An Institutional Investor Bets Big on the Cannabis Industry

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A few months ago, CB1 Capital CIO Todd Harrison pointed to the newly developing trend of institutional investors buying American cannabis stocks, highlighting stakes held by Fidelity, Putnam Investments and Wasatch Advisors. On Friday, the game changed, in our view, as a single unnamed institution took down $79 million in GTI stock in a private transaction. The 5.5 million shares represented 2.5% of the entire company and about 5.5 days of trading volume across the OTC and Canadian exchanges.

We find such a substantial investment to be quite positive for the company and other MSOs. This institution and the others that have been investing are recognizing the promise of the industry and also validating corporate governance, which has been questioned by some due to the multiple voting classes of stock typically at MSOs. Further, they see value at the current prices.

The trend towards a growing institutional investor base bodes well and is happening ahead of any potential ability of the MSOs to list on major exchanges, which would likely accelerate interest among these investors. While raising capital has been a challenge for MSOs, and a broader base of institutional investors could help alleviate that challenge, this transaction could also serve as a model for founders and early investors to find liquidity. In general MSOs trade a tiny fraction of their overall market cap each day, making it difficult for buyers to buy a large stake without pushing up the price. Rather than insiders and early investors selling into the market, which depresses the stock, perhaps we will see more private transactions like this one.

Helping Cannabis Investors Navigate a New Sector Since 2013

Alan Brochstein’s 420 Investor is the only due diligence platform trusted by cannabis investors for over 6 years. The go-to premium service for investors to learn, explore, and profit from publicly-traded cannabis stocks. The primary goal of 420 Investor is to provide professional, real-time, objective information about the top cannabis companies in the market in order to help investors Capitalize on Cannabis™.

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:

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Alan & Joel

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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