Video Summary: Short and insider selling add up to a rainy period for HEXO

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Here is the video summary of the July 10th INK Morning report describing a bearish set up for Canadian marijuana grower HEXO. The report and video were distributed to INK subcribers on publication day. The report is not a recommendation to buy or sell securities.

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The stock of Canada-focused cannabis company HEXO has been coming down to earth recently, off about 20% over the past three months. Short interest in the stock peaked in mid-April, right before HEXO hit its all-time high of $11.29 on April 29th. Although some short sellers have covered, short interest remains high.

INK short signals suggest a bearish stock set up based on large short selling and low levels of insider commitment as measured by our quantitative rankings.

Between April 10th and May 13th, on balance insiders sold $20.6 million worth of stock in the public market, net of option exercise costs.

On June 12th, HEXO reported [product] sales excluding excise tax rose of $13 million for Q3, up 945% from Q3 2018. However, the company still reported a loss from operations of $2.2 million.

Meanwhile gross margins before fair-value adjustments fell to 50% from 61% the year before.

HEXO is aiming for full production capacity of 108,000 kg annually. Will larger capacity yield budding profits growth? We will be watching insiders for clues.

The next time insiders are in the public market, some buying with conviction could help roll away the storm clouds hovering over the stock.

Get our full report through or via the Canadian Insider Club and always consult your registered investment advisor before investing. Good luck friends and thanks for listening!

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