Post-Election Update
While Americans appear divided on many topics these days, there’s one topic on which public opinion has reached a tipping point, and that’s marijuana. Yesterday, voters in all five states where it was on the ballot—Arizona, Mississippi, Montana, New Jersey and South Dakota—said they were in favor of legalization, and in every case, the majority vote was clearly positive, not even close.
Short-term, this does not change much for any of our companies, but it does change the perception of many investors and potential investors, it does mean that the U.S. multi-state operators can continue expanding their footprints rapidly in the years ahead and it reinforces our conviction that the industry will continue to get much bigger down the road.
As for the stocks, as I wrote last week, fundamentally, there’s a risk that the results of the election, particularly as they apply to marijuana stocks, had already been already discounted by the stocks—which means they might peak here.
But the charts today don’t look like blowoff exhaustion peaks. They look like the strength you tend to get in the midst of big runs, when investor opinion grows more and more positive (for good reason) and more and more investors climb on board.
Thus I’m optimistic that marijuana stocks have farther to run in this phase, hitting an eventual big peak (perhaps) when legal sales in New Jersey (the big prize last night) truly begin.
The broad market, however, is still a big question mark. Even after the strength of yesterday and today, the intermediate trend is effectively neutral, which means there’s a good chance the broad market may turn down right around the corner. But until that happens, I’m happy staying heavily invested in our current portfolio—and holding our 17% cash position. As of today, our portfolio is up 33.4% YTD, while the Marijuana Index is down 4.6%,
If our stocks roll over, we’ll listen to the charts and raise cash, while keeping core positions of our long-term winners. But if the broad market strengthens, I’ll happily buy more!
Until then, if you’re feeling underinvested in the sector and you like jumping on fast horses, the strongest charts are those of Curaleaf (CURLF), Green Thumb Industries (GTBIF) and little TerrAscend (TRSSF).
Lastly, there are a few news items:
Canopy Growth (CGC) will release its financial results for the quarter ended September 30, 2020 before the market open on November 9. And the stock will move from the NYSE to the NASDAQ (a more efficient market) on November 16, keeping the same symbol.
GrowGeneration (GRWG) has agreed to acquire The GrowBiz, the nation’s third-largest chain of hydroponic garden centers, with five stores across California and Oregon.
The addition of The GrowBiz is expected to generate annual revenues approaching $50 million; GrowGeneration’s 12-month revenues were $123 million, so that’s a sizeable addition.
TerrAscend (TRSSF) preannounced third quarter revenues of $51.0 Million (up 90% from the prior year) and adjusted EBITDA of $17.8 million, a 56% improvement quarter-over-quarter. Official results will be announced November 19, before the market open.