Video Summary of Contrarian Alert: Short interest vaporizes at MediPharm Labs.

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Watch the video summary of the July 11th INK Morning report. INK Research and Canadian Insider are both subscriber-supported. We do not accept payments from issuers or promoters for stock coverage.

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MediPharm Labs specializes in cannabis concentrates. The stock has seen short interest drop to about 930,000 shares, down from a peak of over 8 million shares on June 15th.  That was two days before the company closed a $75 million financing of 13.5 million shares priced at $5.55.

Although the stock has not closed above that price since May 30th, it now has a positive setup based on our signals.

Ottawa released its rules for cannabis extracts on June 14th.  Five days later, MediPharm announced a deal with Canadian product company Ace Valley to launch a line of cannabis vape pens. The company is hoping that the regulatory hurdles for such products will be cleared by late 2019.

Although regulatory risk are a key consideration for the stock, market dynamics could work in Medipharm’s favour. According to a CBC News report, in California, nearly 25% of legal cannabis sales in 2016 were for vape cartridges.

Meanwhile, Medipharm is working on export markets and on June 24th, it announced its first export shipment of medical cannabis concentrate into Australia under permits.

While the company lost $570,000 in Q1, cash flow from operating activities was $4 million.  Given that we have seen some modest insider buying on the recent pullback, contrarians interested in the marijuana industry may want to put this stock on their radar.

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