continues below advertisement

There are also companies from sectors that have become richly valued from investors stampeding in, such as lithium (used in electric cars) and cannabis. The latter sector alone has seven entries on the second list.

Several new companies have landed on the second list this month: Let’s look at some of them.

Cannabis Wheaton Income Corp., to be renamed Auxly Cannabis Group Inc., provides financing to marijuana producers in return for an equity stake and share of their output. The company had revenue of just more than $600,000 in the last quarter and is valued at $700-million on the Canadian Venture Exchange.

MedMen Enterprises Inc., an upscale cannabis retailer in the United States, listed for trading on the Canadian Securities Exchange in May. It aims to raise capital to expand operations faster. It is valued at $1.4-billion and currently has 12 stores in New York State, Nevada and California.

Delta 9 Cannabis was one of the first companies to be licensed for commercial medical cannabis production in Canada. But the company hasn’t aggressively scaled up to grab market share, so it remains a niche player in Manitoba and has a declining share price.

Brookfield Property Partners LP is focused on commercial properties. As with other companies with a high-yielding stock and substantial debt, it has been under pressure because of rising interest rates. Other concerns: the impact of online shopping on bricks-and-mortar retailers and a dilutive issue of new shares.

Story continues below advertisement

Resverlogix Corp. is a clinical stage biotech company developing an inhibitor for the treatment of cardiovascular, diabetes, Alzheimer’s and other diseases. A lot rides on whether or not the company’s proposed treatments become commercially viable.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies