Yesterday the Globe and Mail reported that CannTrust Holdings is expected to be dropped from the S&P/TSX composite at the end of September.
AltaCorp managing director Chris Murray said that, as a rule, index investors hold about 5.5 per cent of a company’s public float and sell the stock when a company is dropped. Removing the cannabis producer from the index would trigger a wave of selling, as index investors own approximately 4.8 million shares in CannTrust.
Inclusion in the index is partly based on a company’s public float needing to account for at least 0.04 per cent of the S&P/TSX composite. According to estimates CannTrust’s public float currently accounts for 0.012 per cent of the overall index.
An additional nugget in the article, is that Charlotte’s Web Holdings Inc., is also a candidate for the domestic benchmark. What’s potentially holding the $2.2-billion company? Its operations are almost entirely in the United States. The index typically for Canadian based companies.
It has been a rough few months for CannTrust who was reportedly growing cannabis in unlicensed rooms. They have since had a flurry of executive departures and notices from Health Canada. The stock is entering the trading week down nearly 85% from it’s 52 week high.
Information for this briefing was found via CannTrust and the Globe and Mail. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
SmallCapSteve started blogging in the Winter of 2009. During that time, he was able to spot many take over candidates and pick a variety of stocks that generated returns in excess of 200%. Today he consults with microcap companies helping them with capital markets strategy and focuses on industries including cannabis, tech, and junior mining.