GameStop, Bubbles and Marijuana
The GameStop Affair last week offered great entertainment for those of us neither long nor short the stock, but in the end what does it mean? In my opinion, the market worked; I don’t see any real problems revealed (aside from naivety of many of the individuals). But I do think the spotlight on the power of individuals vs. professionals is likely to bring some legal outcome that will further empower individual investors, especially given today’s Democratic control of Washington. I do think the socio-emotional movement developing among these newly empowered traders (I hesitate to call them investors) will continue to fuel the bull market we are in. And I think that marijuana stocks will continue to be one of the beneficiaries of this movement.
So everything’s good!
The big news in the industry today is that Jazz Pharmaceuticals (JAZZ), a traditional drug company based in Dublin, is buying GW Pharmaceuticals (GWPH), which has an FDA-approved cannabis treatment for seizures in young children, for $7.2 billion, a roughly 50% premium over yesterday’s closing price.
This doesn’t affect any of our recommended companies directly, but it is one more step toward removing the stigma of cannabis in the medical world and I have no doubt that further medical uses for cannabis derivatives will be found.
As for our portfolio, which remains fully invested, five of our stocks have hit new highs today, Canopy Growth (CGC), Green Thumb (GTBIF), GrowGeneration (GRWG) (which announced the acquisition of a two-store chain in Maine), Innovative Industrial Properties (IIPR) and Jushi (JUSHF).
CGC in particular looks a bit overheated; its 50-day moving average is 33% below today’s price, and of course the stock is very well known. Little JUSHF’s 50-day moving average is down 28% from today’s price but I’m a little more optimistic that there is less potential selling power there because the stock is less famous.
Partial profit-taking is certainly a possibility for any of those stocks, particularly if your position has become overweight, but I’ll just sit tight in the portfolio.
As for potential buys, for those of you looking for more exposure to the sector, your best opportunity was Monday; yesterday’s strong market has kicked all our stocks higher. Still, I can endorse buying today in Curaleaf (CURLF), TerrAscend (TRSSF) and Trulieve (TCNNF).
FYI, our Marijuana Portfolio is now up 31.1% YTD, while the Marijuana Index is up 40.1%—and my plan is to get ahead of the index by losing less (by holding cash) when the next downturn comes.