Monday Watch for Staying Relevant

Relevant

Global markets were weak today. Growth concerns flared up after China’s exports fell on weak demand. “Grexit” is becoming lexicon again as markets starts bracing themselves for Greece to potentially exit the Eurozone. Uncertainty leads to volatility, which also can lead to price weakness. The S&P 500 declined by 0.41% to 2,047.

Cannabis stocks were mixed today. Most stocks rising or declining double digits were on little to no volume. Liquidity and interest are still on the decline. However, companies should start to put out quarterly updates in the near future. This information could serve as a volume catalyst.

Daily Positive: Aphria is a Canadian Licensed Producer, and today it announced more than a 50% increase in its harvest yield and the launch of a high CBD strain. We hear there is now a US pseudo-tracker but no trades yet (OTC: APHQF).

Daily Negative: Enertopia, a failed Licensed Producer, has been struggling to find a business model. Today, it announced a “me too” sex lube product as it seeks any way to stay relevant.

We have deemed 2015 as the year of revenue. We believe this is the year that companies will need to perform or the market will move away. We think this demand by investors is a good thing. However, the ones with weak businesses will do what they can to stay relevant. It wouldn’t be surprising to see many companies try to “expand” their operations into hot topics within the cannabis industry such as edibles, vaporizers, sex lube filled with CBD, etc.

Pivoting is a good thing for those that have the skills to pull it off. Others will act like they are pivoting for the sake of a good press release. Just another factor to consider when you’re analyzing companies in the market. Ask yourself if the pivot makes sense and if it seems achievable based on the company’s core competencies.

 

The discussion above is provided for informational purposes only and does not constitute an offer of, or solicitation for, any investment services or products offered by the author. The author is not making any investment recommendations and the opinions above do not constitute investment advice. Reference to above indices [and companies] is based on information provided by sources the author believes to be credible. Investing in the cannabis industry, as with other industries, presents certain risks including the risk of loss on an investment.

Morgan is a Founding Partner and Managing Director of Poseidon Asset Management. He is the Chief Investor of their Cannabis Focused Fund. Morgan previously worked for a privately owned Registered Investment Adviser and earlier was at UBS Financial Services focusing on wealth management. Morgan believes in the potential of the cannabis industry and likes having an active involvement as it develops. You can follow him on Twitter @PoseidonAsset.

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