Real Brands Inc (OTCMKTS:RLBD) is an emerging player on the rejuvenating CBD stock landscape, and one that may deserve attention as a squeeze candidate because the stock has been a target for bears, but one that may be entirely misplaced given the company’s recent strong strides toward differentiation as a high-margin success story in the space.
First off, there’s more here than meets the eye at first glance.
RLBD recently completed a merger that took Canadian American Standard Hemp Inc., or “CASH”, onto the public markets last fall. That installed a new leadership team including a new CEO and Chairman, Thomas Kidrin, who was formerly with MariMed Inc (OTCMKTS:MRMD), a publicly traded cannabis company.
Note that the in-depth story surrounding the real situation here can be found by checking out a recent interview with the Company’s CEO, which can be found here.
All of this leads up to an examination of the stock from the perspective that it may be overly shorted by complacent bears ripe for a rude awakening in the form of a potential short squeeze move.
First Things First
In the interview, Kidrin notes that RLBD is in the business of proprietary specialized extraction and chromatography to produce 99% pure cannabinoids.
RLBD is over 23% owned by Turning Point Brands, Inc. (NYSE:TPB), a billion dollar NYSE-listed company that is also a customer of RLBD now for bulk CBD oils and isolates used in Turning Point products. Turning Point has more than 250,000 points of distribution with leading brands such as Zig-Zag®, Stoker’s®, and Beech Nut®.
RLBD also recently brought in the Chief Science Officer of iconic skin care brand, Elizabeth Grant Skin Care, Dr. Adel Rammal, PhD. Rammel will be instrumental in helping to formulate leading edge branded CBD topicals to be marketed through the company’s Wa Brands segment.
In other words, this is a story with plenty of meat on the bone in the space – ie, it’s not a pretender. There’s a real business at work with escalating catalysts in a rapidly growing space.
RLBD is working toward an uplist onto the OTCQB as a stepping stone to a further uplist onto a major exchange. The company is in the process of filing Form 10, which should be completed this month, and believes it will be able to uplist shortly after.
The company also has already established formal affiliation with a group that works directly with major research universities to back up its claims and add value and brand substance.
Finally, Real Brands Inc (OTCMKTS:RLBD) has deep-pocketed support given that it is almost a quarter owned by TPB, which is a third owned by a multi-billion dollar hedge fund with a vested interest in helping TPB and its major interests secure necessary financing on strong investor-friendly terms.
Vulnerable Shorts
When shorts are present in a crowded trade, there’s an opportunity to play for the squeeze. While it is true that bears tend to go after weak stocks, it is also abundantly clear that bears in a crowd tend to present major upside potential because of the mechanics of supply and demand for shares.
Heavy short interest means rising prices can spur a cascade of short covering transactions given the risks involved in being short – ie, the upper price potential of any stock is theoretically infinite, while the downward price potential is bounded at “zero”. That means every short has to consider financial oblivion as a possible endgame for any strategy.
When bears crowd into a name, that worst-case scenario is heightened because a positive turn of events for the company can lead to an absence of shares readily available to purchase, which means it can be tough to cover, especially when competing with a multitude of other traders trapped in the same positioning framework.
Real Brands Inc (OTCMKTS:RLBD) may in just such a position right now.
According to OTCshortreport.com, 14 of the past 19 trading sessions have featured more than 50% of all transactions in the stock occurring from the short side, and a total of more than 62% of all shares traded representing new short-side bets.
That’s an extreme crowding of shorts into the stock.
However, during the same time, we have seen important signs that the company is warming up toward some major potential catalysts in a high-growth industry that could force all of that short interest to cover in a panic if the company executes.
Key Catalysts
Real Brands Inc (OTCMKTS:RLBD) is potentially differentiating itself as a second-stage winner in the re-emerging CBD space, which is a $13 billion market with growth ahead, according to analysts.
Marketing Juice. According to its recent interview, the company is in late-stage negotiations with a major celebrity influencer who will help to spread its brands far and wide and generate massive consumer interest.
We would expect an announcement on that soon, given the tenor of the company’s communications.
Expanded Product Offering. The company is also working on expanding its product lines and has the proprietary technology to produce higher margin cannabinoid-based products at scale efficiently, which grants RLBD another edge over the competition.
Going Global. RLBD is also working on an international expansion that will include marketing through international sports celebrities and sports leagues and include a sports wellness product line that Kidrin says is nearing launch.
Drink Deep. The company is also working on a line of CBD Beverages and other fresh concepts, which will launch in the next 60-90 days.
Real Brands Inc (OTCMKTS:RLBD) wants to move these new products internationally as well, and will seek to market through authentic influencer relationships.
Impending Uplist. RLBD is working toward an uplist onto the OTCQB as a stepping stone to a further uplist onto a major exchange. The company is in the process of filing Form 10, which should be completed this month, and believes it will be able to uplist shortly after.
University Affiliation. The company also has already established formal affiliation with a group that works directly with major research universities to back up its claims and add value and brand substance.
Deep Pockets. Finally, Real Brands Inc (OTCMKTS:RLBD) has deep-pocketed support given that it is almost a quarter owned by TPB, which is a third owned by a multi-billion dollar hedge fund with a vested interest in helping TPB and its major interests secure necessary financing on strong investor-friendly terms.
Given recent money flows into CBD players such as Neptune Wellness Solutions Inc (NASDAQ:NEPT), cbdMD Inc (NYSEAMERICAN:YCBD), GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH), and Jazz Pharmaceuticals PLC (NASDAQ:JAZZ), there’s every reason to be on the lookout for some tough times ahead for over-zealous RLBD bears.
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