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Althea Group Holdings share price up 27% despite Aphria short seller attack

In morning trade the Althea Group Holdings Ltd (ASX: AGH) share price has rocketed higher despite getting caught up in a short seller attack on major shareholder and supplier Aphria.

At the time of writing the cannabis company’s share price has rocketed 27% higher to 23.5 cents.

Despite this gain Althea’s shares have still lost 69% of their value since peaking at 76 cents earlier this year.

What happened?

According to Bloomberg, Quintessential Capital Management and Hindenburg Research have alleged that Canadian cannabis giant Aphria has paid inflated prices for assets held by insiders.

Quintessential’s founder, Gabriel Grego, alleged in his report that Aphria is a “black hole” and that management overpaid for assets in Latin America sold by companies with alleged links to Aphria.

In addition to this, the report has questioned the C$145 million purchase of Marigold Projects in Jamaica. As well as alleged irregularities with the transaction, a site visit to its registered address revealed its “world class” headquarters to be an abandoned and dilapidated property.

Although the Ontario-based company has defended itself and described the allegations as “false and defamatory,” it has not stopped its share price from halving in value and dragging down fellow cannabis companies.

What about Althea?

According to the AFR, Althea’s chief executive and largest shareholder, Josh Fegan, didn’t expect the news to impact the company.

He told the news outlet that: ​”Irrespective of the report and the discussions around it, the Althea operations remain firmly on track.”

Before adding that: “We have no concerns around the supply chain, another batch is leaving Canada next week, and we have an import permit for another batch in 2019. We’ve got no concerns about current and immediate supply.”

Elsewhere in the industry today the AusCann Group Holdings Ltd (ASX: AC8) share price is down 1.5% and the Cann Group Ltd (ASX: CAN) share price is flat at $2.18.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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