420 Investor Weekly Review 11/18/22

Review

Michigan cannabis sales in October slipped sequentially by 1.2% but expanded by 28.1% from a year ago to $209.4 million.

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

I published another article at Seeking Alpha on cannabis ETF MSOS:

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

  • AAWH opened its adult-use store in Fort Lee, New Jersey.
  • CCHWF Q3 revenue increased slightly to $132.7 million with adjusted EBITDA of $21 million.
  • CEAD grew revenue 68% sequentially to $5.1 million.
  • CRLBF Q3 revenue fell 2% from a year ago to $210 million with adjusted EBITDA of $42 million.
  • CRON named James Holm, who joined the firm from Vertiv, as CFO.
  • CURLF unveiled a national rebrand for Grassroots.
  • CWBHF posted a weak Q3, with revenue falling to $17 million, but it also received an investment from BAT in the form of a convertible note.
  • GDNSF Q3 revenue of $18.9 million grew 41% from a year ago.
  • GNLN, which had pre-announced its Q3, posted revenue of $28.7 million, down 31% from a year ago.
  • GRWG announced a partnership with Grodan, a supplier of stone wool growing media solutions.
  • JUSHF posted Q3 results that were below expectations, with revenue of $72.8 million increasing 25%. The company is in the process of raising $68 million debt at 12% with warrants.
  • MAPS named Randa McMinn, a new hire, as Chief Marketing Officer.
  • OGI announced an agreement with Canndoc to sell it up to 20K kg of dried flower.
  • SBIG revenue increased 22% in Q3 to $7.4 million with adjusted EBITDA of -$3.5 million.
  • SMG named a new CFO, Matt Garth, an outside hire from Minerals Technologies.
  • TCNNF opened a rebranded facility in Glendale, Arizona, a one in West Virginia and a new one in Lake Worth, Florida.
  • TLLTF extended some of its debt and announced an agreement in principle for a new debt facility. The company will introduce Old Pal products in Massachusetts. Its Q3 revenue fell to $40.5 million due primarily to lower sales volume it its inhalation business. The company announced a new dab solution for a proprietary initiative, Concept LVT, and it named a new client, House of Blends.
  • TLRY launched a program to provide women with free medical cannabis resources in Canada.
  • VRNOF met expectations roughly with Q3 revenue of $228 million and adjusted EBITDA of $82 million, but it provided a weak near-term outlook.

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 140 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 far above its all-time closing low of 11.26 from 9/30. It fell to 13.37 this Friday, lifting 0.4% during the week. This was a little better than the 0.2% gain in the S&P 500, which is up 2.4% so far in November. The cannabis index has rallied 1.4% this month-to-date, slightly behind the S&P 500, and it has rallied 18.7% thus far in Q4. This is more than the 10.6% return in the S&P 500.

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 59.3% 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 made a new all-time low at the end of September:

Model Portfolios

Flying High, down 16.1% in Q3, ended the week valued at $172,269, down 0.6% during the week. It has gained 0.9% in November and has gained 17.2% in Q4 thus far. 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 41.5% in 2022. The model portfolio has increased 1623% since inception. Flying High has 7 positions and 0.6% cash. During the week, I added to two ancillary names and an MSO on Monday, I trimmed an ancillary name on Tuesday and added to three other ones, exited a Canadian LP on Wednesday and added back the ancillary that I had reduced, and reduced an MSO on Thursday, redeploying the proceeds into two ancillary names.

420 Opportunity, which fell 15.2% in Q3, ended the week at $42,707, down 0.7%, which was worse than the Global Cannabis Stock Index. It has lost 1.3% in November, a bit worse 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 1.4% during the week. In 2021, the model lost 13.8%, while the index decreased 26.0%, and it is down 53.0% in 2022 compared to the index loss of 59.3%. The model portfolio has lost 14.6% 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 MAPS (12.0%), HYFM (10.4%) and TRSSF (9.6%). During the week, I reduced HYFM on Tuesday and added to AYRWF. On Wednesday, I reduced AAWH and added to GNLN. I also reduced OGI and AYRWF and added to HYFM. On Thursday, I reduced OGI to add to MAPS and reduced LOWLF to add to TLLTF.

420 Quality, which was funded with $50,000 (paper) on 3/1/17 and was down 14.8% in Q3, ended the week at $59,406, down 0.5% this week and down 2.1% in November thus far. It has rallied 18.1% in Q4, a little behind the index. In 2021, the model portfolio lost 21.8% compared to the 26.0% loss in the index. In 2022, it has returned -53.0% compared to the index return of -59.3%. 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 18.8%, while the index has lost 83.5%. The model has 14 holdings and 0.7% cash. The largest positions include MAPS (11.4%), TRSSF (10.2%) and HYFM (9.8%). During the week, I reduced HYFM on Tuesday and added to AYRWF and TRSSF. On Wednesday, I reduced AAWH and added to GNLN. I also reduced OGI and AYRWF and added to HYFM. On Thursday, I reduced OGI to add to MAPS and SBIG and reduced LOWLF to add to TLLTF.

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.

  • Tuesday: Indiva Limited reports its Q3 and hosts a call before the market opens. Canada will release cannabis retail sales for September in the mornings as well.
  • Thursday: U.S. markets are closed for the celebration of Thanksgiving Day. Someone at Green Organic Dutchman didn't realize it or doesn't want Americans on the call that they are having in the morning for its Q3.

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 Nov 18, 2022 — 4:11 PM
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