Why Hexo Was Sinking on Thursday

Investors weren’t catching Hexo’s (NASDAQ:HEXO) buzz on Thursday. The marijuana stock was down by over 6% in late afternoon trading, in an apparent reaction to the appointment of a new company executive.

So what

That new Hexo executive is Guillaume Jou毛t, who is taking the role of chief people and culture officer at the Canadian marijuana company. He will formally begin his tenure on Sept. 8.

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Image source: Getty Images.

Jou毛t is a veteran who has served in top managerial positions across several segments of the wider consumer goods industry.

According to his LinkedIn page, his last major corporate stint was a nearly eight-year term as global chief human resources officer, chief sustainability and global communications officer at French food company Groupe Bel (makers of the Babybel and The Laughing Cow cheese products) that ended in December 2019. He has not previously worked in the marijuana industry.

In the press release trumpeting Jou毛t’s appointment, Hexo said that he “will be a key member of our executive team as we continue to build out an intentional culture that is aligned with our corporate strategy.”

Now what

Most likely, Hexo shares did not trade down on Jou毛t’s capabilities and experience, which appear to be excellent and multifaceted.

Yet talented and seasoned executives tend to command high salaries, and Hexo is a chronic money loser. Compounding that, its shareholders just approved the company’s roughly $733 million cash-and-stock acquisition of Canadian cannabis peer Redecan. Something like $416 million is to be paid in cash.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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