420 Investor Weekly Review 10/21/22

Review

Canadian cannabis sales in August rose 0.2% to C$393.7 million. This was up only 13% from a year ago, the slowest annual growth yet. A German plan to legalize for adult-use was leaked.

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 opened its first Pennsylvania dispensary.
  • ACB announced plans to expand its flower offering in Canada.
  • AYRWF introduced its portfolio of brands into the New Jersey market.
  • CEAD will be offering water treatment systems after partnering with Evoqua Water Technologies.
  • CGC introduced two Ace Valley brand cannabis infused gummies.
  • CRON named a new SVP, Head of Operations and the departure of former Supreme employee John Griese, who served in that role before leaving.
  • CRLBF opened a second dispensary in Pensacola, the 20th in Florida.
  • CURLF opened its 4th Maryland dispensary. Curaleaf International released data from a clinical study indicating CBD combined with a pain killer demonstrated significant pain improvement.
  • FFLWF raised C$16 million in capital from Couche-Tard, including C$11 million in debt and C$5 million in equity with warrants.
  • GNLN launched a new house brand, Groove, which aims to be high quality at a low price ancillary products.
  • GTBIF announced that it will open in 2023 10 RISE Express dispensaries within Circle K stores in Florida.

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 remained above its all-time closing low of 11.26 from 9/30. It rose to 12.21 this Friday, lifting 4.1% during the week. This was double the 2.0% gain in the S&P 500, which is down just a tiny amount in October. The index has climbed 8.4% this month-to-date, beating the 4.8% rally in the S&P 500.

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 62.8% 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 $176,577, up 5.5% during the week. It has climbed 20.1% 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 40.0% in 2022. The model portfolio has increased 1666% since inception. Flying High has 7 positions and 0.1% cash. During the week, I sold an MSO and added to five positions, including a Canadian LP and four ancillary names.

420 Opportunity, which fell 15.2% in Q3, ended the week at $42,915, up 7.2%, which was better than the Global Cannabis Stock Index. It has rallied 19.5% 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 4.1% during the week. In 2021, the model lost 13.8%, while the index decreased 26.0%, and it is down 52.8% in 2022 compared to the index loss of 62.8%. The model portfolio has lost 14.2% since inception, while the overall market has declined by 98% during that time-frame. The model maintains 15 holdings and 0.7% cash. The three largest holdings include OGI (9.9%), MAPS (9.8%) and AYRWF (8.5%). During the week, I sold the balance of IIPR on Monday and added to AAWH and OGI. On Tuesday, I sold SMG and bought TLLTF. I also reduced SBIG and added to HYFM. On Wednesday, I added to GRWG. On Thursday, I reduced AYRWF and added to VFF. On Friday, I reduced VRNOF 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 $59,150, up 6.5% this week. It has rallied 17.6% 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 -53.2% compared to the index return of -62.8%. 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 18.3%, while the index has lost 84.9%. The model has 14 holdings and 0.3% cash. The largest positions include OGI (10.6%), MAPS (9.6%) and CEAD (9.3%). During the week, I sold the balance of IIPR on Monday and added to AAWH, VFF and OGI. On Tuesday, I sold SMG and bought TLLTF. I also reduced SBIG and added to GRWG and HYFM. On Thursday, I reduced AYRWF and added to VFF. On Friday, I added to CEAD and reduced VRNOF to add 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.

  • I will host a live chat with members of 420 Investor on Tuesday night.
  • Turning Point Brands will report its Q3 financials and host a call on Wednesday.

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 21, 2022 — 4:10 PM
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