It’s Time to Start Selling
As I’ve explained previously, I’ve become increasingly concerned that the blistering advance of the marijuana sector had progressed so far so fast that it was getting increasingly ripe for a correction. But as long as the stocks were advancing, I was happy to stay fully invested.
Today I’m ready to pull the plug.
Today the charts are telling me that today is the peak day—at least for a while.
If I’m wrong, we’ll have locked in a lot of our YTD profit of 48% (in less than six weeks!) and watch the stocks climb even higher. But whether the correction starts now or from an even higher level, I feel fairly confident that by selling now, we will not only be insulated from some of the pain on the way down, we’ll also be able to redeploy our cash at lower-risk entry points.
Note: through luck and careful chart-reading, I sold within a day of the top in January 2018 and October 2018—and the charts today look a lot like they did then. The only difference today is there is no major legalization event. Still, charts trump fundamentals.
So, today the portfolio will sell one-half of its positions in these stocks: Cresco Labs (CRLBF), Curaleaf (CURLF), Green Thumb (GTBIF), GrowGeneration (GRWG), TerrAscend (TRSSF).
And the portfolio will sell one-third of its positions in these stocks: Canopy Growth (CGC), Innovative Industrial Properties (IIPR), Trulieve (TCNNF), Turning Point Brands (TPB) and Village Farms (VFF).
After these sales, the portfolio will be roughly 42% in cash.
Canopy News
In the news, and possibly the trigger for the latest surge, yesterday Canopy Growth Reported its fiscal third quarter 2020 results.
Revenue was $153 million, up 23% from the year before, with share of the Canadian recreational market growing to 15.7%. The company has been working hard at cutting costs and promises positive earnings for fiscal 2022. It’s laid the groundwork for expansion into the U.S. And it’s made great progress with its Martha Stewart CBD products, having secured distribution in 580+ Vitamin Shoppe and Super Supplements retail locations.
Interestingly, Canopy was an early favorite in the industry, and the recent run of the stock has brought the stock nearly back to its high of October 2018—while all our other holdings have been hitting record highs.
Village Farms News
Meanwhile, at our greenhouse vegetable grower Village Farms, the company announced that it had taken full control of cannabis grower Pure Sunfarms, having fully repaid, ahead of schedule, the debt incurred when that partnership was established.
In addition, Village Farms announced that it had increased its investment in Altum International, an Asian cannabinoid company, from around 6.6% to roughly 10%.