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Altria (MO) Buys Stake in Cronos Group (CRON)

Cronos Group (CRON) is trading sharply higher this morning (+36%) on the announcement that Altria Group agreed to buy a 45 percent stake in Cronos. Current details approximate a total $1.8 billion investment.

Also included are warrants to acquire additional shares in Cronos at $19/share, exercisable over a 3-4 year period. The warrants would boost Altria’s holdings by an additional 10 percent or 55 percent ownership.

CRON Relative Strength and 20d

Three weeks ago we started monitoring CRON, as the stock was the only cannabis company trading about its 20d. Since that time CRON has traded 18 of the past 21 days above its 20d moving average. Relative strength is/was noted. MACD remained above its signal line during the period.


CRON deal MO 12-07-2018


Cronos (CRON) went public in early July 2016. All-time highs were set in September  2018 (15.30), so there is little overhead supply at these levels. Expect day traders to take profits at the open and watch how the stock trades mid-session for potential re-entry. We have 1/2 position left from a recent entry (add) at $10.50.

In premarket trading, Cronos shares were up 36 percent on the news, while Altria shares gain 2.79 percent. MO is turning near recent lows, potentially setting up a long position as a new revenue stream enters the company’s future.

Additional names in the cannabis group are in talks, as tobacco and medical companies discuss prospects with interested candidates.

S&P 500 futures and SPY are trading higher on NFP numbers.

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