How Peter Thiel Made A Killing In Tilray

The momentum stock du jour - Tilray - has captivated trader attentions ever since its IPO at $17 in July, following which it has catapulted in what has been a relentless parabolic fashion. And while most know the general story behind the Canadian pot company, what may come as a surprise is that Tilray CEO Brendan Kennedy’s Privateer Holdings, holds more than 58 million of the total 76 million shares outstanding, a stake now worth more than $12 billion after the stock soared more than 10-fold from its July public offering. And, according to Bloomberg, when Tilray’s unlisted Class 1 shares are included, Privateer’s holdings rise to almost 75 million shares, worth more than $15 billion.

The curiously low float - together with a painful short squeeze - is one of the reasons behind the stock's tremendous move. As Bloomberg notes, the limited number of shares available for trading is also be adding to the volatility, making it more expensive for skeptical investors to short the stock. That however has not daunted the skeptics such as Citron Research, which earlier on Wednesday said it remains short on Tilray, calling the stock’s surge “beyond comprehension” in a Tweet Wednesday.

However, what even fewer know is that one of the biggest winners from Tilray's explosion, is none other than Peter Thiel who is an investor in Privateer.

Privateer’s partners include Brendan Kennedy, 46, who serves as Tilray’s chief executive officer, Michael Blue and Christian Groh. Kennedy and Blue are both graduates of Yale School of Management’s MBA program. Kennedy and Groh both formerly worked together at SVB Analytics, a non-bank affiliate of Silicon Valley bank.

Thiel’s Founders Fund became the first institutional investor in the cannabis industry through Privateer Holdings’ $75 million Series B financing round in December 2014, according to the company’s website. That stake may now be approaching (or has surpassed) $1 billion.

And as investors were counting their profits, Tilray surpassed Canopy Growth as the world’s largest cannabis company, with a market value of more than $20 billion. Canopy, which added a New York listing in May, is worth only $12 billion. Tilray jumped another 50% to $230, giving it a value higher than American Airlines Group.

As Bloomberg adds, Tilray, which has agreements to sell pot in Canadian pharmacies including Shoppers Drug Mart, has ambitious plans well beyond Canada. It’s focused on medicinal marijuana in 12 countries that span five continents.

“Our long-term vision is if a patient walks into any pharmacy in any country in the world that has legalized cannabis that patient should be able to obtain a Tilray product. That’s our global goal,” Kennedy said in an interview this week from New York.

Tilray is investing in production capacity in Portugal so it can supply products to the EU from within Europe, he said. The company also has its High Park brand for the recreational market in Canada, which has secured supply agreements with seven provinces and territories, Kennedy said. The company also has a deal to develop medicinal cannabis with the Canadian division of Novartis AG of Switzerland.

Kennedy said he’s not interested in getting taken over by a large consumer company. “I don’t want to get bought by AB-InBev or Diageo, I want to be that company,” he said. In a testament to the euphoria surrounding the space, he claimed the company may one day be worth more than $100 billion.

At this rate of appreciation, it will hit that price in just a few weeks.