A few weeks ago we covered a teaser pitch for the Irregulars in the Friday File, all about Zack Scheidt’s marijuana tease about an expected takeover for a tiny little Canadian pot stock… and today, as a bonus, we’re opening it up for all our regular readers.
Not much has happened since then — the “secret” stock did release it’s first quarter earnings, with no real news that I noted, and, surprise surprise, the company has not yet been acquired by Anheuser-Busch… though there’s still some time before that June 20 deadline (is there a sarcasm emoji I could insert here?)
The only other thing that has happened is the stock has fallen, so you haven’t missed much on that front — Agora’s attention drove it from $1 to $1.40 or so in pretty short order, and it’s now back just below a dollar.
With that, dear friends, I’ll leave you with my comments from three weeks ago — what follows appeared as part of the Friday File on May 18 and has not been updated or revised. Enjoy!
The teaser pitch in question is from Zachary Scheidt, who has flitted around a bunch of different Agora newsletters over the years — he’s currently helming a service called The Takeover Alert ($1,750/year) and promising that his “M.A.R.K.E.D. Money Signal System” can identify stocks that are primed to be taken over… starting, this time around, with a marijuana stock that he thinks will be bought by Anheuser-Busch InBev (BUD) — with, to get more ridiculously specific, an announcement of this acquisition coming on or around June 20.
Any caveats we should start with? Well, we could go with the old saying, “don’t buy anything just because you think it’s a takeover target.” I’ve heard that bit of wisdom many times over the years, and it certainly makes sense — buy stocks because you think they have great potential, or are trading at an attractive valuation, not because you think you’re about to get bailed out by a higher bidder. Takeovers are notoriously hard to predict or time.
It would be churlish, I suppose, to note that this ad coincidentally has a 30-Day “Golden Parachute” Refund Guarantee that, for today’s customers, would expire just before June 20… but mostly because that guarantee is without teeth in any event, offering no possibility of a refund but only a “you get credit for some other Agora newsletter” guarantee if you don’t like this one during your first 30 days. Sadly, that’s the case for most of the “premium” newsletters, many of them no longer any kind of refund (by “premium” I mean the upgrade letters you’ll be pitched once you sign up for a $49 newsletter, the premium price newsletters, which cost $1,000 and up… they’re not necessarily “premium performance” letters — I often hear from readers that they don’t find the pricier letters to be any better than the “entry level” publications from the same authors).
And, of course, I’d be remiss if I failed to note that any date added to a newsletter teaser has a strong likelihood of being there just to spur you into action — we’ll see if there’s any reason to think that June 20 means anything, but what it probably means is, “the copywriter thought this was a near-enough date that it would get you to cough up your credit card number without thinking too much about that $1,750 price or the lack of a money-back guarantee.”
OK, I know, I’m soapboxing a little there — what we want to know is, what’s this marijuana stock that Zach Scheidt thinks is going to soar once it gets a takeover offer from our Budweiser friends?
So let’s dig in… here’s a little taste of the ad:
“… according to my research (that I want to share with you as soon as humanly possible), Anheuser-Busch has their sights on one specific microcap marijuana company….
“In fact, we could be looking at turning every $2 share into as much as $179. That’s an exceptional 8,850% return!”
And, as you would probably expect, he uses the one public market comparison to get our attention — that investment that Constellation Brands (STZ… owner of Corona, among others) made in Canadian marijuana leader Canopy Growth (WEED.TO, TWMJF)…
“A recent telltale M&A transaction just set the bar for what’s to come…
“Constellation brands, distributors of Corona beer, snapped up an ownership share of the world’s largest weed company, Canopy Growth Corp…
“Investors in Canopy went on to collect a 176% profit – virtually overnight.”
That’s true — and the investment went a long way toward legitimizing marijuana in the minds of many investors. Constellation bought 10% of Canopy, and the stock (Canopy’s) did surge by about 180% between that announcement and the peak in early January — it has come down a bit since then.
More from the ad:
“But what I’m talking about today is a deal in the works that could send a penny stock soaring so high you could literally cash out after June 20th … collect your giant pile of money… walk into your boss’s office and tell him it’s the last day he’ll ever see your face.”
How’s that for manipulating someone’s emotions on a Friday, eh? Stop for a few beers after work, get good and mad at your boss after an awful week, storm over to the computer and say, “take that, boss, I’m spending a week’s salary to buy this marijuana idea and then you’ll be sorry!”
No? OK, let’s see what the stock is… more from the ad:
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“There’s no way to sugarcoat this…
“If the beer industry doesn’t take control of the booming marijuana industry, they’re done for.
“It’s a fact already proven out in the states where weed has been legalized.”
Maybe Scheidt has a different definition for “proven out” or “done for” than I do. It’s certainly true that alcohol companies are thinking about marijuana… maybe even worrying about it as a “risk factor,” as Molson Coors has specifically noted. But it’s pretty early in the game to say that the beer industry is “done for” if they don’t take control of the marijuana business. There’s a more nuanced look at the story here from Draftmag… the upshot, as I read it? “Reports of beer’s demise at the hands of pot are grossly exaggerated.”
Of course, stories about the “death of beer” have been around for a while, and the alcohol business definitely fluctuates, from the craft beer craze to immigration trends, the micro-distilleries and the hipster cocktail bars to the up-and-down wine connoisseurship. I can’t keep track, but as far as I can tell people keep drinking beer, with relatively minor fluctuations and brand flip-flops year to year. In fact, as I put the finishing touches on this piece, I’m drinking a lovely Friday afternoon beer right now. It’s a little odd, a Vanilla Cream Ale that tastes a bit too much like candy, but it’s a far sight better than “bongwater flavor.”
Actually, I’d argue that the real revolution might come with some strong regulation so they finally have to stop labeling Bud Lite as a “beer.”
OK, I know, it’s the most popular “beer” in the country, and I just lost half my readers.
Sorry, you can drink what you want. Or smoke what you want, as long as you don’t stand too close to me.
So what’s going to happen with beer drinkers leaving the fold and going to smoke weed instead? The ad says that…
“BUD is Going to Buy These ‘Average-Joe’ Customers back by Becoming Their Weed Supplier
It’s the biggest no-brainer acquisition of the entire year.”
And we’re told that this deal will be much bigger, relatively speaking, than the Canopy deal…
“… that’s nothing compared to what I see coming for this $2 microcap.
“Because the stake we’re looking at is potentially 10 times bigger…
“See, the Constellation deal was a ‘fractional acquisition.’
“They bought just 1/10th of the marijuana company.
“On top of that, the share price impact we’re looking at is potentially 500 times greater, because our $2 microcap is that much smaller than Canopy.”
What other clues do we get? Apparently this is a