420 Investor Weekly Review 11/11/22

Review

Two of the five states voting to legalize cannabis for adult-use, Maryland and Missouri, passed it, while three others, Arkansas, North Dakota and South Dakota, voted against doing so.

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

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

  • AAWH revenue of $111.2 million grew 18% with adjusted EBITDA of $27.8 million.
  • ACB Q1 revenue fell 18% to C$49.3 million with adjusted EBITDA of -C$8.7 million.
  • AYRWF grew revenue 24% to $119.6 million with adjusted EBITDA of $21.7 million.
  • CCHWF announced a new dispensary in Richmond, Virginia, its fifth in the state.
  • CEAD announced a partnership with Hydrobuilder Holdings to create an offering for growers.
  • CGC posted revenue of C$118 million, ahead of expectations, but this was due to strength at BioSteel. The level was -10% from a year ago. Its adjusted EBTIDA of -C$78 million was worse than expected though a lot better than a year ago.
  • CRON saw revenue shrink again, with sales of $20.9 million up only 3% from a year ago and beneath analyst forecasts.
  • CURLF revenue of $340 million was in line with expectations, growing 1% sequentially and 7% from a year ago.
  • CWBHF announced European company Stark Foods International will distribute its CBD.
  • FFLWF announced six additional locations with Couche-Tard in Ontario.
  • GRWG exceeded expectations in revenue due to strength in its wholesale business, with revenue of $70.9 million falling 39% from a year ago. It also acquired a hydroponics store in St. Louis.
  • HYFM revenue was ahead of expectations at $74.2 million, down 40% from a year ago.
  • LOWLF revenue of $8.7 million was below expectations and down 34% from a year ago, partially due to an accounting change.
  • MAPS revenue of $50.5 million was close to expectations, but the adjusted EBITDA of -$9.6 million was below expectations as the company wrote down additional receivables. CEO Beals departed the company.
  • PLNHF Q3 revenue fell 22% from a year ago to $25.6 million with adjusted EBITDA of $0.4 million.
  • STHZF is expanding its offerings of California brands in its stores.
  • TCNNF missed expectations as it reported revenue of $301 million, up 34% from a year ago.
  • TLLTF will be manufacturing and distributing the Liquid Que vaporizer to Curaleaf International. The company will be bringing the Coda Signature chocolate brand to Massachusetts and then to Ohio.
  • TLRY acquired a New York-based craft beer company, Montauk Brewing, for 1.7 million shares. Former CEO Brendan Kennedy sold another 350K shares at $3.78, with 6.4 million shares now held. It launched new products under CANACA, a Canadian brand.
  • UGRO revenue was ahead of expectations and guidance at $12.4 million, down 32%, with adjusted EBITDA of -$2.3 million.
  • VFF became the first LP to adopt hang dry at scale. Its Q3 financials were negatively impacted by its produce business. Cannabis, which represented about half of the overall revenue, saw sales of $35.5 million and adjusted EBITDA of $5.4 million. Pure Sunfarms introduced a new brand, Soar.

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 rose to 13.32 this Friday, lifting 4.7% during the week. This was a little worse than the 5.9% gain in the S&P 500, which is up 3.2% so far in November. The cannabis index has rallied 1.1% this month-to-date, slightly behind the S&P 500, and it has rallied 18.6% thus far in Q4. This is more than the 11.6% return in the S&P 500.

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 59.5% 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 $173,355, up 5.1% during the week. It has gained 1.5% in November and has gained 17.9% 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 41.1% in 2022. The model portfolio has increased 1634% since inception. Flying High has 7 positions and 10.3% cash. During the week, I trimmed an ancillary name and then added to it at a lower price. I also boosted two other ancillary names, one of which I later reduced,, an MSO and an LP, which I later reduced. I added a new position in an LP too, and I exited two ancillary names. I later exited the new LP position and added to an MSO position and reduced an ancillary.

420 Opportunity, which fell 15.2% in Q3, ended the week at $43,015, up 3.5%, 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 52.6% in 2022 compared to the index loss of 59.5%. The model portfolio has lost 14.0% since inception, while the overall market has declined by 98% during that time-frame. The model maintains 14 holdings and no cash. The three largest holdings include OGI, (11.2%), MAPS (10.8%) and AYRWF (9.1%). During the week, I reduced SMG on Monday and added a new position in CRON. I also reduced MAPS and added to GNLN. On Tuesday, I trimmed GRWG and added to CRON and to MAPS. On Wednesday, I sold the rest of GRWG and added to OGI and to VFF. I also sold UGRO and trimmed AAWH and added a new position in REFI. On Thursday, I trimmed CRON and added to LOWLF. I sold the rest of SMG and added to AYRWF. I trimmed AAWH and added to MAPS and OGI. On Friday, I reduced VFF and added to AAWH.

420 Quality, which was funded with $50,000 (paper) on 3/1/17 and was down 14.8% in Q3, ended the week at $59,705, up 3.6% this week and down 1.6% in November thus far. It has rallied 18.7% in Q4, a little ahead of the index. In 2021, the model portfolio lost 21.8% compared to the 26.0% loss in the index. In 2022, it has returned -52.7% compared to the index return of -59.5%. 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 19.4%, while the index has lost 83.5%. The model has 14 holdings and 0.4% cash. The largest positions include OGI (11.6%), MAPS (10.9%) and AYRWF (9.0%). During the week, I reduced SMG on Monday and added a new position in CRON. I also reduced MAPS and added to GNLN. On Tuesday, I trimmed GRWG and added to CRON and to MAPS. On Wednesday, I sold the rest of GRWG and added to OGI and to VFF. I also sold UGRO and trimmed AAWH and added a new position in REFI. On Thursday, I trimmed CRON and added to LOWLF. I sold the rest of SMG and added to AYRWF. I trimmed AAWH and added to MAPS and OGI. On Friday, I reduced VFF and added to AAWH.

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.

  • Monday: IM Cannabis, Jushi Holdings, MediPharm Labs and Verano Holdings host calls before the market opens. Akerna, Auxly Cannabis, CV Science, SNDL and springbig host calls during trading hours. In the afternoon, 4Front, CEA Industries, Columbia Care, Forian, SHF Holdings, TerrAscend, TILT Holdings and TPCO Holding host calls.
  • Tuesday: Cresco Labs, Goodness Growth and Rubicon Organics host calls before the market opens, Charlotte's Web, Delta 9 and Entourage Health host calls during trading hours and Greenlane hosts a call after the close.
  • Thursday: Vext Science hosts a call before the market opens.

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 11, 2022 — 4:11 PM
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