Exclusive Interview with CNBC’s “Fast Money” Co-Host and Seymour Asset Management CIO Timothy Seymour
Timothy Seymour, co-host of CNBC’s “Fast Money” and CIO of Seymour Asset Management, has been investing in emerging markets since the late 1990s. In 2015, he entered the cannabis investment space and joined the advisory board of Israeli cannabis company Tikun Olam soon afterwards. Seymour spoke with New Cannabis Ventures about his investment experience and offered his insight into the cannabis space today.
Seymour sees the sheer size of the potential cannabis market and the concomitant investment opportunities as a natural way to use his experience. As with any emerging market, exploring potential investments in the cannabis space requires assessing management quality, strategic vision, the ability to execute, and corporate governance. Additionally, he sees an effective understanding of the capital markets dynamic as an essential skill he brings from his emerging markets experience.
The Biggest Trends in Cannabis Investment
Seymour outlined a few of the major trends shaping the cannabis investment space. First, the lack of institutional investors compared to other more traditional investment spaces has been a major dynamic. Like other emerging markets, the cannabis investment space is less liquid, mature, efficient, and transparent comparatively, according to Seymour. This makes for a volatile market where liquidity dynamics can rapidly change.
The entrance of multinational companies as investors in the space is another major trend. For example, Constellation Brands’ major investment in Canopy Growth signaled a change in valuation structure for the industry as a whole, according to Seymour. He expects to see more large, multinational investors entering the space over the next 12 months, which will draw more institutional investors to the table.
Over the past few months, more companies have been uplisting to major exchanges including the NYSE and NASDAQ, and Seymour expects the number of U.S. listings to continue growing.
Historically, the industry has had more difficulty raising debt than it has equity. In 2019, Seymour predicts that more creative financing deals, such as term loans and credit facilities, will take place as increasingly sophisticated lenders enter the cannabis space.
Telling the Industry’s Story
When Seymour first started investing in the cannabis space, he started talking to his colleagues about what he was doing, and CNBC was interested in covering innovative investment ideas. The global network’s earlier coverage of the cannabis space was narrower, but it quickly broadened.
Seymour’s goal on “Fast Money” is to tell the big picture story of the cannabis space. He views the space as a major legislative, social, and economic evolution. He wants to provide thought leadership and help investors understand how to make effective investment decisions.
Evaluating Potential Investments
His asset management company Seymour Asset Management is fielding increasing interest in the cannabis space from its clients. The company is aiming to present a full spectrum of both private and public market options, as well as working on developing a dedicated vehicle for the cannabis space.
When it comes to identifying attractive potential investments, Seymour looks at companies that have been in operation for at least a few years, at a point where they are generating revenue. Companies that promised pro forma growth in 2019 two years ago should be achieving that growth now. Companies like this have proven they can grow in a strict, changing regulatory environment.
The investment focus has been on finding companies with the most funded production, the most market share, or the most global partnerships. Now, that focus is evolving toward companies that do not need an enormous amount of capital to support and grow their core business, even if those companies need capital to expand their platform, according to Seymour.
In addition to his roles at CNBC and Seymour Asset Management, Seymour serves on the advisory boards of a number of cannabis companies, including Green Organic Dutchman (TSX: TGOD) (OTC: TGODF) and KushCo Holdings (OTC:KSHB). In this capacity, he is interested in working with companies that can use his skill set to improve their approach to investor relations and corporate governance. He also strives to help these companies better understand their market.
Seymour indicates that investors should be aware of the capital structure of companies they consider as investment opportunities. The volatility of the market and the influx of new capital will likely be accompanied by significant changes in the industry’s capital structure. As the market becomes increasingly sophisticated, investors can expect more in return for their capital, according to Seymour. As companies execute in 2019, those companies with a successful approach, and those without, will become apparent.
To learn more, visit the Seymour Asset Management website. Listen to the entire interview: