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Over the last quarter, we have highlighted High Hampton Holdings (HC.CN) (HHPHF) as an attractive play on the California cannabis market. The company has been executing on all cylinders and is a stock that investors need to watch.
From acquisitions to the appointing of key personnel to the board of directors and management team, High Hampton is a company that is focused on creating value for shareholders and we are bullish on this opportunity.
A California Execution Story
High Hampton is levered to the California marijuana market through CoachellaGro. The company plans on building a 194,000 sq. ft. greenhouse facility for the purpose of medical cannabis cultivation. This is a major initiative and we are bullish on the plan to build out a GMP certified cultivation and processing facility.
In early May, High Hampton’s CoachellaGro received a conditional use permit and the appeal period associated with this permit has expired. This is a major development and a catalyst for the company. High Hampton can start construction and retained Vertical Construction Co. to assist in the design build and provide input on the design process, early value engineering, and all the required coordination and consulting involved in the construction.
High Hampton has been executing flawlessly and has made significant progress in building out its production footprint. At the same time, management has been laser focused on building out its distribution to capitalize on the California market.
Last week, High Hampton further expanded its distribution network in California with the acquisition of 420 Realty, which has applied for multiple permits to vertically integrate in the Greater Los Angeles Area, for a development agreement including cannabis cultivation, nursery, manufacturing, delivery, and distribution licenses on a single location. Last month, High Hampton acquired 8 Points Management LLC as well as its subsidiary Bravo Distro, a fast-growing California-based cannabis distributor that is led by a management team with a proven track record of success.
These companies represent significant acquisitions and we expect them to prove to be accretive. Distribution within the California marijuana market will prove to be very significant and we are favorable on High Hampton’s focus on this.
Building up the Leadership Team
When it comes to cannabis investments, investors need to take a look at the management team before making any decisions. Earlier this week, High Hampton announced strategic additions to its team and this has been a major focus for the company. The recent additions of Robert Allen to the board of directors and Thomas Sykes as Senior Human Resources Manager are significant and we think they will play in a key role going forward.
Allen is an investor, entrepreneur and C suite executive with more than 20 years of experience building, leading and advising both public and private corporations through complex restructurings and capital market transactions. Earlier in his career he was both CFO and CEO of large public corporations and will add a lot of value to the High Hampton team.
Sykes has more than 30 year of experience in the private and public sectors, having worked for the Union Pacific Railroad, Southwest Management Consulting, the City of Whittier, the State of California, the City of Commerce, the City of Industry, and managing his own consulting company.
An Underappreciated Opportunity
Although High Hampton has made some significant announcements over the last month, the shares have been trading lower. We are monitoring the recent weakness and view this as an attractive California opportunity.
The focus on distribution in California is significant and expect this to be a major value driver for the company. High Hampton’s CoachellaGro asset is also a very attractive opportunity and we see considerable upside to current levels.
The recent additions to the management team and board of directors cannot be ignored and we think High Hampton is in the early innings of a major growth cycle.