The White House Is Paying More Attention to Cobalt Than Investors

Shareholders of First Cobalt – FCC-TSXv/FTSSF-OTCQB are like the Fram Filter man – they can get paid now, or they can get paid later.

I think they could get paid now because FCC owns the only cobalt refinery in the world that’s idle – outside of China, up in the small town of – where else – Cobalt Ontario.

It’s permitted, and has been independently appraised as being worth USD $80 million – which would be $104 million in our discounted Canadian dollars. Compare that to the company’s market cap of CAD$43 million.

CEO Trent Mell believes that for a $30 million investment… this refinery can be quickly cranking out $25 million in cash flow at a USD $30/lb cobalt price – that’s just over a one year payback.

Even at current prices that are bouncing around $20/lb (and viewed as unsustainable) the payback on getting this refinery up and running is just two years… a no-brainer kind of return.

I tell all my OGIB subscribers – juniors in oil and gas must have one year payback on their assets for them to grow within cash flow. Oil wells decline quickly. But this refinery will keep on chugging out huge profits year after year with no decline.

USD $30 per pound is the consensus analyst view for medium term cobalt pricing although some analysts see quite a bit higher.

A lot of mining projects go into production with just 15, 20% IRR. This refinery is going to have like 100% IRR – 50% in the worst case.

So while the numbers work great, the strategic value of

  1. having a permitted asset inside North America
  2. for a commodity dominated by China and the DRC – Democratic Republic of the Congo (can you say “supply risk”?)
  3. in an industry (Electric Vehicles) that’s growing around the world very quickly

adds an incredible amount of intangible value the Market isn’t pricing in.

Investors aren’t recognizing this, but the American government is. They put out a personal invitation for CEO Trent Mell to visit the White House in Washington D.C. to help them better understand what the US could do to secure a domestic supply of cobalt – as they have a growing deposit in Idaho.

That’s what I mean by shareholders getting paid later. Getting the refinery into production ASAP would pay shareholders now – getting the Idaho asset developed & ready for mining – with the strong backing of the US government – means they get paid later.

The White House Is Paying Attention – Even If Investors Aren’t

The US government is clearly concerned about domestic supply of critical minerals – including cobalt. So when Mell told me he took a trip to the White House for a conversation with the President’s national security advisers – I wanted to speak with him right away.

It isn’t every day that I get to speak with someone who has done that!

The obvious question is why is it that the White House is interested in a $50 million company like First Cobalt?

Well, it is for the same reason that Simon Moores of Benchmark Mineral Intelligence appeared before the US Senate Committee on Energy and Natural Resources last week – the US Government is quickly figuring out that the country is heading towards a major problem.

That problem – as described by Moores to the Senate Committee last week – is:

“We are in the midst of a global battery arms race in which the US is presently a bystander.”

The US is woefully behind in getting ready for the future of transportation – Electric Vehicles.

During his testimony Moores revealed that he is now tracking 70 lithium ion battery megafactories under construction across four continents. Forty-six of those are based in China with only five now planned for the US.

When Moores last provided testimony to the Senate in October 2017 the global total was at 17 – so it has increased fourfold in 15 months globally while nothing has happened in North America.

Why is this a big problem?

Because right now it looks more and more like the 21st century will belong to lithium ion batteries. The power in the auto and energy storage industries is going to belong to those who control both the raw lithium ion battery materials and the manufacturing know how.

China is miles ahead in securing the supply of lithium, cobalt, nickel and manganese to produce lithium ion batteries. As of today the US has a minor to non-existent role in most of the key lithium ion battery raw materials and only has a presence in lithium ion battery manufacturing via Tesla and its Gigafactory.

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The U.S Government is recognizing that country is almost comically behind in this critical race… and that this has to change and it has to change fast.

A Domestic Source Of Cobalt Is Mission Critical

Cobalt is a critical safety component of the lithium ion battery. The US currently has virtually no control over the entire cobalt supply chain.

In his presentation to the Senate Committee Mr. Moores said that cobalt… “is the highest risk lithium ion battery raw material, both from a supply structure perspective and a geopolitical one.”

Mining of cobalt is dominated by the Democratic Republic of Congo (DRC)… YIKES!!

Refining of cobalt is currently dominated by China which is increasingly looking like an enemy of the US.

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When it comes to cobalt the US currently has nothing… NOTHING!

The scorecard is…

Cobalt supply… Zero.

Cobalt refining capacity… ZERO.

China has locked down the supply from the DRC and has developed the refining capacity of its own.

Developing domestic cobalt supply and refining capacity is nothing less than a national security issue for the United States… hence the reason that First Cobalt’s CEO Mell found himself at the White House speaking to the President’s National Security Advisors.

Mell told me that during his visit at the White House he started to walk the President’s advisors through the global supply and demand situation for cobalt specifically but was cut-off with…

Look. We understand that. What do you have in America?”

The Government seems to now see the problem. The good news is that the US has an opportunity to develop its own domestic supply of cobalt. It just needs to get moving to do it.

The Idaho-cobalt belt is globally known as being a cobalt rich jurisdiction and presents one of the few opportunities for US cobalt supply security.

You Will Excuse My Shorter Term Thinking In This Case

It was most certainly First Cobalt’s important Iron Creek cobalt project in Idaho that had CEO Mell visiting the White House. That huge asset will definitely be First Cobalt’s long term driver.

But that’s where FCC shareholders get paid later.

Where they likely get paid now is First Cobalt’s $100 million Ontario refinery that has my short term interest… both for the fact that it is hugely mispriced in the market today but also for the economics it offers.

First Cobalt last reported $11 million of cash in the bank and no debt so they can get this refinery producing cash flow with a reasonable debt financing.

Or… somebody smart figures out that this unique asset is selling at a third of replacement value in the market and takes this company over before the market corrects its absurd valuation mistake.

Sources:

  1. https://www.newswire.ca/news-releases/first-cobalt-initiates-study-on-refinery-restart-requirements-680227893.html
  2. https://www.energy.senate.gov/public/index.cfm/files/serve?File_id=9BAC3577-C7A4-4D6D-A5AA-33ACDB97C233

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Keith Schaefer

Thunderbird (TBRD-TSXv) has What Amazon, Netflix, and Disney Desperately Need

Thunderbird Entertainment (TBRD:TSXv/THBRF-PINK) and their shareholders are laughing all the way to the bank as streamers, big studios and traditional networks pay big bucks for content.

Every big business in any kind of media has – or is launching – a subscription video service. That is creating an epic supply/demand imbalance.

These companies are spending big money on content – and will for years to come – tens of billions each year. It’s the biggest tailwind I see for any sector anywhere in the Markets.

The Biggest Mistake that the new streaming companies can make: is not having enough content. Paying too much for that content is not the concern. The billions these companies are pouring into streaming services is wasted if they don’t get subscribers fast – they need high quality content.

Netflix spent $12-13B in 2018, Amazon $5B, Hulu $2.5B, Apple $1B… next year all of those budgets are going up.

Netflix alone is expected to spend $18 billion and are especially desperate with Disney yanking its content off of Netflix to build their own streaming service.

The timing for Thunderbird Entertainment could not be better–nor could the timing for buying shares in the company.

That’s why I got long! Because while investors don’t know about it….

Everybody in the industry is chasing T-Bird’s creative team in this race to build paying subscriber bases. You can’t make $5 billion at the flip of a switch like Netflix when they jumped rates by $3/month – without a lot of subscribers!

And you need high quality content to do that!

All this frantic action is showing up in T-Bird’s financials – look at these EBITDA numbers for the last three years:

2016 – $2.2 million

2017 – $5.1 million

2018 – $10.1 million

AND… they have a potential $170 million backlog on shows for next year – much of it with The Big Boys – what’s called the OTT – Over The Top content majors like Netflix.

EBITDA will keep growing with that kind of backlog. And I get to buy all that growth at half price, as their valuation is half their peer group. That’s mostly because T-Bird only listed in November 2018, it really isn’t on anyone’s radar screens yet.

I want everyone to understand the leverage here. This industry is now GLOBAL. Netflix has 80 million international subscribers. If you get a hit show, EVERYBODY in the world will have a chance to see it now. Asia, Europe, Australia, South America… you can get BIG in a hurry here and make HUGE money.

And where that really pays off is in animation. If you create a cartoon character the kids love, you could have another Paw Patrol, a Canadian-made animation that brings in as much as $300 million in annual sales from merchandising   That would have an incredible impact on T-Bird’s $2 stock.

The merchandising of these cartoon characters can absolutely dwarf what the show is worth – to the point where truly, the show is just a commercial for the toys, games, consumer products etc that surround a winning character.

Get this: Toronto based eOne was offered 1 billion pounds (US$1.3 billion) in August 2016 just so they could have the rights to the animated Peppa PigOver 1 billion dollars!!!!! (By the way, that would be $21.73/TBRD share)

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It’s the most un-appreciated part of the studio business by investors, yet it has been happening for years.You know why Star Wars director George Lucas is a multi-billionaire? Because he chose a paltry salary of $150,000 but wanted the merchandising rights. That decision made him one of the richest men on earth.

T-Bird’s stock has a huge tailwind with massive studio spending, and the leverage that ONE hit show or character can create a worldwide merchandising deal. Given the talent and focus that T-Bird has on this (they just hired away a Pixar animator!) on animation, and only 50 million shares out – the leverage for investors is very real.

Now, an animation homerun is the sizzle for investors.

But honestly, the main reason I’m buying the stock was the Chairman, Ivan Fecan. Fecan (pronounced Fees-an) is the Ted Turner of his time. It’s always about management.

The media business is one where small companies came become multi-billion dollar juggernauts – provided the right entrepreneur is calling the shots.

Ted Turner took over his father’s billboard ad company in an emergency… the elder Turner had tragically took his own life.

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The company was tiny, nothing. Turner had a vision to build a giant media conglomerate. He renamed the company Turner Broadcasting and went to work, building it from scratch to selling it to Time Warner for $7.5 billion in 1996. (T-Bird only has 50 million shares out, so that’s about $152/share if Ivan & team can do it.)

Ivan is a great builder, manager, and seller of content.  He has been the creative or executive head of THREE national TV networks, and sold two of them.

In other words Fecan is at the very top of the food chain in the entertainment industry. And this is the first time he’s working for himself, with a BIG stock position.

Joining Fecan as the lead director of Thunderbird is the founder of Lion’s Gate Entertainment, one of if not THE largest independent studios in the world – Frank Giustra.

Lions Gate also started from scratch, and now has an $8 billion enterprise value.  These two men have built BIG media companies. T-Bird just listed four months ago! They’re just starting out and shareholders get them today at half price by any valuation metric.

Their smartest move to date was promoting the head of Atomic Cartoons, Jennifer McCarron – to CEO. This amazing woman built up Atomic from 60 to 600 employees, and developed their key relationship with Netflix. McCarron was the executive producer of Beat Bugs, an animal cartoon series built around the Beatles’ songs.

Thunderbird pitched Netflix, and they bought it right away. Not only did they pay tens of millions for the show – they wanted a two year exclusive. McCarron produced that show – it was one of Netflix original shows – and was their top family hit for years. Netflix even has one of their main boardrooms in Los Angeles covered in Beat Bugs!

She is now definitely IN with the OTT–Over The Top-crowd, and that is key for us shareholders. Since then, she has literally walked into Netflix and walked out of there with another T-Bird deal worth tens of millions – same day. SAME DAY. Cha Cha Cha!

Yoda and Obi-wan have their Skywalker.

This threesome’s experience, connections and financial discipline is why T-Bird’s EBITDA is up 500% in two years. And that backlog will keep it growing.

Their involvement is why Thunderbird is attracting top quality creative talent like no other studio this size (they just hired away an animator from PIXAR!)

Their involvement is why I expect this little company to one day – and not too far away – have a valuation in the billions – more 10x what it’s trading at today. That has happened with every other company these two men have been involved with, and this  time it should be so much easier now that content is going  into (desperately) short supply.

The stock has only been trading for four months. A full, new set of financials have not come out yet. I think investors get a pop when the first couple quarterlies come out, and then steadily build as the studio gets bigger.

And they’re already in with OTT crowd I spoke to earlier; The Big Boys. In fact, studios like Disney and Netflix ask T-Bird to produce their shows!

That sure makes it easier to get same-day, multi-million dollar deals – the OTT crowd has the confidence to push work onto T-Bird, so no wonder they can land big contracts.

This stuff is happening all the time now. They just signed a distribution deal for one of their half-hour comedy shows (Kim’s Convenience) across all of Asia. Their top ranked reality show, Highway to Hell, is sold in over 170 countries, and has spawned TWO more reality TV series spinoffs.

They’re firing on all cylinders. And nobody in the investment world knows this T-Bird story. Like I said, it trades at half the value of its studio peers, even the small ones. And T-Bird is growing much faster.

Of course, when they make their own shows, whether it’s the cartoons from animation or the reality TV series, they own the rights to those shows. The merchandising revenue alone from a hit show could make T-Bird stock a multi-bagger…and Atomic Cartoons is having great success. And the distribution rights can be re-sold time and again, creating a recurring revenue stream for the company over time.

T-Bird is growing revenue and cash flow like crazy. They’re making top-rated shows. They’re attracting both high quality creative talent (PIXAR…) and being given shows to make by The Big Boys. They’ve got the two best media builders in the country who are just starting out on their big growth curve – right when the studios begin spending billions… could their timing have been any better?

And the stock is trading at half price; half its peer-valuations. Whenever you can buy best-of-breed management already generating huge growth AND positive cash flow – at half price – I make that trade all day long.

I think my timing is great, owning the stock right now. Quarterlies are coming, more analyst and institutional attention is coming, and as that potential $170 million backlog gets firm announcements, I think the stock moves up steadily.

That’s why I’m long.

Management at Thunderbird Entertainment has reviewed and sponsored this story. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons.  Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom.  Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements.  No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.   Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity.  He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.

Plus Products–PLUS:CSE–Has A Tiger Behind It

Plus Products Inc. (PLUS:CSE / PLPRF:OTC) is the cannabis business backed by the same high powered hedge fund that took as E-cigarette manufacturer JUUL – which went from being nothing more than an idea to a business valued at $38 billion in a span of just 40 months.

I don’t need to speculate whether that elite hedge fund can do the same thing with Plus Products – because I can already see it happening.

The hedge fund is Tiger Global Management – the PLUS prospectus shows they own over 6 million shares or 15% of the company – and it has an incredible track record of helping turn small companies in rapidly growing industries into multi-billion dollar businesses.

JUUL was the most recent homerun for Tiger Global. In December, tobacco giant Altria paid $12.8 billion for a 35% interest – valuing JUUL at $38 billion.

Take a look below at what Tiger Global and JUUL were able to achieve in terms of E-Cigarette market domination. In 40 months JUUL went from no market share to controlling more than 75% of the E-Cigarette market.

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Tiger Global’s homerun with JUUL was not a one-off occurrence. Tiger Global also built Indian based e-commerce juggernaut Flipkart which was recently sold to Walmart for $16 billion. Tiger were also early investors in Spotify and Glassdoor – Tiger can spot HUGE winners very early.

Just Like JUUL –
Plus Products Inc. Is Steamrolling Competition

Like many investors, Tiger Global has rightfully identified cannabis as its next big homerun opportunity – and they’ve made Plus Products Inc. one of their biggest investments.

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Plus Products Inc. is a cannabis company that is already dominating the market the way that JUUL did.

Plus Products is just starting to tell its incredible growth story, of becoming the #1 edibles brand in California. But its main stock listing is in Canada… not the United States; very much offer the radar.

The OTC listing for Plus Products Inc. only took place on January 24, 2019 – so it was more difficult for a huge group of US investors to look at the company until just last week.

What you are reading today is the “coming out party” for Plus Products Inc. in terms of market awareness.
And it’s perfect timing, as business performance is rocking.

Plus Products Inc. has been knocking it out of the park… in exactly the same manner that JUUL did on its way to become a $38 billion company. Plus Products Inc. has been taking cannabis edibles market share at a staggering rate.

This is not my opinion. These are verifiable facts by the top two cannabis market research firms – BDC Analytics and Headset.

California is – far and away – the largest and most important market for cannabis at this point. Everyone knows that cannabis will be legalized everywhere eventually, but for now California is the most important market by a mile.

In Q2 17, Plus Products was ranked #43 in California and had less than one-half of one percent share of the edible cannabis product market.

Barely 12 months later – by Q3 18 – Plus Products became ranked #1 in California and has increased its market share by 24 times now with 9.89 percent of the crucial California market. Revenue is at a $10 million run rate now and growing every month. And The Big News is – they’re about to go into more states.

It’s important to me – how and why that happened: It happened organically, with almost NO marketing–to become #1 in the #1 Market in the world right now!  It’s all about the quality and consistency of the product, and the logistics behind making sure it’s on every shelf on every store possible. Their edible products have an incredibly consistent dosage, much tighter than what the law says is necessary. Good product, good business execution.

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Take a look at the chart above which shows what Tiger Global-backed Plus Products has done in just over a year in California… then look back at the chart that I showed you earlier with the incredible growth in market share that Tiger Global backed JUUL was able to achieve.

Growth that took JUUL from no market share to being worth $38 billion in 40 months.

This is no coincidence and I can assure you of one thing… Tiger Global didn’t put invest Big Money into Plus Products without feeling very confident that it could be built into another multi-billion dollar, dominant business.

Plus Products is now getting ready to expand outside California. I think this will be the biggest growth story in the sector in the next 18 months. And one of their largest backers has done it all before – grown something from zero to a $38 billion dollar company in just 40 months.

This stock has only 40 million shares out… meaning this could be a HUGE winner if management executes like Tiger Global thinks they can. 

One Or Two Brands Will Control 
The Entire Cannabis Opportunity

There is no better investment than a dominant consumer brand.

Just ask Warren Buffett who built his $90 billion fortune by owning the dominant consumer brands of Coca-Cola, American Express and Gillette.

A brand name is the most valuable asset a retailer has because it lends credibility to product quality… consumers know what they can expect when they buy that brand name product.

As consumers we buy Coke or Pepsi because we know that we like it; the same thing for McDonalds or Wendy’s. Every retail market ends up being dominated by a few powerful brands.

As I’m sure you can imagine… for a product like an E-Cigarette or edible cannabis  – being able to trust the quality and safety of the product you are buying is even more important.

That is a big reason why JUUL was able to lock down a 75%market share. That is why the opportunity for Plus Products to do the same in cannabis is so very real… and in fact is already happening.

The truth is that it is going to be easier for Plus Products to dominate cannabis than it was for JUUL to dominate E-Cigarettes. Everything that Tiger Global built and learned with JUUL in E-Cigarettes is directly transferable to Plus Products and cannabis.

This gives Plus Products a huge advantage with marketing, distribution, manufacturing, talent, financing… you name it, Plus Products has the edge. Having a multi-billion dollar hedge fund titan behind Plus Products is an incredible advantage.

You can see that advantage in how fast the Plus Products brands are taking market share.

Plus Products has almost US$20 million cash and has zero dollars of debt. Sales and revenue are increasing every month. They’re about to start expanding into several new states. Insiders are aligned and own a boatload full of shares… and so do I.

Tiger Global isn’t invested in Plus Products to build a nice little business. Tiger Global is invested here to build another multi-billion dollar business. And there’s only 40 million shares out.

I think my timing is excellent – right on the cusp of a major expansion, after already being #1 in the biggest market in the world right now. Whoever wins the California cannabis market could win the world… and Plus Products is already #1 and increasing that market share at an incredible clip.

With a big expansion plan on the immediate horizon, I expect this company to do very very well in 2019 and 2020.

DISCLOSURE—I am very long Plus Products Inc.

Keith Schaefer

The JUUL of Cannabis

Today I’ll tell you why I invested in “The JUUL” of the cannabis sector. I’ve just made it my largest investment ever into cannabis – and I have little doubt it will be my most profitable.

Some of the smartest money on the planet has invested in this company, and that’s what I follow in this sector – because it’s so new.

Because this young cannabis company has Smart Money behind it, it has almost $20 million cash, and a very tight share structure – most of these pot stocks have well over 100 million shares out. This one has less than HALF that many. That structure can make for explosive share price moves.

As the rest of  the institutional capital find what I believe to be “The JUUL” of the cannabis sector – I think they’ll pile into the company’s shares.

Tomorrow I’ll put this same opportunity in front of you – so pay attention to that e-mail – it identifies this company and everything you need to know about it.

After I let the cat of the bag on this one these shares will never be this cheap again.

I want you to fact check the details of what I’m about to tell you today and tomorrow… so you have my level of conviction on this company.

There would be too much regret to live with if you didn’t.

What Do I Mean By “The JUUL” Of The Cannabis Sector?

Just four years ago – right before cannabis became one of the fastest growing global markets – E-cigarettes had a similar experience, where this product went from niche to mainstream, making millionaires and billionaires for investors in a very short period of time.

Only 40 months ago – on June 1, 2015 PAX Labs introduced the JUUL electronic cigarette. At that point in time the product had zero sales and zero market value.

Only 18 months ago – in July 2017 JUUL was spun out of PAX Labs as an independent company. Until then it was JUUL buried inside of PAX.

Last month Altria paid $12.8 billion for a 35 percent stake in JUUL!!!

Simple math values the entirety of JUUL at $38 billion.

JUUL went from nothing to $38 billion in 40 months – that’s an incredible creation of massive wealth.

How did that happen you ask?

Over a 40 month period JUUL built the dominant e-cigarette brand on the planet.

By dominant I really mean DOMINANT….

CNBC reported at the time the Altria deal was closed that JUUL owned 75 percent of the e-cigarette market.

Back in July Bloomberg had that market share at 70.5% in the chart below.

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Over that 40 month period everyone lucky enough to be involved with JUUL has gotten rich.

When the deal with Altria was struck, JUUL announced that it would pay each of its 1,500 employees a bonus of $1.3 million.

In 40 months everyone involved with JUUL made enough money to retire.

Now it is my turn….

This Is Why I’m Certain This Company
Will Be “The JUUL” Of The Cannabis Sector

Now you know why the institutions are searching for “The JUUL” of the cannabis sector.

JUUL made thousands of  people rich in a hurry.

E-cigarettes was a new market that went from nothing to something large very quickly.

The unfolding cannabis market is very similar to that.

Today I’m here to tell you that “The JUUL” of the cannabis sector most certainly exists… and that I’ve found it. And that I own a lot of it!

This newly public company has not found its way onto the screens of analysts and institutions yet – but that will change with the next couple quarterlies. Revenue is increasing very rapidly.

That lack of market attention will change with my e-mail tomorrow which goes out not just to readers like you –but also to much of the analyst community.

What makes me convinced that I have found “The JUUL” of the cannabis sector?

Because the exact same secretive elite investment firm that built JUUL from the ground up are now building this cannabis company.

Literally… the exact same people.

These renowned billionaire investors (who I will reveal by name in my next e-mail) have a track record for building multi-billion dollar companies from the ground up.

These people built India based e-commerce juggernaut Flipkart which was recently sold to Walmart for $16 billion. They were early investors and involved in building Spotify, Glassdoor and other tech businesses as well.

This isn’t a leap of faith investing alongside these people.  They know how to pick early stage winners. There is little doubt this is going to work out well… the only question is how well?

I would gladly turn a good chunk of my money to them to invest with no knowledge of what they were going to invest in.

This secretive billionaire firm has rightfully identified cannabis as the next market to conquer and they have made exactly one cannabis investment… which is why I believe this company will be “The JUUL” of the cannabis space!

They have all of their eggs in this one cannabis basket.

This single little cannabis company is getting all of their attention, all of their knowledge, the benefit from all of the connections they have made through JUUL which is in an almost identical business.

Their involvement with this young cannabis company has generated shocking results already.

This single little cannabis company is getting

  1. a huge chunk of their attention
  2. all of their knowledge
  3. the benefit from all of the connections they have made through JUUL – which is in an almost identical business

This young cannabis company has generated shocking results already:

In the last 24 months – with the involvement of these secretive investors – the company’s brand has moved from being #43 in the Market to #10 – and now #1 – with its lead expanding.

While this company’s market share has soared from 10thto 1stno other competitor has grown its market share at all… which means this company is taking it all!

Nothing short of market domination is the goal – just as JUUL did in the E-cigarette business with a now 75% market share.

These secretive billionaires did not invest here to build a nice little cannabis company. They are in this to build a company that dominates this industry and have it be worth billions of dollars!

These guys aren’t in this to build a nice little cannabis company. They are in this to build a multi-billion dollar company that dominates this industry. (I can hardly think what kind of share price that would mean for this company with less than 35 million shares out and trading under $10!)

Do Not Be Late Opening My E-Mail Tomorrow!!!

I rarely come across the opportunity to get in on the ground floor of what could be a life-changing investment.

This is an opportunity to invest at the ground floor level beside one of the greatest company building investment firms of all-time. To be honest, this almost isn’t a fair fight for the cannabis competition.

There is one more thing that I want you to appreciate.

The opportunity in cannabis is much, much larger than the opportunity in E-cigarettes was.

The E-cigarette market is expected to have total sales of $44 billion by 2023.

Meanwhile the global cannabis market is expected to hit $146 billion shortly thereafter.

JUUL went from nothing to a $38 billion valuation in 40 months in the E-cigarette market.

The same people that built JUUL are now working on building the same type of dominating company in the cannabis business. They clearly bet on the right horse, as this cannabis company now has the largest market share in the largest and most competitive cannabis market in the world… (verified by the Top 2 independent market research firms in cannabis no less!) and they did it in just 18 months.

If anything building this cannabis company will come easier for them given what they just learned building JUUL. These are similar industries and the connections that they have made in marketing, manufacturing and distribution can be leveraged.

Look….

I’ve been doing this a long time.

At this point I know when I’ve found a great investment idea.

And I really know when I’ve found an idea that my readership is going to love.

Tomorrow I’m telling you – and all of my massive list of e-mail readers which includes many analysts – all about “The JUUL” of the cannabis sector.

My first cannabis investment, Canopy Rivers, is up 50% in 5 weeks. I bought into that stock because it was Smart Money – the public merchant bank of Canopy Growth CEO Bruce Litton. They have the best deal flow and the deepest pockets. No-brainer!

But I have a much larger position in this company – the investors behind this company are that exciting.

You do not want to be late opening my e-mail to learn the following:

  1. The name and ticker of this company
  2. The details of this company’s already market leading brand
  3. The incredible company building track record of the power players behind this business
  4. Everything about the company’s current financial position

I feel lucky to be able to introduce you to this great company at this early stage. I am long, but you can fact check everything I tell you very easily.

Be ready to hear from me tomorrow!

Keith Schaefer

Canopy Rivers (RIV-TSX-V) is a Marijuana Bank

Canopy Rivers (RIV:TSXv; CNPOF:OTC) is the marijuana stock that has what billions of dollars of institutional money are desperately searching for… That is – RAPIDLY GROWING FREE CASH FLOW!!! Predictable and growing cash flow is what the institutions want. They have been searching for marijuana stocks with real business fundamentals and traditional valuations. By mid-2019, I think that every institution that wants to deploy capital into the marijuana sector will own Canopy Rivers. Today this business is already generating a good and growing amount of free cash flow. I’ll explain: Think of Canopy Rivers as the private merchant bank of Canopy Growth (WEED-TSX) and its CEO Bruce Linton – but they’re allowing YOU to buy into their best-in-class deal flow. With $5 billion cash, you can bet Canopy Growth sees a lot of companies they want to buy – all over the world. But some entrepreneurs don’t want to sell outright – and that’s where Canopy Rivers comes in.  Seeded by Canopy Growth, its management team and insiders, Canopy Rivers funds the best deal flow that Canopy Growth can’t buy. I think it’s a great business model – they create a small-cap merchant bank and fund it enough so they can do several deals at once – any one of which can – and have – created multi-baggers big enough to show up in the Net Asset Value (NAV) of “Rivers”.  And they do no business in the US. Canopy Growth has a controlling voting interest in Rivers’ stock, to make sure nobody can steal the company.  But they’ve set it up perfectly – there is almost no G&A in Rivers; everybody owns so much stock they don’t need the money. Rivers already has 12 investments – and they use debt, convertible debt, pref shares, regular equity and royalties in their model – in mostly private but some public companies. Think about this – just the investment income from their portfolio will be $15 million annualized at YE 2019, vs. cash G&A of just $7 million. Then of course, as their investments grow and mature, the cash flow net to them should increase – and by a lot. Here’s what my research shows annualized cash flow COULD look like in the coming 5 quarters:
That is not well understood by the market because quarterly financial filings come out months after cash flow is actually generated… so the institutions haven’t picked up on the story. Canopy Rivers just IPO’d late Q3 18 and is just starting to filter into stock screens. By my calculations Canopy Rivers could see cash flow increase 6 to 10 times over the course of 2019.  As that happens, more institutions will be comfortable enough to own the stock. That is why Canopy Rivers isn’t a marijuana stock that I own… it is why it is the only marijuana stock that I own!  It’s a (merchant) bank.  Banks make money.  Banks with debt that can convert into lucrative equity in select companies.  That’s what I mean by low-risk/high-reward. Everyone knows that 2019 will be a huge year for the marijuana business. Momentum is growing in Canada and internationally. The problem is that the institutions have no clear way to play it – the typical marijuana stock is all story and no substance. Canopy Rivers is different. This is a business built on quality from top to bottom. This is a company that everyone can own… and everyone interested in the marijuana sector eventually will own. It ticks every box on my investment checklist: 1.     Top notch management – CEO Bruce Linton and his team recognized as the BEST in the industry 2.     Management is hugely incentivized by equity ownership not big salaries (Linton is paid just $1/yr!) 3.     No debt and a huge cash balance – great balance sheet ($40 million net cash) 4.     Cash flow positive and growing fast – which could be up 6 to 10 times in 2019 5.     Has a low valuation relative to its growth rate (I’ll get to the specifics on that in a moment) This company is the ONE marijuana stock that gives investors everything they could ask for – including a realistic valuation!

What Canopy Rivers Has In Store For 2019 Cash Flow, Cash Flow and More Cash Flow! There is a lot to the Canopy Rivers Story, but I’m going to focus in on what I believe to be the main driver of growing cash flows – a joint venture called PharmHouse. PharmHouse combines the marijuana expertise of Canopy Rivers and a large, seasoned North American greenhouse operator. The greenhouse partner is one of the world’s leading commercial agriculture and produce companies. This partnership will be huge – it already has a long growth runway. PharmHouse is retrofitting a massive, 1.3 million square foot greenhouse for cannabis production in Canada…and there are already plans to build another one of comparable size. And then another, and another and another…. This is a brand-new, top-of-the-line production facility built by North America’s top greenhouse operator.  Comparing this to other, older facilities that many peers are using to grow marijuana – this is like comparing an iPhone with a 1980s mobile phone that was the size of an encyclopedia. Production from this facility should be very profitable.  The anticipated selling price in 2019 will be $3.75 per gram, and management has been rightly basing all decisions on profit margins of just $1 per gram – and even that shows PharmHouse’s first facility generating $100 million of annualized free cash flow by the end of 2019. Half of that production belongs to Canopy Rivers – which equals a run-rate of $50 million in cash flow from just this one asset by Year End 2019. And PharmHouse is just one asset out of the 12 that Canopy Rivers has to offer!

This Is The Lowest Risk Lottery Ticket You Will Ever Find In Marijuana After PharmHouse, Canopy Rivers has 11 other marijuana projects underway. That means that Canopy Rivers’ shares come with free huge upside optionality… multi-bagger potential, lottery ticket winning type returns. Canopy Rivers is an incredibly advantaged merchant bank. As a publicly traded sub of Canopy Growth, “Rivers” gets best-in-the-world-deal-flow… Canopy Rivers gets to put seed capital into the best marijuana start-up companies at incredibly favorable terms. It’s like being in Silicon Valley and getting acccess to the seed financing of the Facebooks and Googles of the tech world. Canopy Rivers can see huge increases in its share price as its investments go from millions to tens of millions or hundreds of millions of dollars… those returns would be lost on the balance sheet of the $12 b-b-b-illion market cap of Canopy Growth – which is why the deals are pushed to Canopy Rivers. At least, that’s the way it’s supposed to work. It makes sense to me. Canopy Growth CEO Bruce Linton is the acting CEO/Chairman here, working for $1/yr and a whack of stock. That means that you have… 1.       The best and most experienced management team in the marijuana world 2.       Giving “Rivers” the best deal flow they come across 3.       And they’re completely aligned with shareholders Like I said, they already have a minimum $8 million in investment income for 2019 and easy-to-achieve milestones that pushes it to over $15 million – against cash G&A cost for the business of just over $7 million per year. All 35 employees at Canopy Growth also have equity linked exposure which incentivizes them to push top investment opportunities to Canopy Rivers. In 2019, Year One of this business model, I’m really invested in Canopy Rivers because of the cash flow growth that PharmHouse could/should crank out by year end… it could be as much as $50 million net cash flow to Canopy Rivers by year-end and growing from there. In a perfect world, Rivers is at an $84 million run rate this time next year – against an Enterprise Value today of some $520 million–about 6x EBITDA. Like every other management team in a public company, they must execute flawlessly for that valuation to make sense. But it’s certainly one the institutions could understand – and buy. DISCLOSURE:  I am long Canopy Rivers. Keith Schaefer

Here’s Why I DON’T Write A Newsletter on Marijuana Stocks

Every month I get asked to start a newsletter covering marijuana stocks.

I always say no.

I mean, I get it – this will be the fastest growing sector in 2019 – possibly in the whole world.

One of The Big Catalysts will likely come from the US – it’s The Big Dog in this market and it will almost certainly legalize marijuana federally sometime in 2019. We just saw bipartisan support for this with Congress passing the Farm Bill which legalized hemp and the status of CBD (Cannabidiol).

Not only is there an existing large market waiting to be filled, now medical research can begin in earnest to find even more positive benefits to cannabis products.

The investor opportunity is incredible – and I think we’re barely into the second inning of this ball game.

The problem I see – that has kept me out of this sector – is that these public company marijuana stocks are all story and no substance.  Most of them I wouldn’t touch with a ten-foot pole.

I really try to be an investor – fundamentals and intrinsic business value matter to me.

In fact, there’s only ONE marijuana stock I’ve ever found that has a near bullet proof business model and is executing its plan.

This company allows me to get exposure to the hyperbolic growth that the marijuana sector has in front of it (which nobody disputes) – but also ticks all of the fundamental boxes that every value investor like me would love.

To let you know how different this company is… it is the only stock in the marijuana space I’m willing to own right now.

This company fulfills all my criteria as a value focused investor:

1.     Top notch management – the BEST
2.     Management owns a lot of stock, and takes almost no salary
3.     No debt/net cash – one of the best balance sheets in the sector
4.     Cash flow positive and growing fast – cash flow could increase 6-10x in 2019
5.     Has a realistic, traditional valuation relative to its growth rate

And as a bonus, it’s business has nothing to do with the US – just yet. So I can still cross the border!

At first I was intrigued, but then I got excited. How could a marijuana stock tick all the boxes?

What Everyone Else In The Sector Is Missing
Cash Flow, Cash Flow, Cash Flow!!!

There is a lot of hype around the marijuana sector.

There should be… because fortunes will be made from the growth that this sector will experience in the coming decade.

This sector has been full of hype, but at the end of the day, what matters is always the same… CASH FLOW.

Don’t let anyone fool you. It is a growing cash flow stream that drives the biggest stock market winners. It doesn’t matter if we are talking about insurance companies, oil producers or technology companies.

The marijuana sector doesn’t have that yet. That lack of cash generating businesses is what is keeping all of the respectable (and BIG) institutional money on the sidelines. And without that institutional money – the upside in these stocks is limited.

Institutional capital does want exposure to the huge opportunity that is marijuana. But the institutions can’t buy stocks based on hype. The institutions need to buy stocks based on financial performance… based on cash generating ability.

There are tens of billions of institutional dollars just waiting to buy marijuana stocks. That money is just waiting for cash generating companies to develop.

This is exactly why this one company, my only marijuana stock, should have a huge 2019.

In the next 12 months I believe that institutional investors will become big buyers of select marijuana stocks.

Why? Cash flow… rapidly growing cash flow.

The marijuana stock I own is already generating free cash flow. Over the next 12 months the company has a clear sight to increasing that cash flow tenfold – that’s 1000%.

There are no hoops to jump through, no wishful thinking here. The company has already made the up-front investments to generate this cash flow ramp and now just needs to carry out a simple business plan – one that has no impediments in front of it, except time.

With every quarterly filing in 2019, I expect the institutional money to see not just growing cash flow, but at a scale that makes sense for Big Money. I’m talking $10 million to possibly $90 million. Everyone has been looking for a free cash flow generating marijuana stock.

And this company is it…

This Company Has Credibility From Top To Bottom

The most important factor in any company is management. When I tell you about management, you’ll ask yourself – how did I not know about this company?

Every single door in the marijuana industry – and in the Tier 1 banks – is open to this CEO.

Everybody wants to be part of his empire, because his name and company brand bring respect and money.

That’s the kind of guy with whom I want to invest. His relationships open doors in ways that no other company can compete with.

And every time the company achieves a milestone, its shares will get rewarded.

This management group put $5 million of their own money into the shares of this company. The CEO gets paid the grand sum of $1/yr.  One dollar – because he owns stock!

The company was structured this way on purpose: they keep G&A costs VERY low so that the company (read:shareholders) can benefit from as much cash flow as possible.

It’s Financially this company is also built upon quality… it’s got a pristine balance sheet. It has a pristine income statement. Who else in this sector already has positive cash flow and will grow 10x in 2019?

As the market learns the names of these key relationships and the opportunities that they are laying the groundwork for… it will be a game-changer for this stock.

What Valuation Does 5 to 10-fold Growth In Cash Flow Gets You….

As 2019 unfolds, I expect investors to be drawn to this low-risk, high growth company.

What I’m talking about here is a cash flowing, rapidly growing, debt free, cash rich, marijuana stock with a trusted management team and high quality recognizable partners.

Can you see where that is going to attract some attention?

As the cash flow ramps up in 2019 this company is going to stand out to institutional investors like a 500 carat diamond sitting on top of a field full of jet black coal.

DON’T  MISS  MY  NEXT  EMAIL!!!

If a company like this happens to interest you – do not miss my next e-mail.

In that e-mail I’ll direct you where I’ve positioned myself ahead of the institutional money that I expect to pour into this stock in 2019.

I will provide for you the name and the ticker of this company – the only marijuana stock that I’m interested in owning.  A company that is all quality and ready to see cash flow explode higher in 2019.

What I’ll tell you specifically in that e-mail is:

1 – Specific details of the core business and how it will see cash flow ramp up 5-10x over the course of 2019

2 – The key relationships that is going to turn this already cash flowing business into a huge player in both the American and international marijuana market

3 – How I arrive at my valuation targets that show this stock being a multi-bagger within 18 months

Everything I’ll tell you – you will be able to verify for yourself through this company’s financial filings.

I’m sure that this company is by a wide margin the must lucrative way to play what is going to be a huge 2019 for the marijuana industry.

Keith Schaefer

Jericho Oil Is A Stock I’m Looking At

Oil stocks will be a screaming buy sometime between now and Dec. 31. Tax loss selling pressure will add to the pressure of lower oil prices, and some crescendo of selling will hit in the coming weeks, if not days.

Siyata Mobile SIM-TSXv Is The Key to 4G–A $12 Billion Market Ready to Buy

I’ll explain how this $50 million microcap already controls that $14 billion market, it’s a massive investor win hiding in plain sight.

THE RFID SOLUTION THAT WILL MAKE ME RICH

TrackX Holdings Inc (TKX:TSXv TKXHF-PINK) is the microcap stock with the proprietary RFID technology rapidly being deployed by multiple NASDAQ/NYSE listed corporations.

MY GREATEST WINNER OF ALL TIME WILL NOT BE AN OIL OR GAS STOCK

Back in 2016 there was no bid for oil stocks.

The sector was dead money — and I knew it.