Short-sellers appear to have covered their positions in Canopy Growth Corp. in droves last month after news that the Canadian pot producer had lined up a multi-billion-dollar investment from U.S.-based alcohol giant Constellation Brands Inc.
Canopy Growth closed at $32.15 on August 14 in Canada. The stunning $5 billion investment by Constellation Brands was announced the next day. Yesterday, it closed at $68.83. That's a staggering 114% increase in just three weeks! Retail investors are buying. Institutions are buying. Shorts, of course, are scrambling, cursing, and buying.
The deal was announced on Aug. 15, when the short interest in Canopy was approximately 19.3 million shares, the IHS Market numbers show.
That figure began to decline noticeably in the days that followed, reaching as low as 10.4 million shares, the lowest level since February.
The legalization of recreational marijuana in Canada will be on October 17.
Prediction: Emotional noobs, traders, and shrewd opportunists push the stock prices higher in the cannabis sector followed by an epic crash at the end of October.