420 Investor Weekly Review 10/07/22

Review

The big news this week was an unexpected move by President Biden regarding pardoning federal cannabis offenders and to seek rescheduling talks. BDSA data for August showed a small sequential decline across the 11 markets it covers in total. 2 rose and 9 fell. Illinois released its adult-use sales for September, which had a day less than August but increased 1% sequentially to $130.7 million, up 7.4% from a year ago. Hifyre data for September suggests that Canadian cannabis sales will fall 4.6% sequentially to C$374 million, up just 7.7% from a year ago.

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

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

  • ACB repurchased about $23 million of convertible notes at a slight discount.
  • AYRWF launched HAZE concentrates in Florida.
  • CCHWF launched Hedy, a new edibles brand.
  • CEAD added a new client in Connecticut obtained through Merida Capital.
  • CURLF closed the acquisition of Tryke and will pay out its former owners over the next three years. The company opened another dispensary in Florida and in Arizona.
  • CWBHF amended its license agreement with Stanley Brothers and also reached a separation agreement with former CFO and COO Booysen.
  • GNLN announced that CEO Kovacevich will step down at the end of the year, with Craig Snyder, now President, becoming the new CEO and Kovacevich remaining on the Board of Directors and taking on a new role as Chief Development Officer.
  • GTBIF had three of its independent directors resign and added two new ones. The company partnered with Purple Scientific to bring Rapid NIRS testing to its cannabis oil production.
  • JUSHF added an independent director and promoted an employee to Chief Legal Officer.
  • STHZF moved its distribution to Nabis.
  • TCNNF opened a dispensary in Sierra Vista, AZ. It launched Khalifa Kush in Florida.
  • TLLTF launched Black Buddha Cannabis in Massachusetts.
  • TLRY relaunched its oral cannabis solution in Ireland. The company saw cannabis revenue increase 10% sequentially in its Q1 to $58.6 million.
  • VRNOF opened two dispensaries in Florida, reaching now 61 in the state.

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.

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.

Market Performance

The Global Cannabis Stock Index hit a new all-time closing low last Friday of 11.26 but soared to 12.63 this Friday, rallying 12.2%. This far exceeded the 1.5% gain in the S&P 500.

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 61.6% in 2022. It currently includes 28 stocks and ended 2021 at 32.85. In September it was down 25.9%, and it was down 23.7% in Q3:

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, down 16.1% in Q3, ended the week valued at $179,924, up 22.4% during the week. 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 38.9% in 2022. The model portfolio has increased 1699% since inception. Flying High has 7 positions and 3.0% cash. During the week, I sold one MSO and reduced another. I added a new ancillary name and added to three other existing ancillary positions.

420 Opportunity, which fell 15.2% in Q3, ended the week at $42,676, up 18.8%, a bit better than the Global Cannabis Stock Index. 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 gained 12.2% during the week. In 2021, the model lost 13.8%, while the index decreased 26.0%, and it is down 53.0% in 2022 compared to the index loss of 61.6%. The model portfolio has lost 14.7% since inception, while the overall market has declined by 98% during that time-frame. The model maintains 17 holdings and 0.4% cash. The three largest holdings include (MAPS (11.0%), OGI (9.1%) and GRWG (8.2%). During the week, I trimmed CCHWF on Friday and added a new position in IIPR.

420 Quality, which was funded with $50,000 (paper) on 3/1/17 and was down 14.8% in Q3, ended the week at $59,309, up 17.9% this week. In 2021, the model portfolio lost 21.8% compared to the 26.0% loss in the index. In 2022, it has returned -53.1% compared to the index return of -61.6%. 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 18.6%, while the index has lost 86.1%. The model has 16 holdings and 0.4% cash. The largest positions include MAPS (10.8%), OGI (10.0%) and CEAD (8.7%). During the week, I sold CRLBF and added to AAWH and CEAD on Monday. I trimmed CCHWF on Friday and added a new position in IIPR.

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.

  • Monday is Columbus Day in the U.S., but markets are open. It ls also Thanksgiving Day in Canada, and markets are closed.
  • On Tuesday night, I will host a chat with subscribers of 420 Investor at 8:30 ET.
  • On Thursday, Avant Brands reports its Q3 after the close and hosts a call.

Companies with fiscal years ending in July (June for Canadian Venture stocks that don't file with the SEC) must report their annual financials in October. Companies with years ending in February, May and November must file their quarterly reports by mid-October (or by late October for Canadian-listed stocks that aren't on the TSX or NEO or filing with the SEC).

Posted to 420 Investor on Oct 07, 2022 — 5:10 PM
Comments on this post have been disabled by the Maven.