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Trulieve TCNNF Stock short interest sales

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D. H. Taylor
(@dhtaylor)
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Above is the latest chart on the closing price of TCNNF Stock and short interest as a percentage of daily volume for TCNNF.  


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Andrew More
 Andrew More
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I'm struggle a bit to understand this chart since there does not appear to be any legend.  What do the yellow bars and the blue line represent please?


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MIKE LOWMAN
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Stock price (BLUE LINE)

Percentage of short interest per total volume traded (ORANGE)


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Andrew More
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Thanks!


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D. H. Taylor
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@Andrew More Hi Andrew...  As Mark mentioned, the blue line is the closing price.  The yellowish bars are the percentage of daily volume that is short.  Anything above 50% means that over half of the daily volume is short selling.  Typically, anything above, say 5% - 10% - 20% would be normal for some stocks on a daily basis.  The fact that so many of these data points are above 50% is very serious and the reason why stocks continue lower and lower.  You can see some correlation between the movements upward in the individual yellow bars and the blue line being pressured lower.  

Just keep in mind that from a value approach, when these stocks go lower and lower, the amount of value you buy at lower and lower prices increases.  So, if you are trying to get in, you are in luck.  If you are holding stocks, you may feel a bit uncomfortable.  In the long run, value will prevail.  And, these short sellers will get obliterated.  


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Andrew More
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@cannabisinvestingnewsletter Thanks DH.  I'm a lot more used to seeing these numbers as a percentage of float or days to cover so that you can determine how easy it is for the shorts to cover.  Is there a reason why you've chosen to present the information in this manner?

Unfortunately my usual sources of information: Seeking Alpha, Morningstar, Yahoo, etc don't seem to have information on the short interest for this or some of the other stocks you've reported on.  Is there a good place to view this?  I appreciate the work you put into this, but I also like to learn to fish as it were.


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D. H. Taylor
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@Andrew More I wanted to present this in a way that was visual.  If the yellow bar shoots up, theoretically, the blue bar goes down.  I also played with inverting it, but I really felt that would be confusing and I'd end up having to spend all day explaining it to everyone.  

But, the theory should hold: If yellow goes above 50% then price should drop.  So, as these bars head above 50% you should see price pressures lower.  

https://otcshortreport.com this is where I get my info.  


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Andrew More
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DH Thank you for the link, interesting information as always.  Let me attempt to be a bit clearer on what I meant by presenting the info: I'd like to know what percentage of the entire float is currently being shorted rather that what the day to day short vs trade volume is.

These short sale numbers seem crazy high right now, and yet since the volumes aren't super high, the actual numbers aren't crazy high either.

Just as an example, take a single day, say 11/17, you're saying 43% of volume was short selling.  According to OTC Short Report the volume on 11/17 was ~333K, but that's only about 0.4% of the float of 71.79M shares outstanding.  So I see your point about it moving the share price in the short term, but I'm failing to see what it means for the stock overall, in the same way I can see the BBBY is a crowded short, while INTC is not. 

BBBY just had a short squeeze, so I'm wondering if TCNNF is going to be in a similar situation or if this high short volume is a momentary blip, and the overall short interest is still pretty low.


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D. H. Taylor
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@Andrew More Andrew... great questions and you are obviously thinking deeply on this.  Let me give you a running example so you can visualize the process.  

Let's say the bid/offer is $0.99/$1.01 - last price printed was probably $1.00.  If someone shorts with a market order, they are hitting the bid price.  The new price is now $0.99.  If there are 1,000 trades made at 10,000 shares in any one day you are looking at 10M in volume for the day.  If 50% of the volume was short, and 50% was a buy, the price would not budge.  Now, in that same example, if the overall float was 100M shares outstanding, only 10% was traded in one day. The other 90% was in shareholder accounts and they sat on their hands.  

Only the shares traded in any one day is going to move the market at any time.  The other remaining sit back and these shareholders do nothing.  

Given that, I do not know what percentage of the volume is held for any period of time, say 2-3 days.  That is actually important information and I'll have to look around for a site that prints that.  That being said, I'm certain a lot of these short sellers are holding positions overnight.  Given that, this is when a short squeeze would occur because these guys are likely building up huge positions and the stock continually trickles lower and lower... until one day there is some kind of news announcement that pushes a huge rush of bids in to the market.  Then, the shorts have to get out hard and fast.  We saw this happen in February and I fully expect the exact same thing to occur again.


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Andrew More
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DH I believe this answers the question.  According to Market Beat as of Nov 15th 350,800 of TCNNF have been sold short, or about 0.4% of the entire float, and this is a decrease from the previous high of 639,000 shares.

https://www.marketbeat.com/stocks/OTCMKTS/TCNNF/short-interest/

Obviously with these stocks being OTC instead of regular market it's harder to get accurate info, so this might be a bit off.


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D. H. Taylor
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@Andrew More Interesting. 
for anyone else wondering, here’s the official definition:
https://www.investopedia.com/terms/d/daystocover.asp

 


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Mark Barrett
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@cannabisinvestingnewsletter  could Relentless shorting actual cause a company to fail?  It seems these short sellers are trying to destroy these stocks, kind of a self fulfilling protect.


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D. H. Taylor
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@mebarrettyahoo-com I don’t know how a stock price level could potentially crush a company.  The stock price is a reflection of value and investors’ belief in the company.  There is no tying together of debt or assets with the stock price.  Besides, with continued earnings, the eventuality is that a company gets to a size where they eventually start giving back money to investors in the form of dividends.  Given that, retirees would be circling a stock like this like wolves on prey.  

I will say that a very low stock price hinders a company’s ability to acquire new companies via stock since it would be so cheap.  That being said, all cannabis stocks are cheap and therefore you are acquiring cheap stock with cheap stock, so it might wash out.  


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Mark Barrett
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Thx. That makes sense. I guess I was wondering if the low share price could affect their ability to borrow money and also acquire other companies by using stock.  It did occur to me that they might decide to go private if the market failed to value them. 


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Andrew More
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Generally speaking the inability to borrow money, a low share price, and high short interest all go together because a company is struggle in some way.  However that doesn't mean that the short selling is causing the inability to borrow money, and might not be the only reason for a low stock price.

You are correct that a lower share price will make it difficult for a company to raise additional capital by selling shares since they'll have to sell more, or to use those shares to acquire other companies.

The thing you really need to keep an eye on is the debt, and how that compares to revenues, and particularly the free cash flow.  Debt can and will cause a company to go into bankruptcy.

I love this classic Peter Lynch story about a company without debt with a falling stock price.  Actually anything Peter Lynch says is great, and he has the track record to back it up.


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