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UPDATE: Day of the double: Organigram and Bedrocan list with massive price hikes

Chris Parry Chris Parry, Stockhouse.com
9 Comments| August 25, 2014


It's not often you can say that a stock will almost definitely double in the morning, but today's one of those days when the planets did align and the investors went nutty and if there wasn't some doubling going on early, it would be a case of going against all conventional wisdom.

The level of buying demand waiting for Ogranigram (TSX:V.OGI, Stock Forum) and Bedrocan (TSX:V.BED, Stock Forum) as they listed Monday made a quick two-bagger for each an almost dead set cert - in fact, we called it and nailed it.


Bedrocan shot up to $1.40 before settling back to $1.27 on 3.5m volume, while Organigram blazed to glory, hitting $2.40 on decidedly lower volume but with many less shares outstanding, before settling in around $1.90.
 

Of course, most of the activity on those multibaggers came in the opening minutes of trading, and with the vagaries of Canadian trading as it stands, some found themselves unable to hit the new tickers in the opening minutes. 

 

When Tweed (TSX:V.TWD, Stock Forum) hit the markets several months back, it was a similar situation: Intense interest in the financing before the listing leaving some big players outside the deal, with those big players opting instead to just buy as much free trading paper as they can get.

 

In Tweed's case, the stock was financed at $0.84, and quickly jumped to $4.50+ when the light went green on opening day. It didn't stay there, soon dropping toward $3.00 in the weeks after, and $2.60 today, valuing the company at more than $100 million.

 

At that time, just as today, a lot of traders simply couldn't get on. It takes time for financial data to make its way through Canada's trading dashboards and media outlets, and so some (like me) tried and failed to get on that streaking train before the handbrake was pulled. Reports on the Stockhouse Bullboards of trades erroring out and of some not being able to see the tickers on their trading platforms until business was well underway were plentiful.

 

Brokers were telling me they've got clients very sore at missing the Organigram private placement, which sought to raise $5m for the company but got closed off at $7.5m, leaving another $15m untapped. A lot of that money was in the market today, while the PP cash is locked in for four months. 
 

Add to the interest levels: Both companies are launching on the TSX Venture Exchange, not on the CSE, where 97% of the sector has taken shelter from stompy regulators and their insistence on change of business trading halts. This opens them to some US investors and the stronger possibility that institutional investments will be made.

 

Adding to Organigram's likelihood to maintain momenutm is that their organic offerings (Organigram is Ecocert certified) and the strong exposure of the company to the Maritimes, where it's based, and Quebec, which will appreciate the company's true bilingual nature, give the company solid differentiators from the other 12 licensed producers (only one of which was publicly traded before today).

 

Bedrocan is no distant second, being as it is the medical marijuana supplier to Europe. The Canadian end of the company doesn't have a functioning grow house yet (coming by year's end they say, and 50k sq. ft when it lands) but has been given government permission to supply the local market with imported Dutch medicines, something no other LP has the benefit of.

 

Bedrocan will have a monster war chest to play with, so when it decides to open a grow, that grow will be up quickly and efficiently, and will no doubt produce. The Dutch parent will send over master growers galore and a grow plan that has been battle tested. The company says it has 1100 patients already.

 

Organigram will also have mondo cash to play with, with a lot of that financing mentioned earlier going toward expansion, what with the company having sold out of product to this point.

 

Writing last night, I said that I could see the sector taking a big dip on the day, as others clear the books to try to get in on the roll out. "Tweed will also likely take a hit, and will need to get seriously competitive going forward to hold what it has," I wrote. That appears to have happened, but not to an overwhelming extent.

 

My pick of the two was Organigram.

"As for which to buy at the open: My preference, if I had to make a Sophie's Choice, is Organigram. In fact, I'll be looking to buy early if I can get near it at a reasonable price (which, to me, is anything up to $1.50). But if you're not finding value in one, you won't go far wrong jumping to the other. Organigram is the 'today' play. Bedrocan has some 'tomorrow' in the mix."

 

There are more LPs coming to the markets in the weeks ahead (Mettrum, Aphria, Thunderbird), but this is D-Day. This is when the institutions will join the weed sector, and those with legitimacy will begin the long march forward while the distance between them and the pretenders starts to get obvious.

 

Never again will we hear those eye-roll inducing words, “compared to Tweed's market cap” when a new weedco lists. There's a new standard. Two of them, in fact.

 

FULL DISCLOSURE: Organigram is a Stockhouse Publishing client.



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Comments

hedgefundguy01
Good luck with that buy at $1.50 at the open maybe you lucky to get a few at $2.00+ is it worth it ? With all the promo and pumping going on here on stockhouse where every Tom,Dickk and his dog tells you IS A EASY 100% PROFiT$$$$$$$...... Will see today and over the next few days how easy it is have a great day and good luck with your 100% profit today
2 stars
August 25, 2014
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Tweedlede
The one thing I keep hearing over and over is "Tweed". Price flucuations are expected. All this media hype from these two companies going IPO wil be invariably compared and contrasted to Tweed. It just shows the power of first to market advantage as far as branding goes. Good luck to Bed and OGI investors. My warhorse is already on the front lines .
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August 25, 2014
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G4General
Stockhouse to update their information. The share outstanding for BED is not 3 million and OGI the shares outstanding is not 8 million....LOL. Pass that along Chris Parry.
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August 25, 2014
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Investech2
I believe Bedrocan is a far superior company with 10+ years experience in Europe and building a solid new foundation in Canada. Bedrocan has an excellent Medical Advisory committee and bi-lingual Board of directors with depth and industry know-how. Organigram has yet to prove themselves. My money's on Bedrocan!
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August 25, 2014
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TechDrive
I agree Chris Parry has some beef with Tweed. Everyone knows if your company does not subscribe to Stockhouse, they only say bad things about your firm. I wonder if Tweed subscribes to Stockhouse? Most likely based on Parry and his unsubstantiated comments I would say no... Comic relief, that's all his articles are....and pretty much everyone in the industry knows that. He is a self proclaimed medical marijuana journalist.
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August 25, 2014
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G4General
More like 50% drop. tweedv TWD.v IPO was $4.75 and look at it now down to $2.50
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August 25, 2014
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WolfOfWeed
If you call this " MASSIVE BUY DEMAND" with volume of OGI not breaking 100,000 that is scary. I thought Brokers wanted OGI.
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August 25, 2014
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G4General
the only sure way to get 100% return is by being apart of the PP. That is how you are insured to get 100% return on IPO day. I.e. OGI.V Ogranigram had raised funds at $0.85
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August 25, 2014
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clm128
mr. parry if your going to predict the past at least predict it right. dont twist your words because what you meant yesterday was a double after open not a double for the people who did the pp. if you bought in this morning you lost (hopefully just for the short term), plain and simple.
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August 25, 2014
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