Investigating Aphria With Gabriel Grego And Hindenburg Research

Dec. 03, 2018 9:20 AM ETTilray Brands, Inc. (TLRY), TLRY:CAFLLIY144 Comments
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Behind The Idea


  • As part of our coverage of the Kase Learning Short Selling Conference, we spoke with investigative short sellers Gabriel Grego of Quintessential Capital Management and Nate Anderson of Hindenburg Research.
  • The two of them teamed up to research Aphria, a cannabis industry high flier. Nate and Gabriel are skeptical about the company's acquisition history.
  • Their research took them to on-the-ground visits of Aphria sites in Jamaica, Argentina, and Colombia. This podcast is about their detective work and adventures researching the company.

"It takes a lot of work in order to do this with an acceptable level of danger," says Gabriel Grego of his investment research process. Gabriel, who runs Quintessential Capital Management, looks for tangible evidence of corporate misconduct, and he shorts companies whose valuations seem high given what he sees on the ground.

He made waves earlier this year with his idea on Folli Follie (OTC:FLLIY). Now he and Nate Anderson of Hindenburg Research are presenting a new idea on Aphria (APHA). They are raising concerns about the company's acquisitions of target companies that have apparent relationships with insiders. Some of these assets, according to their on-the-ground work, have little in common with the images conjured up in company press releases.

The idea itself is interesting, and I encourage everyone to check it out. This podcast dives into the process of gathering this type of information and what it's like to travel to remote parts of the globe to validate a hunch that a company's story might have serious holes.

  • Intro - Catching up on the Aphria setup.
  • 4:50 - Nate outlines the Aphria thesis - what the company says vs. what Gabriel and Nate found.
  • 7:00 - Gabriel talks about his trip to visit Aphria's Jamaican holdings. He describes dilapidated buildings, tenants who haven't ever heard of Aphria, and an apparently empty corporate address.
  • 11:45 - What it's like to do on-the-ground research in developing countries, and Gabriel's sleuthing inspiration from books and movies.
  • 14:00 - Gabriel's undercover doctor visit.
  • 18:45 - The wisdom of insiders' Instagram posts, and the Argentina pharmacy transaction.
  • 23:00 - How to approach interview subjects.
  • 24:45 - How Gabriel and Nate started their collaboration.
  • 30:00 - Gabriel and Nate's final takeaways about Aphria, and what investors should take from their experience from their own investment processes.

This podcast is part of our coverage of the Kase Learning Shorting Conference. Check out our preview podcast with Whitney Tilson here.

What do you think? Let us know below.

Editor's note: Please find a transcript of this call here. This is not a perfect transcript, but should be a helpful guide.

This article was written by

Behind The Idea profile picture
On Behind The Idea, Seeking Alpha editors Mike Taylor and Daniel Shvartsman take a closer look at an investment idea published on Seeking Alpha to see what makes for compelling investing analysis. We look at what’s happening with the underlying company, what the author’s case is, how well s/he made that case, and what we can learn from this investment story. We also bring on the authors, top investors, and industry analysts or experts to explore the case further. We hope the breakdowns and discussions are is both timely and evergreen, educational and entertaining for investors.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Gabriel Grego and Hindenburg Research are short APHA.

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