STMH - Stem Holdings (STMH)(STEM:CA) - Appoints New CEO

New CEO. Stem Holdings announced the appointment of Co-Founder Matthew Cohen as Chief Executive Officer and Chief Financial Officer effective immediately. Although working out of the spotlight, Mr. Cohen played an instrumental part in the organization of Stem and its acquisition of the cannabis cultivation and retail operations. We had an opportunity to speak with Mr. Cohen and following are the highlights. Rationalization of Assets. Mr. Cohen already is moving forward with the sale of assets, such as some of the Company's joint ventures and real estate that can be leased backed. Funds generated by these actions will provide a cushion as the Oregon operations are rebuilt. Ultimately, we expect Stem to rationalize into the Oregon operations and the California dispensary, although in our view if an acceptable offer for the Sacramento dispensary was received, it too should be sold as the Company does not have economies of scale in the California market.Expense Reduction. Top of the to do list is to perform an expense restructuring process across the entire organization to minimize cash burn. Spending on areas such as IT, office leases, and legal costs are high priority targets. Once the burn is minimized, we expect Stem to re-invest the savings into areas such as marketing and advertising for the Oregon and California operations to drive revenue. The Future. We believe the future path for Stem is either as a consolidator or a consolidatee, and we believe Mr. Cohen is open to either path. Stem occupies a solid position in Oregon and the growing retail dispensary in California. These assets make a strong base from which to grow or would be attractive to another operator, in our view.Maintaining Market Perform. With the Company's future still in a state of flux, we are maintaining our Market Perform rating. We believe the Company has an attractive position in the Oregon market and a solid performer in its California location but it is unclear what the outcome of the Company's other holdings will be nor its competitive advantage over the increasing number of MSOs. Read More >>