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Brett Schafer

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13 Oct, 12 tweets, 4 min read

Today's 10-K, another cannabis company, Aphria $APHA.CA:

1. Aphria is another Canadian grower/seller of cannabis brands. They focus on adult-use and medical products

2. Here is the company's CEO, Irwin Simon. Notice how it says "interim."

That is because in 2019 the old CEO had to step down after battling with short-sellers, among other things

The company still hasn't found a permanent leader

marketwatch.com/story/ceo-of-c…

3. The company grows cannabis at its "Aphria One" greenhouse, which has a capacity of over 250,000 kg as of the 10-K release

mjbizdaily.com/aphrias-flagsh…

4. Aphria has operations in Europe and Africa as well, and is slowly moving into the U.S. as things get legalized

5. Some more notes on Aphria One, since it is super important for Aphria:

- Over $250 million spent on it
- 90%+ of the company's capacity
- "state of the art automation"

6. Aphria invested in "Aphria Diamond," and owns 51% of the company. They use the businesses to accelerate greenhouse production by splitting costs but then getting the majority of profits up to the parent company

7. Aphria is waiting for federal legalization to go full-steam ahead in the United States

8. Aphria is growing revenue rather quickly, as they are in a heavy investment/start-up phase

9. Here is Aphria's debt obligations over the next five years (looking from end of FY 2019). Not bad but probably will get larger as they continue to invest

10. Here is a look at their current assets as of the end of 2019. They've raised a considerable amount of money and are deploying it quickly

According to Koyfin, Aphria has an enterprise value of $1.35 billion and an EV/sales of 4.2

If they can continue growing at a rapid pace and achieve a decent ROIC, this could be an interesting investment to take a look at

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More from @CCM_Brett

Brett Schafer

@CCM_Brett

14 Oct

@chitchatmoney

On yesterday's @chitchatmoney I talked about this @mjmauboussin essay on the role of intangible investments:

morganstanley.com/im/publication…

Here are some further thoughts on the topic⬇️

Quick aside: if you want to hear the author talk about the essay at length (and definitely do a better job of explaining it than I ever could), listen to his appearance on Invest Like the Best

open.spotify.com/episode/1dGqfl…

1. As most of us know, a lot of factors go into what future Free cash flow (FCF) for a company will look like.

Most of these factors are out of our control though

Read 18 tweets

Brett Schafer

@CCM_Brett

12 Oct

Today's 10-K: Cronos Group

1. was founded in 2012 in Ontario, Canada. It trades on the Nasdaq and Toronto exchanges

They describe themselves as "an innovative global cannabinoid company"

2. In the U.S. they have the Redwood brand, a company they bought out that is focused on hemp-based products (not under the schedule 1 scrutiny)

Read 12 tweets

Brett Schafer

@CCM_Brett

26 Sep

$SFIX 10-K out recently. Some interesting tidbits I found:

- Stitch Fix is less than 10 years old and only available in the U.S. and U.K.

- First new product outside of Fixes (Direct Buy) is barely one year old

- "We believe that an intelligent combination of data science and human judgment is required to deliver the personalized retail experience that consumers seek."

- The specific term "data science" is mentioned 25 times in the 10-k

Read 9 tweets

Brett Schafer

@CCM_Brett

24 Sep

A good theory I heard was "investing in companies you think are inevitable."

I think a better revision may be: "Invest in companies you think are inevitable but the market doesn't understand"

for example, my top investment from a dollar-return basis has been Square

I believe this is because the market misunderstood what the Cash App was and its inevitability as the "go-to" finance app

chitchatmoney.com/cash-app-is-go…

Another permutation of this is: you think the company is inevitable, but the market understands this too. This can lead to meager future returns

I think is a prime example of that right now (although I've been wrong on them in the past)

Read 4 tweets

Brett Schafer

@CCM_Brett

24 Sep

A thread of companies that spent more on capex than in 2019:

(reminder, Tesla is supposedly currently disrupting the entire auto market, semitruck market, lithium battery market, solar market, and is the leader in FSD)