Khiron's (TSXV: KHRN) stock price declining, fundamentals improving

A question I receive regularly these days is “What’s wrong with Khiron?” I could actually switch any of the six or eight names I am associated with into the question but I was fortunate to have a chat with Chris Naprawa, President of Khiron (TSXV: KHRN) on Sunday. So let’s discuss KHRN.

One of the things Chris Naprawa and I share in common is many years of stock market experience. So I agree when Naprawa expresses the opinion that recent events including the firing of Bruce Linton from Canopy Growth and the discovery that CannTrust was growing illegally for six months have triggered a serious loss of confidence among less experienced cannabis investors. Cannabis investing is governed by the same general rules as any other relatively new, growth industry. What we see today in cannabis happened in the resource stocks and the technology stocks in the past as well.

Old misinformation such as lack of registration of seeds with the Colombian government are making the rounds again. Last week there was a new story that KHRN was mixing Vaseline into their products in Mexico. This was particularly ridiculous because right now KHRN does not have products in Mexico. Unfortunately, disinformation of this sort can result in the stock price being knocked down and the people who are hurt are often smaller, less experienced investors who are panicked into selling.

Here is Naprawa’s summary of how Khiron is poised at the present time:

1. KHRN is focussed on execution and building the business. This is what they have always done, what they will continue to do and it is happening.

2. KHRN is extremely well funded and will not have to issue shares to raise money in the foreseeable future.

3. KHRN’s operations have never been healthier or stronger and revenues are growing.

4. Market weakness has the effect of eliminating or reducing competition and making acquisitions cheaper. Given their position, it is working to their advantage.

Khiron will be issuing a full operational update shortly. Here is a quick summary of some of the things I think they will say:

• Commercial cannabis production will begin in the third (current) quarter.

• Medical cannabis distribution set up with over 900 locations.

• Cultivation capacity now in hand for Colombia, Uruguay and Chile

Naprawa’s thoughts on the stock market are very much in line with what I have been saying over and over. KHRN is a leader in cannabis in Latin America and that is only going to get better. Markets like this create opportunities for KHRN and they are working actively to take advantage of them. These are not the ingredients that should make investors panic and sell. Any company, including KHRN, where the fundamentals are improving and the stock price is declining is creating an opportunity to buy.