Strong Uptrend Continues
Marijuana stocks as a whole remain very strong as we head into the holiday season, where trading is expected to be lighter and news announcements few. Today I have no recommended changes in our portfolio, though I do have a few updates, as well as a little advice on buying and selling.
Interestingly, the Canadian marijuana stocks have been weaker than the U.S. stocks in recent weeks—so it’s good that we have only one Canadian.
All told, of our eleven holdings, six have hit new highs today. Momentum is strong! And the best way to play momentum is to ride it as long as it lasts—and then when momentum is lost, take partial profits to reduce risk to an acceptable level.
As for new buying, I see no bargains today, but I do see slightly lower-risk setups in the short bases being built by Cresco (CRLBF) and TerrAscend (TRSSF).
Moving to news:
GrowGeneration (GRWG), our hydroponic supplier, recently acquired Southern California-based Canopy Crop Management and its portfolio of products, including the Power SI brand of silicic acid-enriched fertilizers. This is the Company’s second acquisition in Southern California this month and third acquisition in the state since November.
Innovative Industrial Properties (IIPR), our marijuana REIT, continued its run of acquisitions with properties in Georgetown, Massachusetts and Olympia, Washington, which total roughly 181,000 square feet that will be leased to a subsidiary of 4Front Ventures (FFNTF). (FFNTF has a decent chart, but at less than a dollar a share, risk is higher than I like) With the acquisitions, IIP now owns 66 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Virginia and Washington, totaling approximately 5.4 million rentable square feet which are 99.3% leased.
As mentioned before, these two companies are notable because what they do is totally legal nationwide, and thus their stocks can be bought without legal worry by institutional investors. Somehow, they’ve become our biggest winners.
FYI, our portfolio is now up 89.5% YTD, while the Marijuana Index is up 25.2% (held back by the Canadians, among other factors).
Final note: Long-term studies tell us that stocks tend to do well just before and after holidays—so that’s a likely plus for the weeks ahead. But I am aware that trees don’t grow to the sky and that this sector is increasingly ripe for a major correction—and when it arrives, my plan is to move substantially to cash.
You can look forward to a full issue of Cabot Marijuana Investor next Wednesday, and I wish you a happy and safe holiday season with family and friends.