The past couple of years has not exactly been an easy ride for the bulk of listed small-cap companies.
Indeed, with the pandemic, even those who have been flourishing have not known whether this state of affairs might continue. For many companies therefore, the strategy has been a mixture of battening down the hatches, as well as getting their house in order to varying degrees. The idea here is to be as lean and mean as possible, something the past month and Russia / Ukraine has underlined.
Corporate Self Improvement
A company which has very much taken the message of self improvement in tough times has been Love Hemp, the consumer goods company focussed on CBD health and wellness solutions. Having interviewed the company on several occasions, one has been struck by the passion and sheer hard work of the CEO Tony Calamita, something which has fed through to what has been achieved at the company over the past year. There are too many items to list of note, but they include a Revenue increase of 60% over previous year, Units sold up 244%, and Consumer Accounts up 106%. Just as importantly has been the conversion of £5m of debt and £12.5m in financing, heralding the first institutional investors and a move to a LSE listing.
Blue Chip Names
On this basis one can say that Tony Calamita and his team have done all the heavy lifting to turn Love Hemp not only into a premier brand in its space, but also readying the company for the transition from small cap to blue chip player. In fact, in terms of distribution one can say that Love Hemp is already there given its presence on Amazon, Boots, Holland & Barratt and Ocado.
Most people who had led a company to this particular level of achievement in pretty short order might expect their shareholders to be offering at least a metaphorical pat on the back. This would be whether or not the share price was reflecting the good work done, which like many companies in Cannabis space and beyond, it has not. That said, shareholders are getting something of a bargain with all of the above for less than £9m.
Ironically, rather than a pat on the back and an appreciation of the fundamental appreciation of the value of Love Hemp, we are witnessing a rather foolish development on April 1. Love Hemp Group has received a Requisition Notice from a shareholder with around 6.63% of the stock. Rather than a big thank you to the Love Hemp board, he is looking to give it the big elbow, in the wake of all the efforts made in the recent past. There are a number of points that arise from this development.
Requisition notices, while they may be good for the ego of those involved, historically are never a good look for the companies they target. They are a PR disaster, waste money and time, and distract the management from simply getting on with the job, with the uncertainty upsetting the share price. All of this is true even if the Requisition Notice is justified.
Unfortunately, they are normally the result of misunderstanding between the “rebel” shareholder(s), and management, and / or an understandable desire to get control of a company just ahead of its transformation from an ugly duckling to a beautiful white swan. Even if the requisition is successful, it can take months / years for the dust to settle and the market regain its former confidence in a company. It could also take months or years for any new management to replace the match fit CEO Tony Calamita and Chairman Andrew Male, who know the company inside out. At the very least, a new board would take months to get their feet under the desk, with no guarantees regarding how they might perform when the do.
A Vote Against All The GM Motions
It is therefore not surprising that the board of Love Hemp have recommended shareholders vote against all the motions at the General Meeting on April 1, and it would appear quite logical that shareholders should back this view for the long term good of Love Hemp.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.
If anyone reads this article found it useful, helpful? Then please subscribe www.share-talk.com or follow SHARE TALK on our Twitter page for future updates.
Terms of Website Use
All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned