You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We no longer send these by email as we did in the past, but we post this and all of the newsletters on our website here.
Friends,
Six weeks ago, this newsletter suggested that Canadian cannabis stocks were the place to be. Since then, the NCV Global Cannabis Stock Index has advanced 6.4% to 5.69. The MSOs, now only 11.8% of the index with just three members, have done well since then. MSOS, now at 2.75, has increased 22.2%, but its rally has been helped by a stock that is not currently part of the index. Here are the six names that were in the index in June:
The three MSOs that are still part of the GCSI have increased an average of 11% since June 11th. Since June 30th, these three MSOs have increased just 2.5%. Year-to-date, MSOS has dropped 27.8%, while the Global Cannabis Stock Index has declined 17.3%. The New Cannabis Ventures Canadian Cannabis LP Index has actually increased by 3.6%.
Since June 30th, these three MSOs have increased just 2.5%, which is far below the 13.3% return in the Global Cannabis Stock Index. MSOS has increased by 14.1%. Big rallies in a few of the Canadian LPs are driving the GCSI. Looking at the action since the end of June, with the index up 13.3%, the 7 Canadian LPs have performed well:
Tilray, which I had called out as very cheap, is leading the way, and Canopy Growth, which I have warned readers about, is the only one down. The 7 LPs in the GCSI have averaged 24.5% return in July so far. The three that I called out in that June 12th piece have rallied a lot since then:
I don’t see a really good reason for the Canadian LPs to keep rallying in the short-term. I have become neutral on Tilray Brands, which reports on Monday. It might go up, but it could drop some too. I remain quite negative on Canopy Growth, and my overall weighting in my 420 Investor model portfolio is just 27.2% Canadian LP, with two positions that are about equal weight in Organigram and Village Farms. The net result is that my model portfolio is currently short the weighting in the index of 33.5%. At the end of June, my model portfolio was 44.1% invested in three Canadian LPs, and the Global Cannabis Stock Index was 30.4% exposed.
I am not bearish on most Canadian LPs, but, since I have been so loudly bullish on this sub-sector, I wanted to share that I think it makes sense to take some profits. The Canadian government will update us on sales activity in May this morning and most of the companies will be reporting quarterly financials over the next few weeks.
Sincerely,
Alan
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