420 Investor Weekly Review 10/28/22

Review

The big news for the industry this week was the announcement by Canopy Growth regarding its U.S. acquisitions, which opens the door potentially for MSOs to trade on the NASDAQ. Also, Germany appears to be moving forward with its plans to legalize cannabis for adult-use in 2024.

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

I recently conducted an interview with Matt Battaglia of Business Roundtable:

BRT - Cannabis Industry Post Legalization from Investing, 280E, MSOs, M&A & more... w/ Melissa Diaz & Alan Brochstein - BRT S03 EP53 (152) 10-23-2022

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

  • CGC announced a plan to create Canopy USA to complete the pending acquisitions of Acreage Holdings, Jetty Extracts and Wana Brands and to hold its stake in TerrAscend. Shareholders must approve the new structure in January. Constellation will convert its Canopy holdings into exchangeable shares and give up its board seats.
  • CRON was fined by the SEC for accounting issues in 2019-2021.
  • CURLF launched Find Cannabis Flower in Massachusetts with expansion to 8 other states ahead.
  • FFLWF was approved to offer cross-docking logistics in Manitoba.
  • GNLN will be distributing its own products in Puerto Rico. The company pre-announced Q3 below expectations at revenue of $27.7-29.7 million. It sold 8.33 million shares with 16.66 million $0.90 warrants at $0.90, a big discount to where it had been trading.
  • JUSHF launched newly formulated infused fruit chews in Massachusetts and will launch in three other states in Q1-2023.
  • SBIG integrated with Shopify to offer CBD and hemp retailers loyalty programs.
  • TLLTF is bringing the CCELL EVO to its device customers at Jupiter Research. The company amended and extended the closing date on its Pennsylvania sale-leaseback with IIPR. It launched "H" by Ricky Williams in Pennsylvania.
  • TLRY expanded its Canadian flower and extract offerings under the Good Supply brand.
  • VRNOF extended its $350 million senior credit facility with Chicago Atlantic, with the new rate of 12.75% based on the prime rate.

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 remained above its all-time closing low of 11.26 from 9/30. It rose to 12.55 this Friday, lifting 2.8% during the week. This was less than the 4.0% gain in the S&P 500, which is up 8.9% October. The cannabis index has climbed 11.5% this month-to-date, beating the rally in the S&P 500.

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 61.8% 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 $162,282, down 8.1% during the week. It has climbed 10.4% 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 44.9% in 2022. The model portfolio has increased 1523% since inception. Flying High has 7 positions and 0.2% cash. During the week, I trimmed an ancillary position to add to another one. I also trimmed an LP to add to the same ancillary stock.

420 Opportunity, which fell 15.2% in Q3, ended the week at $41,619, down 3.0%, which was worse than the Global Cannabis Stock Index. It has rallied 15.9% 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 2.8% during the week. In 2021, the model lost 13.8%, while the index decreased 26.0%, and it is down 54.2% in 2022 compared to the index loss of 61.8%. The model portfolio has lost 16.8% since inception, while the overall market has declined by 98% during that time-frame. The model maintains 14 holdings and 0.5% cash. The three largest holdings include OGI (11.1%), MAPS (10.8%) and CEAD (9.3%). During the week, I reduced AYRWF on Monday and added to CEAD. On Wednesday, I sold the rest of VRNOF and added to TLLTF. On Friday, I reduced VFF and added to GNLN.

420 Quality, which was funded with $50,000 (paper) on 3/1/17 and was down 14.8% in Q3, ended the week at $57,723, down 2.4% this week. It has rallied 14.8% 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 -54.3% compared to the index return of -61.8%. 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 15.5%, while the index has lost 84.5%. The model has 13 holdings and 0.4% cash. The largest positions include OGI (11.8%), MAPS (10.6%) and AAWH (9.3%). During the week, I sold the rest of VRNOF and added to TLLTF on Wednesday. On Friday, I reduced VFF 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.

  • Monday: Delivra Health Brands hosts its Q4 call during trading hours
  • Wednesday: Scotts Miracle-Gro hosts its Q4 call during before the market opens, and GTI hosts its Q3 call after the close
  • Thursday: IIPR hosts its Q3 call during trading hours, and Jones Soda hosts its Q3 call after the close

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

Posted to 420 Investor on Oct 28, 2022 — 5:10 PM
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