Truth Seeker

Politics & Stocks Nut. Views are my own and do not represent any financial advice. Please do your own due diligence.

[Truth Seeker @PoliticoStocker]

1/ $GRUSF: The takeaway from today's results—IF they didn't add back $1.9M of magical "other income" to EBITDA, their EBITDA is down a whopping 72% vs the 9M avg.

For 9MFY24, other income was $51K. In Q4'24, it jumps to $1.9M. What exactly is this other income? (1/n)

[Pablo Zuanic @420Odysseus]

Live on Z&A: Shane Pennington on Rescheduling @BlankRomeLLP @admindotlaw #cannabis #Schedule3 https://t.co/Z6NUf2LFKM

[Truth Seeker @PoliticoStocker]

@420Odysseus @BlankRomeLLP @admindotlaw The cannabis industry is so fortunate to have a smart, straightforward and articulate person like Shane and his former partner Matt Zorn.

I always appreciate hearing you both speak on pretty much any issue. Thanks guys and keep up the good fight!

[Truth Seeker @PoliticoStocker]

@cupofcoffeecap Lastly, the rest of the universe trades at much lower multiples despite for some 40-80% of EBITDA being from medical states that have inherent growth in them. Should none of that be priced in? But it should be for this company?

[Truth Seeker @PoliticoStocker]

@cupofcoffeecap On your first point. Consider this (i) We have an insider sale of a significant minority position at a $10M valuation for their MI asset and (ii) you’re valuing it at 11x EBITDA on peak EBITDA from NJ.

I’ll let you use your own judgement to decide what’s fair or not.

[Truth Seeker @PoliticoStocker]

@cupofcoffeecap Yes, your second point is fair. It’s unclear what the realizations are. I’d say between $2k-$2.5k (their A flower price).

[Truth Seeker @PoliticoStocker]

@cupofcoffeecap To be clear, $GRUSF trades at 25x EBITDA today and at >11x EBITDA INCLUDING full build out of NJ, full sell-through of NJ at a $2k wholesale price per pound. None of those things are true today. Dividing their NJ revenue by pounds produced shows a ~$1,800/pound realization.

[Truth Seeker @PoliticoStocker]

@cupofcoffeecap Haha, I like your responses. At best its "partially made up slop".

[Truth Seeker @PoliticoStocker]

@fatehsmann So, how did he arrive at the fact that Michigan decline despite significant higher production and lower COGS was due to pre roll pricing? It also doesn’t negate the fact that on a blended basis pre roll is a tiny portion of the business so price would have to decline >50% QoQ

[Truth Seeker @PoliticoStocker]

Who is this guy? He constantly DMs me and then makes up stuff trying to mock me. Please get your facts straight or maybe just keep it quiet when you're faced with the task of being honest about a highly illiquid holding that is your entire fund, I don't expect anything unbiased.

[Jerry Derevyanny @JDerevyanny]

@PoliticoStocker A Flower pricing was flat QoQ, not all pricing. Pre roll and other pricing was down, which explains the rev/aEBITDA reduction. No "massaging" or "reallocation" tin foil hat required, just take a quick look at the financials.

[Truth Seeker @PoliticoStocker]

@JDerevyanny Based on production data, NJ realizations are ~$1,800 per pound. At least 40% lower than what your buddy at the other fund was parading to the public as "simple math".

[Truth Seeker @PoliticoStocker]

The fundamental issue is three fold: 1. With $9M in cash, they cannot afford to build out these states without an addiitonal fundraise, so need to keep pitching the future to raise current $'s. $GRUSF

[Aaron Edelheit @aaronvalue]

Great news today from $GRUSF. The company through its director of cultivation won a license in Minnesota! This market alone with $GRUSF's cost structure could be worth more than the entire market cap. How do I come up with that?

[Truth Seeker @PoliticoStocker]

@JDerevyanny On the call, they mentioed how NJ was going slower than expected. So, I don't even see how my statement is controversial. NJ realizations can be backed into with prod data, would be better if we had sales data, which we don't, despite your insincere attempt at mocking me.

[Truth Seeker @PoliticoStocker]

To help you further, it is page 15 of the MD&A filed on Sedar.

[Truth Seeker @PoliticoStocker]

Just open the filings of your holding once in a while:
1. Pre-rolls is <15% of their business so its wtd avg cannot mathematically impact MI as you describe and 2. Hilariously, they disclose pre-roll pounds sold and revenue so you can calculate ASP, which INCREASED QoQ by + 3.2%

[Truth Seeker @PoliticoStocker]

I would argue that the "flywheel" was entirely made up slop to help fundraise and it seems the goalposts keep being moved to "new states" when the company cannot realistically fund those on the timelines stated.

[Truth Seeker @PoliticoStocker]

Last point $GRUSF. Bulls never talk of valuation or impending dilution. Co. trades at >11x EBITDA if i assume full build out & sell through of NJ & 70% allocation to GRUSF (~$9M EBITDA) and annualize base-business EBITDA ($2M with corp o/h). Also has no 280E benefit from resched.

[Truth Seeker @PoliticoStocker]

The flywheel was super exaggerated and the stock is back to trading at a nosebleed valuation.

[Truth Seeker @PoliticoStocker]

3. COGS numbers seem massaged. Costs are being reallocated to corporate to show better state numbers. Here's a clue: despite QoQ flat pricing in Michigan. +15% higher production and -14% stated "costs". EBITDA in the state declined -14.5% and revenue -9%. How is that possible?

[Truth Seeker @PoliticoStocker]

2. NJ, arguably least competitive state in the US, has had an extremely slow ramp, poor sell-through (they don't disclose sale data only production) and much worse than expected realizations. Expect worse in other states. Also, pls adjust for them owning only 70% at best of NJ.