I No Longer Like Organigram Stock

Organigram (NASDAQ: OGI) is up a lot in 2024. On 2/23, it closed at $2.02, which is up 54% in 2024 and up more than 100% from the all-time low that was set in October. I loved OGI, writing about it most recently on 12/31 at Seeking Alpha, calling it my favorite cannabis stock. The stock then was $1.31.

I had submitted the stock to a value stock contest in October, writing that it was a great stock for value investors. It was then $1.15. I did not win the contest, but it's up more than 75%!

Of course, I got bullish on OGI a while ago, and wow did I look stupid for a long time. My first article on the company at Seeking Alpha was published in May (ahead of the reverse-split). I called it the best cannabis stock when it was effectively $1.88, just a little lower than currently. It dropped just below $1 in late October.

Here is the chart from the past year:

There is an open gap in trading from last April, which was ahead of that first article. My current target for year-end is about $3, so that gap could get filled this year.

So, if the stock can rally about 50%, why have I exited? Well, in cannabis stocks, which have been in a bear market for three years now, it's best to take gains. In the past, I liked that it was trading below tangible book value, but it trades at about that level now. I have 20% of my model portfolio at 420 Investor in another Canadian LP that is currently 0.4X. This is a lot cheaper!

I like the company, but the stock seems ahead of itself for now. I am quite concerned about Canopy Growth (NASDAQ: CGC) and Tilray Brands (NASDAQ: TLRY), and their weakness could weigh on investor sentiment.

Organigram shifted its fiscal year-end from August to September recently, and this resulted in a strong Q4 due to the extra month. The company reported its Q1 this month, and it looked weak. Revenue was reported at down 21% sequentially and 16% from a year ago, and this was below analyst expectations. The company reported a C$13.1 million operating loss.

The big story on Organigram has been the involvement of British American Tobacco (NYSE: BTI). This company first bought a big chunk of the company at a much higher price in early 2021, but it recently doubled down by setting up a program where it will be buying stock at a substantially higher price than where Organigram was trading when it was announced. The first tranche closed in January, and the price that BTI paid is a little higher than the current price. When the news was announced in late 2023, I was a bit disappointed that BTI was buying some but not all of OGI.

For those who want to stay on top of my views on OGI and other cannabis stocks, the best place to do so is 420 Investor. I recently began offering a sub-service there, The Big Picture. It's less money, and it's a lot less intensive. I offer Top Picks, which number 4. The Canadian LP that I mentioned above is one, and I also have three ancillary companies.