Real Brands Inc (OTCMKTS:RLBD) is in a particularly interesting position at present. After a reverse merger late last year, the company is now Canadian American Standard Hemp Inc. or “CASH”.
Thomas Kidrin, CEO of CASH, has been named Chief Executive Officer (CEO) of Real Brands, replacing former Real Brands CEO Jerry Pearring, and Real Brands’ headquarters were moved to the newly renovated/constructed CASH headquarters and hemp processing facility in North Providence, RI.
Along with that merger came a powerful new strategic partner with standing equity investments in CASH: Turning Point Brands, Inc. (NYSE:TPB). TPB is also a customer of RLBD now for bulk CBD oils and isolates used in Turning Point products. Turning Point is a major player, with more than 250,000 points of distribution with leading brands such as Zig-Zag®, Stoker’s®, and Beech Nut®.
According to a recent release from the company, CASH is an early entrant in the hemp-derived CBD market, specializing in hemp CBD oil/isolate extraction, wholesaling of CBD oils and isolate, and production and sales of hemp-derived CBD consumer brands.
The company’s Halo 5 is a proprietary chromatography extraction technology utilizing a Simulated Moving Bed (SMB) engineered process for chromatographic separation. The SMB process is advantageous inasmuch as it provides large quantities of highly purified material and precise pharmaceutical grade molecular separation at dramatically reduced costs.
RLBD is also a massively over-shorted stock, and now has a game-changing partnership built into the mix.
As noted above, Real Brands Inc (OTCMKTS:RLBD) has become a campground for overleveraged over-eager bears over recent months based on data from OTCshortreport.com.
To wit: on 15 of the past 16 trading days, RLBD has seen more than half of all of its transactions occur as part of a naked shorting strategy from traders. Over the past 18 market sessions, nearly 64% of all shares were transacted as part of a shorting strategy, and more than 7.7 million shares have been shorted in that time.
Short squeezes happen for the simple reason that risk is unlimited to the upside. A stock can only down to $0/share. But there’s no ceiling. That fact creates an asymmetry that creates more drama for upside panic than for downside panic, particularly when a stock is crowded with short side bets.
In essence, shorts can become pitted against one another in search of a scarce commodity: shares of the stock they are short together. If risk was limited, then parties involved could hope to ride it out. But because there exists no theoretical “highest price”, everyone involved faces potential wipeout if things intensify.
We saw it earlier this year when shares of GameStop Corp (NYSE:GME) rallied from $10 to $500 in a matter of days, nearly destroying the Maplelane hedge fund and stirring controversy on Wall Street.
Given the activity on the short side of the tape in RLBD, one has to be on the lookout for some squeeze potential. However, squeezes usually need some sort of catalyst to take off. In the case of GameStop, it was a combination of broad market factors, a crowd of shortcrushers forming on Reddit, and the entrance of a major new investor with a history of success in moving brick and mortar companies into ecommerce models.
In the case of RLBD, it may be more about a key partnership.
We noted above that Real Brands Inc (OTCMKTS:RLBD) recently completed a reverse merger late last year, and that the company is now Canadian American Standard Hemp Inc. or “CASH”, with a transfer in executive leadership and headquarters.
The other big item that came with that transaction was CASH’s partnership with Turning Point Brands, Inc. (NYSE:TPB). TPB owns major equity interest in CASH, and now, by virtue of the merger, in RLBD.
Aside from its massive distribution footprint, TPB is also a customer of RLBD now for bulk CBD oils and isolates used in Turning Point products.
As noted by CEO Kidrin: “Our strategic relationship with TPB is invaluable, as they offer unique expertise and experience in brand launch and marketing, in addition to being a valued major customer.”
Recall that the CBD market is one of the fastest growing markets on the planet right now by virtue of the mainstream consumer integration of CBD in many outlets and products. Analysts believe it has the potential to be even bigger than the cannabis market.
As traders come to understand the synergies involved in this partnership, as well as the growth potential it introduces, and the fact that RLBD may become the vehicle by which TPB gains access to widespread hemp/CBD exposure (through its equity investment position), we could come to see some of the dramatic gains we have already witnessed in other major players in the CBD marketplace, such as Tilray Inc (NASDAQ:TLRY), Neptune Wellness Solutions Inc (NASDAQ:NEPT), and cbdMD Inc (NYSEAMERICAN:YCBD).
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