Clover Leaf Capital Corp. Stock

Read our Advertiser Disclosure.
Contributor, Benzinga
September 9, 2021
$11.82
-0.33[-2.72%]
Last update: 9:20AM (Delayed 15-Minutes)
Get Real Time Here
Open-Close-
Vol / Avg.0 / 560.000Mkt Cap62.888M
Day Range- - -52 Wk Range10.900 - 12.500

If there’s any example of a full-circle investment in today’s financial ecosystem, it would have to be the cannabis sector. Currently, the otherwise divisive political landscape has largely reached consensus to relax restrictions on the much-maligned plant. During President Biden’s campaign in 2020, he pledged to decriminalize the use of cannabis and automatically expunge prior convictions related to such consumption.

Although championed as a progressive move, cannabis actually has a long and storied history in America. According to PBS Frontline, the then-colony of the British Empire produced high volumes of hemp, with the commodity exchanged as legal tender in Pennsylvania, Virginia and Maryland in the early 1600s. Only until the ugly politics of immigration entered the picture did the U.S. government crack down on the plant.

Today, the tolerant environment allows companies like Clover Leaf Capital Corp. — a special purpose acquisition company (SPAC) seeking to merge with a cannabis-related enterprise — to flourish, thereby expanding opportunities for retail investors.

When is the Clover Leaf Capital Corp. IPO Date?

On April 7, 2021, Clover Leaf Capital filed its intentions to raise $125 million via an initial public offering (IPO) with the Securities and Exchange Commission. Backed by privately held Yntegra Group, Clover Leaf announced that while it gave itself the flexibility to pursue any viable business combination, it specifically intended to focus on the legal cannabis market. At the proposed capital raise, the SPAC would command a market value of $158 million.

Later, on July 19, Clover priced its IPO — which involved the sale of 12.5 million shares — at $10 per unit. Maxim Group LLC provided the sole bookrunning management services for the offering. Shares began trading on the Nasdaq exchange under the ticker symbol CLOE.

Beginning Sept. 9, holders of CLOE stock which were purchased in the IPO can elect to separately trade the shares of the common stock and the rights included in the units — the reason why Clover appears on the IPO calendar on this date.

Unlike a traditional public market offering, a SPAC-based IPO does not represent a capital raise for a particular enterprise. In fact, a SPAC has no underlying operations, which is why analysts refer to such entities as blank-check firms or shell companies. Rather, a SPAC’s only goal is to identify a promising private firm. Once shareholders approve of the business combination, the SPAC merges with the target, making the latter a public entity by default.

It helps to view SPAC mergers as a symbiotic relationship: the merger candidate brings the business to the table while the shell company provides access to the capital market. Therefore, financial journalists often refer to these arrangements as reverse mergers.

On paper, a SPAC IPO opens many doors for retail investors. Under a traditional new offering paradigm, underwriters usually only provide access to shares at their initial price to their choicest clients such as mutual funds. This circumstance forces public buyers to wait for new issues to be released at the open market, which may arrive at a pricing disadvantage. With SPACs, retail buyers can acquire shares at any phase, from pre-merger-announcement to post-combination.

Still, SPACs following their mergers have not performed well this year because of dilutive pressures. Thus, risk-mitigation measures and due diligence are key to succeeding in this SPAC bull market.

Clover Leaf Capital Corp. Financial History

Thanks to the Agriculture Improvement Act of 2018 — an initiative which both Democrats and Republicans supported — hemp-based products, including cannabidiol (CBD), enjoyed legal status, a huge victory for proponents of adult liberties. At the same time, some confusion exists regarding the concept of marijuana legalization.

Although the above act — best known colloquially as the Farm bill — legalizes some forms of cannabis-based products, it does not actually legalize cannabis. Hemp or CBD products benefit from their newfound status as noncontrolled substances because, per guidance from the Food and Drug Administration, they contain less than 0.3% delta-9-tetrahydrocannabinol (THC) content. Of course, THC is the psychoactive compound in “full-powered” cannabis, which is at the heart of a wider political argument.

For now, hemp or CBD products offer tremendous revenue-generating opportunities for CLOE investors. According to a study by Graphical Research, the North American CBD market could surpass $61.2 billion by 2027. Much of this sector upside stems from product category diversity, which include segments like vaping oils, tinctures, transdermal patches, supplemental tablets, creams, edibles and infused beverages, among many others.

Typically, people view the cannabis sector in a negative light. However, with hemp and CBD products only containing a trace amount of THC, users can enjoy the possible health benefits of these botanical compounds without incurring a psychoactive effect. Moreover, the product diversity allows cannabis advocates to effectively evangelize the industry.

For instance, attempting to get someone to smoke CBD products would not nearly be as effective offering the same person CBD-infused gummy bears or beverages. Therefore, Clover Leaf can pursue multiple candidate enterprises without an overly high risk of offending public sensibilities.

Clover Leaf Capital Corp. Potential

Admittedly, the cannabis sector has been incredibly volatile despite the transformative nature of the underlying industry. Due to favorable legislation, the U.S. hemp and CBD market represents the conversion of an illicit retail segment to a fully legal (and taxable) one. Nevertheless, several publicly traded cannabis producers have generated less-than-stellar returns.

But if Clover Leaf succeeds in its stated directive, investors may have a better-than-average chance of profitability with CLOE stock. Because management seeks “providers of ancillary services” rather than “directly plant touching businesses,” Clover Leaf can explore several opportunities, including cultivation, processing, testing and consumer goods technologies.

More critically, by providing services to the cannabis sector rather than being involved in the actual production of hemp or CBD products, investors of CLOE stock can potentially gain exposure to the administration of the legal cannabis industry, which is a highly sought-after business segment.

Primarily, Innovative Industrial Properties (NYSE: IIPR) — a real-estate investment trust focused on the cannabis market but not on its production — has been one of the best performers in the botanical segment, generating a return of 1,246% since its IPO. It’s possible, then, that Clover Leaf could spark similar bullishness by following the same path.

How to Buy Clover Leaf Capital Corp. IPO (CLOE) Stock

Although Clover Leaf brings an attractive narrative to prospective speculators, you must be aware that as a whole, SPAC-based business combinations have not performed well this year. After peaking in mid-February 2021, SPACs have been disappointing, with these blank-check firms generally underperforming major market indices since April 12.

Simultaneously, it’s unfair to state that SPACs offer no opportunities for interested investors. In fact, plenty of reverse-mergers resulted in outstanding gains for stakeholders. One of the main advantages of SPACs is that they’re easy to acquire, especially if you already know how to buy stocks. If not, follow the simple steps below.

Step 1: Pick a brokerage.

Any reputable brokerage will offer its members access to CLOE stock. Therefore, you’re free to narrow your list of best brokers to attributes that you care the most about, such as interface intuitiveness or platform mobility.

Step 2: Decide how many shares you want.

Whether you go with a traditional IPO or a SPAC merger, new offerings represent risky territory. Therefore, choose a balanced share count that facilitates upside rewards but also mitigates downside pressure.

Step 3: Choose your order type.

Before placing your bet, familiarize yourself with these market concepts.

  • Bid: The buyer’s best offer, the bid is always lower than the ask.
  • Ask: The seller’s bottom-dollar price, the ask is always higher than the bid.
  • Spread: The bid-ask price difference, the spread also indicates market liquidity and risk. Tighter spreads entail higher liquidity and lower risk due to robust volume, while wider spreads indicate a low-volume market, implying higher risk.
  • Limit order: Trade requests at a specific price, limit orders provide transparency but no execution guarantees.
  • Market order: Conversely, market orders guarantee fulfillment but only at the prevailing rate, which usually fluctuates.
  • Stop-loss order: A protective mechanism, a stop-loss order automatically exits your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders only execute at a specified price, affording transparency in your automated exits. However, such orders carry the same nonfulfillment risk as limit orders.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

CLOE Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons for questions about potential conflicts of interest. In summary, securities laws prevent investors from acting on privileged information.

CLOE Pre-IPO

If you want to build your repertoire of new public offerings, you should consider opening an account with ClickIPO, which buys select shares of companies with public market ambitions. Since these shares are priced at their initial offering rate, regular investors enjoy the benefits of buying stock on the ground floor.

Green in More Ways Than One

According to an April 2021 Pew Research Center report, Americans overwhelmingly support marijuana legalization. In short, the backdrop for CLOE stock couldn’t be brighter. However, execution is vital as Clover Leaf’s management team must find the right business for the job.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.