SLIM

$CRON: I've been pounding the table on CRON for a while. I still believe the business is not properly understodd as cannabis is still a sector that most people shy away from, hence why the opportunity exists. I rarely build complex financial models like I did before, and I do not put too much emphasis on them: "More fiction has been written in excel than word". I also happen to believe that alpha in markets is mostly generated through qualitative insights and behaviour, but let's leave that discussion for later. I have made an exception for CRON. The reason is that CRON has four growth engines going simultaneously: Organic growth, margin expansion, inorganic growth and buybacks. Hence why I think it's helpful model the moving parts and see what assumptions you need to make in order to achieve a satisfactory results. And, by my model, I think $CRON is one of the more compelling 5-year setups in the market today when looking at reasonability of assumptions underwriting the upside (predictability, if you will) and potential downside considering what the market is charging for the operating business today. So, here it goes (please don't kill me if I get some of details wrong, @cupofcoffeecap): At ~$3.16/share: ~368m shares outstanding ~$1.16bn equity value ~$827m cash + investments Essentially no traditional financial debt ~$337m enterprise value So roughly 71% of CRON’s market cap is backed by cash and investments. Meanwhile, the operating business is inflecting quickly. 2025: Revenue: ~$147m Adj. EBITDA: ~$10m Margin: ~7% H1’26: Revenue: ~$98m Adj. EBITDA: ~$18m Margin: ~18.5% Q2’26: Revenue: ~$53m Adj. EBITDA: ~$13m Margin: ~25% The margin expansion is being driven by higher GrowCo utilization, lower unit costs, better product/geographic mix and a largely fixed corporate cost base being spread over much higher revenue. Q2 gross margin reached ~54%, while capex has normalized after the GrowCo expansion. The valuation compresses quickly as earnings inflect: LTM EBITDA: ~$24m → ~14x EV/EBITDA H1’26 annualized: ~$36m → ~9x Q2’26 annualized: ~$52m → ~6.5x And CanAdelaar is still not consolidated. CanAdelaar generated roughly: Revenue: ~$47m EBITDA: ~$28m Margin: ~60% Full estimated consideration is ~$95m including earnouts, or only ~3.4x current EBITDA. Pro forma: CRON EV: ~$337m CanAdelaar consideration: +~$95m Pro forma EV: ~$432m CRON LTM EBITDA: ~$24m CanAdelaar EBITDA: +~$28m Pro forma EBITDA: ~$52m That is only ~8.3x pro forma LTM EV/EBITDA before further organic growth. My 2031 base case: Revenue: ~$600m Adj. EBITDA: ~$190m Margin: ~32% Underlying operating FCF: ~$125m Shares: ~330m The revenue build is not especially heroic. Canada: ~$115m → ~$170m, ~8% CAGR Israel: ~$65m → ~$115m, ~12% CAGR Other international: ~$35m → ~$90m, ~21% CAGR from a small base CanAdelaar: ~$85m Acquisition #2: ~$70m Acquisition #3: ~$75m That gets you to roughly ~$600m. The margin build is also fairly reasonable: Existing CRON: ~$375m revenue at ~28% margin → ~$105m EBITDA CanAdelaar: ~$85m at ~48% → ~$41m EBITDA Acquisition #2: ~$70m at ~27% → ~$19m Acquisition #3: ~$75m at ~25% → ~$19m A ~28% margin for legacy CRON does not look especially aggressive when Q2’26 already ran at ~25%. The CanAdelaar assumption also embeds meaningful margin compression from ~60% today to ~48%. Capital allocation adds another layer. Continued ~$50m annual buybacks could reduce the share count from ~368m toward ~330m by 2031, while the growing FCF base replenishes much of the cash used for M&A and repurchases. Even after the full ~$95m CanAdelaar consideration, CRON would still have roughly ~$730m of cash and investments before future cash generation. If excess cash remains difficult to deploy, a special dividend also becomes increasingly plausible. On ~$190m of 2031 EBITDA: 10x EV/EBITDA + substantial net cash ~$8.50/share ~170% upside until 2031 12x EV/EBITDA + substantial net cash ~$9.50–$10/share ~200–215% upside until 2031 vs. ~$3.16 today. And none of this requires U.S. legalization. So essentially, you can underwrite a strong outcome using fairly reasonable assumptions around organic growth, operating leverage, disciplined M&A and continued buybacks, while the huge cash balance and lack of traditional debt provide substantial downside support. Hence why this is one of my favorite setups today and a 20% position for me.