420 Investor Weekly Review 09/16/22

Review

Michigan cannabis sales fell 1% sequentially in August due to continued weakness in medical. Sales of $207.9 million, up 26% from a year ago, were supported by a record level of adult-use sales.

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

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

  • FFLWF had a rough Q2, with revenue falling 6% from a year ago to C$40.7 million and adjusted EBITDA of -C$6 million
  • IIPR disclosed that it signed a confidential settlement agreement with its tenant in California, Kings Garden.
  • TCNNF opened a Trulieve-branded dispensary in Tucson, AZ.
  • TLLTF launched the Highsman brand (Ricky Williams) in Massachusetts. It held a Grand Opening at its dispensary in Cambridge, MA.
  • TLRY launched RIFF Drumsticks in Ontario.
  • UGRO announced a new $2 million share repurchase authorization.
  • VFF reported that its Pure Sunfarms Pink Kush has maintained the top spot in Ontario.

There were comments in over 110 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.

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.

Market Performance

The Global Cannabis Stock Index hit a new all-time closing low on Friday of 13.41. For the week, it fell 9.1%, which exceeded the 5.2% decline in the S&P 500.

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 59.2% in 2022. It currently includes 26 stocks and ended 2021 at 32.85. In September it is down 11.8%, and it is down 9.2$ 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 recently made a new all-time low:

Model Portfolios

Flying High, up 21.7% in July and 3.9% in August, ended the week valued at $187,417, down 11.6% during the week and now up 6.9% quarter-to-date. 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 36.3% in 2022. The model portfolio has increased 1774% since inception. Flying High has 7 positions and 0.1% cash. During the week, I added to two ancillary stocks and reduced one.

420 Opportunity, which rose 19.3% in July and 1.6% in August, ended the week at $44,484, down 9.5% and still up 5.2% quarter-to-date. 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 lost 9.1% during the week. In 2021, the model lost 13.8%, while the index decreased 26.0%, and it is down 51.0% in 2022 compared to the index loss of 59.2%. The model portfolio has lost 11.0% since inception, while the overall market has declined by 98% during that time-frame. The model maintains 18 holdings and no cash. The three largest holdings include OGI (9.3%), CEAD (8.9%) and HYFM (8.6%). During the week, I reduced IIPR and added to MAPS on Friday.

420 Quality, which was funded with $50,000 (paper) on 3/1/17 and was up 20.4% in July and 0.5% in August, ended the week at $61,663, down 8.7% this week and still up 4.5% in Q3. In 2021, the model portfolio lost 21.8% compared to the 26.0% loss in the index. In 2022, it has returned -51.2% compared to the index return of -59.2%. 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 23.3%, while the index has lost about 83.4%. The model has 16 holdings and 0.4% cash. The largest positions include OGI (10.2%), MAPS (8.8%) and HYFM (8.4%). During the week, I reduced IIPR and added to MAPS on Friday.

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.

  • On Tuesday, after the close, Aurora Cannabis will host its Q4 call.

Companies with fiscal years ending in June (May for Canadian Venture stocks that don't file with the SEC) must report their annual financials in September. This includes ACB from the Focus List. Companies with years ending in January, April and October must file their quarterly reports by mid-September (or by late September for Canadian-listed stocks that aren't on the TSX or NEO or filing with the SEC).

Posted to 420 Investor on Sep 16, 2022 — 4:09 PM
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