Shareholders in cannabis firms are anxious about their investments, the profits and the coverage of them. It is seen as riskier than most investments because there is no historical data to track and because it is likely, in an emerging market, that there will be some great successes and some spectacular failures. In fact, according to a recent internal e-mail viewed by The Globe and Mail, TD Bank is discouraging clients from investing in the marijuana sector. The bank is prohibiting its financial advisers from pro-actively adding most cannabis shares to clients’ investment accounts.
But, spurred on by online conversations with investors on Reddit last month, several were quick to criticize The Globe and Mail’s coverage of one company, Aphria, which was buying a smaller cannabis firm, Nuuvera.
A few of these shareholders and interested parties wrote to me to complain that three recent articles about the deal were unethical for, in their words, “attacking” Aphria. One quoted the words of The Globe’s Code of Conduct, which says “the credibility of content rests on solid research, clear, intelligent writing and maintaining a reputation for honesty, accuracy, objectivity and balance.”
What riled them most was that The Globe covered a report posted initially on an investing forum site that raised red flags over the purchase of the smaller company by Aphria. While the author of this online report was not listed, The Globe’s capital markets reporter Christina Pellegrini found out it was the chief executive officer of a U.S.-based hedge fund research firm. She spoke to him on the record and included his criticism of the deal, mainly that Nuuvera had – in his words – almost no revenue. Her report appeared online the day after the investing forum posting. She also tried to reach Nuuvera but their representatives did not respond to multiple e-mails and voicemails.
Covering the criticisms of short-sellers is not unusual in the Report on Business. While they might profit from a lower price, they can point out flaws that the investor should know about, as long as their motive as a short-seller is included. And the fact that the person was a short-seller was clearly stated in Ms. Pellegrini’s article so all could judge any potential bias.
In just one month, there were many stories quoting short-sellers on Tesla, Shopify, Maricann Group (medical marijuana), Sino-Forest and Netflix.