Sunniva (CSE: SNN) stock rallies
Recently, Sunniva dominated my inbox with negative questions. This week it is just the opposite. I received several emails asking about the rise in the stock price last week. There were a few rumours making the rounds. One involved a story that SNN was negotiating a large financing with a leading Canadian cannabis brokerage firm. Another speculated that SNN was being taken over by an opportunist company that wanted to take advantage of a depressed price. What’s going on?
Many readers asked essentially the same question.
It was quite a positive week for Sunniva (CSE: SNN) (OTCQB: SNNVF) as the stock rallied mid-week for no apparent reason and closed out the 4-day week with a gain of 32%. The two main stories making the rounds were a potential takeover offer and a large financing being negotiated with Canaccord.
In tracking these “stories” down, I traced them back to the more popular Bulletin Boards for Sunniva. These so-called “Bull Boards” (this name acknowledge the nature of information published there), allow people to express their views on a company and on many occasions vent their anger and hostility. As I noted last week, people often don’t see things as they are, they tend to see things as they are.
In some cases and others might argue in many cases, the Bull Boards initiate unfounded rumours that hurt unsuspecting investors. I have seen instances when a well-known naysayer will get on and start a negative rumour about a company. As others jump onboard and spread the false story, they encourage others to sell their holdings. This figment of the imagination gets picked up and spread until it gains momentum. Investors who sell their shares based on the “news” can lose out because eventually the rumour proves false and the stock goes back up.
Sometimes, it happens in the other direction and this is the case with Sunniva.
I was able to connect with Dr. Anthony Holler, Chairman and Chief Executive Officer. Holler said that there was no current takeover offers he was aware of although there had been casual informal chats in the past. In his opinion, the company is not for sale at current levels. It is possible, of course, that a takeover could happen in the future but it would probably come when the company was far more developed and the stock price was a much fairer representation of Sunniva’s potential value.
I don’t think a takeover is likely in the near term. Of course, in the world of cannabis things can change in a heartbeat but there appears to be nothing in the works at this time and an offer would likely be rebuffed by management at or near current stock price levels.
With respect to the financing Holler was quite clear that no financing is being negotiated with Canaccord. He stood by the earlier statement that management has been doing contingency planning regarding financing and this discussion has covered a wide range of possibilities. Sunniva is very aware of the need to avoid dilution and has and will take every opportunity to protect shareholder interests.
Our conversation quickly turned to other matters, namely, the closing of the sale of the Okanagan Falls property. As there is only one week left to the middle of September, there is only one week to go on their self-imposed deadline. Given that last week included the Labour Day holiday, I might be inclined to give them until Monday, September 16, 2019. In any case, Holler indicated they are on the home stretch and have every expectation of meeting the current deadline.
With respect to the sale of Natural Health Services, Holler indicated that he expected to have something constructive to report in the not too distant future. Those of you who know Tony understand he is always upbeat and enthusiastic and he convinced me that the sale of NHS was proceeding in a positive manner.
My takeaway from SNN last week is the market action is indicative of a stock that is oversold and looking for a reason to rally. In addition, if Dr. Holler with Wilkerson and Lyle are able to take the Business Plan to a successful conclusion, I think the value will be much higher than the stock price reflects today.
I am still waiting for the OK Falls sale to close and it shouldn’t be too long now. This will be the first step in the management group restoring investor confidence which I believe can happen in fairly short order. Sunniva shareholders finally have something positive to look forward to.