AYRSF - AYR Strategies

[villainx]

https://ir.ayrstrategies.com/news-events/press-releases/detail/61/ayr-strategies-enters-into-agreements-to-expand-footprint

 

Florida!  -  "Liberty shareholders will receive 0.03683 Ayr shares for each Liberty share held1, equating to approximately 13.1 million new Ayr shares. Total purchase price is equivalent to ~US$290 million based on the closing price of Ayr shares as of December 21, 2020."

 

New Jersey!  -  "Total up-front consideration of $101 million includes $41 million in cash, $30 million in stock and $30 million in the form of a promissory note."

[Gregmal]

Today Florida and NJ....tomorrow? The world!

[JRM]

I don't know much about New Jersey, but Florida is a great limited license market, and Liberty is a very solid company. 

[JRM]

The Liberty deal seemed too good to be true: https://seekingalpha.com/article/4396686-liberty-health-sciences-shareholders-want-higher-price

[Gregmal]

Its actually a pretty splendid opportunity. Buy yourself some Liberty shares and worst case is that you end up owning more AYR. Im not sure what the Seeking Alpha author is bitching about. I dont think he mentioned how much stock they controlled, while insinuating they are close to 51%...which leads me to believe its nowhere near 50%. This is a company who just put up sales of 700 ounces in addition to NEO departures...get real.

 

Separately, it does warrant a tad bit of caution IMO seeing how bananas they've gone with the acquisitions. If all plays out as expected its a home run. But its certainly no walk in the park integrating a half billion $ worth of companies in a couple quarters.

 

Disclosure, Ive been buying LHSIF.

[JRM]

Its actually a pretty splendid opportunity. Buy yourself some Liberty shares and worst case is that you end up owning more AYR. Im not sure what the Seeking Alpha author is bitching about. I dont think he mentioned how much stock they controlled, while insinuating they are close to 51%...which leads me to believe its nowhere near 50%. This is a company who just put up sales of 700 ounces in addition to NEO departures...get real.

 

Separately, it does warrant a tad bit of caution IMO seeing how bananas they've gone with the acquisitions. If all plays out as expected its a home run. But its certainly no walk in the park integrating a half billion $ worth of companies in a couple quarters.

 

Disclosure, Ive been buying LHSIF.

 

We can vote our Liberty shares in favor of the merger, then.

[villainx]

Its actually a pretty splendid opportunity. Buy yourself some Liberty shares and worst case is that you end up owning more AYR. Im not sure what the Seeking Alpha author is bitching about. I dont think he mentioned how much stock they controlled, while insinuating they are close to 51%...which leads me to believe its nowhere near 50%. This is a company who just put up sales of 700 ounces in addition to NEO departures...get real.

 

Separately, it does warrant a tad bit of caution IMO seeing how bananas they've gone with the acquisitions. If all plays out as expected its a home run. But its certainly no walk in the park integrating a half billion $ worth of companies in a couple quarters.

 

Disclosure, Ive been buying LHSIF.

 

That sounds like a not awful idea!  It's around buyout value now, right?  So outcomes are either higher bid, goes through, or walk away - respectively, slight sweetening, same, or big minus?

 

I don't really see why folks would vote no if it's stock for stock.  But I guess it's also hard to swallow when cost basis was high.

[willie2013]

Thought this latest earnings call from Cresco Labs (CRLBF) might provide a worthwhile listen to some of you guys here on Greg’s AYR.  Cresco is much more of a wholesaler/cultivation company than a vertically integrated company. The stock looks to be consolidating around $10.  They are building brand and have been able to compete (excel actually) in California, a very mature tough competitive market with numerous competitors.  Their award winnings ads (they are on their website) and gummies from a James Beard winner are also interesting !  I also wonder if the advantage of scale helps them tremendously as far as SG&A % of sales, R and D /Genetics, Gross Margin, Branding, lower execution risk, low cost of production and distribution, ability to attract talent, etc.

 

I now have a basket of Cannabis including AYR (about 18 months late!). GTI, Green Thumb, is one of them.

 

https://edge.media-server.com/mmc/p/srcmxce5

 

[Gregmal]

Its actually a pretty splendid opportunity. Buy yourself some Liberty shares and worst case is that you end up owning more AYR. Im not sure what the Seeking Alpha author is bitching about. I dont think he mentioned how much stock they controlled, while insinuating they are close to 51%...which leads me to believe its nowhere near 50%. This is a company who just put up sales of 700 ounces in addition to NEO departures...get real.

 

Separately, it does warrant a tad bit of caution IMO seeing how bananas they've gone with the acquisitions. If all plays out as expected its a home run. But its certainly no walk in the park integrating a half billion $ worth of companies in a couple quarters.

 

Disclosure, Ive been buying LHSIF.

 

That sounds like a not awful idea!  It's around buyout value now, right?  So outcomes are either higher bid, goes through, or walk away - respectively, slight sweetening, same, or big minus?

 

I don't really see why folks would vote no if it's stock for stock.  But I guess it's also hard to swallow when cost basis was high.

 

Its stupid attention seeking nonsense. You're currently buying LHSIF at loosely a 10% discount to closing exchange. Theres a share conversion range based on the usual shit and you're getting between .0368 and .043 shares AYR per turd share of Liberty you own.

 

I think this is definitely a bit of a reclamation project and am not entirely sure it vibes with Jon's earlier statements about not taking on anyone else's problems. But Florida is a good market and sometimes you have to bite the bullet. I doubt there is a higher bid out there.

[Gregmal]

That 12% note should likely get refinanced soon. Strong showing from AYR at the polls yesterday.

[JRM]

"were's my money" Mitch is (likely) on his way out.

[villainx]

https://ir.ayrstrategies.com/news-events/press-releases/detail/65/ayr-strategies-announces-pricing-of-offering-of-equity

 

?

[Gregmal]

Yea they "dont need it" but want it anyway....odd.

 

Dont get me wrong, I'm all for raising $100M just like that. But it just goes to show what a waste of time the 12% note is. The purpose of that was not to dilute! Now they dilute, just cuz. If they are excited about what the election brought, wouldn't that also likely include financing at reasonable rates?

 

I think the widespread legalization also speeds up a lot of the risks too. I still like this a lot, but have swung some shares to Liberty which is just a cheaper conversion. Notwithstanding, valuation is also quite different than it was a year or even 6 months ago.

[movys]

Yea they "dont need it" but want it anyway....odd.

 

Dont get me wrong, I'm all for raising $100M just like that. But it just goes to show what a waste of time the 12% note is. The purpose of that was not to dilute! Now they dilute, just cuz. If they are excited about what the election brought, wouldn't that also likely include financing at reasonable rates?

 

I think the widespread legalization also speeds up a lot of the risks too. I still like this a lot, but have swung some shares to Liberty which is just a cheaper conversion. Notwithstanding, valuation is also quite different than it was a year or even 6 months ago.

 

Georgia changed everything because the Senate went blue.  There are a few reasons for why this move actually makes a lot of sense right now.  Every industry development has been accelerated and the land grab urgency factor just went a lot higher.  You can expect AYR to increase their footprint in existing markets on an accelerated timetable and possibly to expand into NY or IL with another acquisition, despite Sandelman's comments on the Liberty deal call about taking a break (this was pre-Georgia).  Yes, they could probably finance with more debt and could always call the warrants, but issuing equity was faster, makes room for more long-term, supportive institutional shareholders, and increases the float, which has been a problem.

 

I was told the largest buyer in this (3x oversubscribed) deal is an institutional investor that is totally new to cannabis.  I was skeptical about this offering at first but having spoken with mgmt about it I am confident they will find a very useful place for this capital.

[willie2013]

I’ve seen this shared publicly in a couple of places and it mentions AYR:

 

https://drive.google.com/file/d/1gyzNcRkFS5bbfSSvJX3bvNwvmXvE9cQL/view

 

-willie

[willie2013]

Canadien LPs are ridiculous:

 

$SNDL MC = $3.63B

Last Q Sales = $10M

Last Q Net Loss = $56M

90x t sales & 50x fwd sales

Neg. t & fwd EBITDA

 

$AYRWF MC = $2.57B

Last Q Sales = $45.5M

Last Q EBITDA = $19.3M

14x t sales & 3.5x fwd sales

33x t EBITDA & 8.5x fwd EBITDA

 

 

[rkbabang]

Canadien LPs are ridiculous:

 

$SNDL MC = $3.63B

Last Q Sales = $10M

Last Q Net Loss = $56M

90x t sales & 50x fwd sales

Neg. t & fwd EBITDA

 

$AYRWF MC = $2.57B

Last Q Sales = $45.5M

Last Q EBITDA = $19.3M

14x t sales & 3.5x fwd sales

33x t EBITDA & 8.5x fwd EBITDA

 

Maybe Ayr will get more love with the name change.

 

Ayr Strategies Announces Corporate Name Change to Ayr Wellness

https://ir.ayrstrategies.com/news-events/press-releases/detail/68/ayr-strategies-announces-corporate-name-change-to-ayr

 

 

 

[JRM]

The name change should add a couple billion to the market cap. 

 

Thanks Gregmal for a hell of a pick.

 

My Liberty shares are up around 40% which is nuts for a merger-arb.

[willie2013]

Is Greg still in timeout? He got me interested in Cannabis investing last year and it has turned out well so far.

[spartansaver]

Is Greg still in timeout? He got me interested in Cannabis investing last year and it has turned out well so far.

 

Ha I did very well on this one as well. I greatly appreciate the name. Sadly I sold my stake at 19.

[rkbabang]

I didn't really think it was in doubt, but since I had converted about 25% of my AYRWF holdings to LHSIF to arbitrage the price difference it's good to know it passed.

 

Liberty Health Sciences Shareholders Overwhelmingly Approve Acquisition by Ayr Wellness

https://ir.ayrwellness.com/news-events/press-releases/detail/69/liberty-health-sciences-shareholders-overwhelmingly-approve

 

[Gregmal]

Just an updated that Ive closed this out. Was a great run, the company still seems to be in great shape, but the crux of my investing is based off grabbing easy money with margin and managing risk. This type of stuff always seems to trade more on momo than fundamentals, and I continue to be bearish on tech/momo stuff which there is definitely a correlation to here. My concerns with AYR really would come down to growing pains, too much expansion and subsequent competition, and now felling the pains of inflation. If I had to guess I'd say its still probably OK as a long here, but I dont have to guess and just rather book a nice gain and raise liquidity. Best of luck to all still here. 

[villainx]

1 hour ago, Gregmal said:

Just an updated that Ive closed this out. Was a great run, the company still seems to be in great shape, but the crux of my investing is based off grabbing easy money with margin and managing risk. This type of stuff always seems to trade more on momo than fundamentals, and I continue to be bearish on tech/momo stuff which there is definitely a correlation to here. My concerns with AYR really would come down to growing pains, too much expansion and subsequent competition, and now felling the pains of inflation. If I had to guess I'd say its still probably OK as a long here, but I dont have to guess and just rather book a nice gain and raise liquidity. Best of luck to all still here. 

Thanks!

[JRM]

Thanks again for the thread.  I've also trimmed my position substantially, my cost basis was below $8, and I have about 1/4 of my original position now.  I'm not a very good momentum\technical trader, but the chart seems to be screaming pretty loudly that the momentum (may) be broken.  The 10 week SMA has held support pretty well during the run, but now it seems to be resistance.

 

[Gregmal]

I think theres also the risk that last year stunted growth opportunities for new businesses, inflated pricing power, and forced people to take what they can get; all benefiting AYR. As things open up, and especially with blue wave, the initial thought is this benefits pot co's and AYR too which may be true. But it also encourages new competition, and if you add inflationary pressures to the mix, you could see negatives in terms of pricing power and then combine this with operational cost increases, its a big headwind. 

 

The positive is AYR is very much ahead of the competition. They've demonstrated excellent business execution. Perhaps not great, but satisfactory discipline with the acquisitions, and the valuation isnt crazy. Its just not a no brainer to me anymore.