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3 Ideas - May 2018: The MicroCap Conference, NYC

May 01, 2018 12:00 PM ETILLM, ALPE, HEXO, ILLM:CA, HEXO:CA8 Comments
Justin Polce profile picture
Justin Polce


  • Small caps, big ideas.
  • Canadian marijuana, lithium metal anodes, ad tech algorithms.
  • The Hydropothecary Corporation, Alpha-En Corporation, AcuityAds Holdings.
  • Fabled stories of microcap folklore.
  • Intended as the opening act, never the finale.

Recently, I had the chance to attend the MicroCap Conference in New York City; it's an event I always look forward to. With over 120 companies in attendance, there's ample opportunity to speak with management, sit in on multiple presentations, and learn about exciting new businesses… Ideas abound! I'm on the hunt for a captivating story, an exciting tale, and a great adventure in the Microcap lore. Some of my previous narratives include "22nd Century, Inc. (XXII) and the Very Low Nicotine Cigarette," as well as "Marrone Bio Innovations (MBII) and the Biological Pesticides" (more to come in the near future).

Although usually considered speculative in nature, small cap companies can be extraordinary outperformers, given the right circumstances; and so, below are some notes on three presentations I sat in on during the conference, in the hopes of finding a fabled unicorn, instead of getting stuck fighting the Minotaur.

The Hydropothecary Corporation (OTC:HYYDF) and 20 Tons of Cannabis ($492mm Cap)

The Hydropothecary Corporation is a cannabis producer centered in Quebec. It is the fifth largest marijuana company in Canada (by market cap). As part of management's expansion strategy, the company intends on spreading into Ontario and the rest of Western Canada, and then internationally, including to the United States once cannabis becomes legal in the lower 48.

Mostly due to government contracts, HYYDF has a 35% market share of the Quebec cannabis market, which translates to ~8% of the Canadian market as a whole. From a revenue standpoint, that's about an $800 million opportunity based off a $10 billion market for Canadian Cannabis (in $CAD).

With a current 63% margin, the company is focused on a value chain of products, manufacturing multiple cannabis goods - everything from mint-flavored sprays to oral pills to dried powder. One of CEO Sebastian St-Louis' long-term goals is to achieve brand power, similar

This article was written by

Justin Polce profile picture
MS Industrial and Applied Mathematics. Investing through a loosely coupled, complex system. "I am a great believer in luck, and I find the harder I work, the more I have of it." -Thomas Jefferson

Analyst’s Disclosure: I am/we are long ACUIF, XXII. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may initiate a position in ALPE, HYYDF, or MBII in the next 72 hours. Nothing contained in this message is an offer or solicitation to buy or sell any security/investment, and is for informational purposes only.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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