420 Investor Weekly Review 10/14/22

Review

Michigan cannabis sales expanded 2% sequentially in September to a record $212 million, up 31.4% from a year ago. Illinois added medical data for September to the previously released adult-use data, and that state saw sales rise 0.2% sequentially in total to $158.7 million, up 3.1% 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:

  • AYRWF hired an exec from Neiman Marcus Group as its new President.
  • CURLF relocated a dispensary in Deerfield, Illinois to better handle adult-use customers.
  • CWBHF and Major League Baseball inked a CBD Brand partnership where the company will pay MLB $30.5 million over three years, including 4% of its stock up-front, and will also pay a 10% royalty on sales above $18 million.
  • FFLWF CFO Judy Adam is leaving in November for another CFO position. The company announced that it is launching Hifyre in Colorado and that it is working on adding 5 new cannabis store licenses in New Mexico.
  • GDNSF received a termination notice from its former merger partner, Verano Holdings, who is seeking a payment of $17.875 million.
  • GNLN will distribute AUXO products. AUXO products target the consumer and use CCELL technology.
  • TCNNF is opening a new dispensary in Florida.
  • TRSSF borrowed $45.5 million for 5 years from Pelorus Equity Group with an initial interest-rate at 12.77%.
  • UGRO announced that it signed over $50 million in contracts related to design-build in Q3 and reiterated Q3 guidance. The company also announced a $7.5 million acquisition of a Texas-based engineering firm. The company, DVO, generated $5.5 million in revenue over the past year with EBITDA in excess of 20%.
  • VRNOF terminated the previously announced acquisition of Goodness Growth.

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 100 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 spent most of the week reversing last week's big move but remained above its all-time closing low of 11.26 from 9/30. It fell to 11.73 this Friday, sinking 7.1%. This far exceeded the 1.5% loss in the S&P 500, which is down just a tiny amount in October. The index has climbed 4.2% this month-to-date.

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 64.3% 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 $167,404, down 7.0% during the week. It has climbed 13.9% in October. 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 43.1% in 2022. The model portfolio has increased 1574% since inception. Flying High has 8 positions and 0.3% cash. During the week, I sold one MSO, added three MSOs, including the one I sold early in the week, and an LP, sold two ancillaries, added to two ancillaries and trimmed one too.

420 Opportunity, which fell 15.2% in Q3, ended the week at $42,676, down 6.2%, a bit better than the Global Cannabis Stock Index. It has rallied 11.4% in October, far ahead of the 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 55.9% in 2022 compared to the index loss of 61.6%. The model portfolio has lost 19.9% since inception, while the overall market has declined by 98% during that time-frame. The model maintains 16 holdings and 1.3% cash. The three largest holdings include OGI (9.4%), MAPS (9.3%) and AYRWF (8.3%). During the week, I sold the balance of CCHWF on Monday and added to IIPR and AAWH and trimmed UGRO and added to GNLN. On Wednesday, I reduced HYFM and added a new position in VRNOF. On Friday, I bought more VRNOF and trimmed IIPR. I also exited UGRO and added to SBIG.

420 Quality, which was funded with $50,000 (paper) on 3/1/17 and was down 14.8% in Q3, ended the week at $55,558, down 6.3% this week. It has rallied 10.5% in October, far ahead of the index. In 2021, the model portfolio lost 21.8% compared to the 26.0% loss in the index. In 2022, it has returned -56.0% compared to the index return of -64.3%. 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 11.1%, while the index has lost 85.5%. The model has 15 holdings and 1.5% cash. The largest positions include OGI (10.3%), MAPS (9.2%) and CEAD (8.6%). During the week, I sold the balance of CCHWF on Monday and added to IIPR and AAWH and trimmed UGRO and added to GNLN. On Wednesday, I reduced HYFM and added a new position in VRNOF. On Friday, I bought more VRNOF and trimmed IIPR. I also exited UGRO and added to SBIG.

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.

There are no calls scheduled this week.

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 14, 2022 — 4:10 PM
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