420 Investor Weekly Review 08/19/22

Review

Canadian cannabis sales set a record in June! The StatsCan data showed a 1% sequential increase to C$377.5 million, up 22% from the prior year.

I distributed this written material to 420 Investor subscribers during the week:

Here are some of this week's highlights for Focus List names:

  • AAWH announced an agreement to acquire Ohio Patient Access, boosting the ability of the company to move from 2 to 5 Ohio medical cannabis dispensaries. The company reported a solid Q2, with net revenue jumping 15% sequentially to $97.5 million. Adjusted EBITDA was $20.9 million. It also announced it is no longer buying MedMen NY. The company also began adult-use sales at its New Jersey dispensary in Montclair.
  • AYRWF introduced LEVIA water soluble tinctures in Nevada and Arizona. The company reported a soft Q2 and reduced the outlook. Revenue was $110.1 million, and adjusted EBITDA was $19.6 million.
  • CCHWF reported Q2 revenue a bit below expectations at $129.6 million, with adjusted EBITDA of $12 million, also below expectations. The company expects its acquisition by Cresco Labs to close by year-end.
  • CGC announced that Martha Stewart CBD has launched a new flavor of its gummies portfolio, Pumpkin Spice.
  • CRLBF reported a solid Q2, with revenue increasing 2% sequentially to $218.2 million. Its adjusted EBITDA was $51 million, 23% of revenue.
  • GNLN was under expectations with $39.9 million revenue in Q2, and this was a 14% sequential decline. Adjusted EBITDA was -$5.8 million. The company will raise additional capital, selling its real estate in Boca Raton in September for $10 million.
  • PLNHF reported $28.4 million in revenue in Q2, up almost 11% sequentially. Adjusted EBITDA was $3 million.
  • TCNNF opened a dispensary in Auburndale, Florida.
  • TLLTF reported 11% sequential revenue growth in Q2 to $47.1 million. Adjusted EBITDA was $1.1 million.
  • TLRY earned authorization to commercialize its medical cannabis products in Poland.
  • TRSSF is opening a Cookies Corners in its Lodi, NJ store.
  • UGRO had a disappointing quarter, with revenue falling below expectations at $16.3 million and adjusted EBITDA at -$529K. Guidance for Q3 was reduced to revenue of $10-11 million and adjusted EBITDA about -$2.5 million.
  • VFF extended the relationship with Pure Sunfarms and Simon Fraser University for cannabis research.
  • VRNOF has introduced its brand Savvy, flower and extract, in seven core markets it serves. Its Q2 was a miss on profitability, with revenue of $224 million up 11% but adjusted EBITDA of $48 million, just 22% of revenue. The company also announced a distribution agreement with Tyson 2.0 for Ric Flair Drip Cannabis. It opened its 56th Florida medical cannabis dispensary in Hollywood and its 4th West Virginia dispensary in Clarksburg.

There were comments in over 130 discussions in the Forum. Don't miss out on this most informative part of 420 Investor! Not familiar with the the Forum? This video will help! This is a great way to track your favorite tickers, even those not on the Focus List, and to get your questions answered quickly.

Please check the Focus List, (which has technical, fundamental and valuation ratings as well as a market-cap table). To help track market caps, we maintain tables for the Canadian LPs and the American cannabis operators and ancillary companies.

Market Performance

The Global Cannabis Stock Index slipped and trailed the broad market weakness, decreasing 3.3% to 15.05, still up from the all-time low close of 14.76 set 6/30:

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 54.2% in 2022. It currently includes 26 stocks and ended 2021 at 32.85. In August, it has fallen 2.3%:

For perspective, the index, which began 2013 at 100, bottomed in August 2013 at 70 after a prior peak of 220 in February 2013 and peaked in 2014 at 1010. The long post-2014 decline ended in February 2016, with the market soaring at the beginning of 2018 to levels not seen since 2014. We took out the 2016 lows by a wide margin in early 2020 and then soared into 2021 before reversing. We recently made a new all-time low:

Model Portfolios

Flying High, up 21.7% in July, ended the week valued at $228,864, down 4.5% during the week and now up 2.5% in August. This model portfolio was launched on 9/23/13 with $10,000 (paper), and it ended 2013 at $18,225, 2014 at $15,702, 2015 at $9608, 2016 at $49,568, 2017 at $112,891, 2018 at $161,346, 2019 at $165,249, 2020 at $252,409 and 2021 at $294,249. The year-to-date gain was 16.6% in 2021, and the model portfolio is down 25.7% in 2022. The model portfolio has increased 2176% since inception. Flying High has 8 positions and 0.3% cash. During the week, I trimmed an ancillary name on Monday and added to another. On Tuesday, I trimmed an MSO and added to another. On Friday, I trimmed that same MSO and added to the same MSO.

420 Opportunity, which rose 19.3% in July, ended the week at $51,681, down 2.5% (and +2.5% in August) This model portfolio, which was funded with $50,000 (paper) on 4/8/14 and ended 2014 at $17,105, 2015 at $11,418, 2016 at $44,915, 2017 at $91,407, 2018 at $94,616, 2019 at $77,715, 2020 at $105,373 and 2021 at $90,823, has a goal of being fully invested and outperforming the market as measured by the 420 Investor Cannabis Stock Index, which lost 3.3% during the week. In 2021, the model lost 13.8%, while the index decreased 26.0%, and it is down 43.1% in 2022 compared to the index loss of 54.2%. The model portfolio has gained 3.4% since inception, while the overall market has declined by 98% during that time-frame. The model maintains 19 holdings and 0.2% cash. The three largest holdings include CEAD/CEADW (10.1%), AAWH (9.4%) and AYRWF (7.8%). During the week, I .trimmed HYFM on Monday and added to TRSSF and exited CGC and added to LOWLF and started a new VFF position. On Tuesday, I trimmed MAPS and added a new position in UGRO. ON Wednesday, I reduced HYFM again and added to UGRO. On Wednesday, I reduced CRLBF and added to GNLN.

420 Quality, which was funded with $50,000 (paper) on 3/1/17 and was up 20.4% in July, ended the week at $71,956, down 3.4% this week (and still up 1.3% in August). In 2021, the model portfolio lost 21.8% compared to the 26.0% loss in the index. In 2022, it has returned -43.0% compared to the index return of -54.2%. It ended 2017 at $109,480, 2018 at $119,053, 2019 at $113,123, 2020 at $161,504 and 2021 at $126,323. To learn more about the model portfolio, which is longer-term focused, please read the description I posted before launch. Since inception, the model has gained 43.9%, while the index has lost about 81.4%. The model has 19 holdings and 0.2% cash. The largest positions include CEAD/CEADW (9.4%), OGI (9.0%) and AAWH (8.9%). During the week, I .trimmed HYFM on Monday and added to TRSSF and exited CGC and added to LOWLF and started a new VFF position. On Tuesday, I trimmed MAPS and added a new position in UGRO. ON Wednesday, I reduced HYFM again and added to UGRO. On Wednesday, I reduced CRLBF and added to GNLN.

Calendar

As a reminder, 420i posts a calendar for your convenience, as does New Cannabis Ventures. NCV also posts a separate calendar for conference calls. We are almost done with the June 30th quarter!

  • Monday: Greenrose hosts a call to discuss its Q2 results after the close.
  • Thursday: EnWave and SLANG Worldwide host calls in the morning to discuss their Q3 and Q2, respectively. POSaBit and XS Financial host their Q2 calls after the close.

Companies with fiscal years ending in May (April for Canadian Venture stocks that don't file with the SEC) must report their annual financials in August. This includes none from the Focus List since Tilray already filed. Companies with years ending in March, September and December must file their quarterly reports by mid-August (or by late August for Canadian-listed stocks that aren't on the TSX or NEO or filing with the SEC).

Posted to 420 Investor on Aug 19, 2022 — 4:08 PM
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