CANNABIS CORNER: Riding The Big Bounce

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street.

It is gratifying to see that cannabis stocks remain open to both extremes of ambient market volatility. When the mood swings against them, they crumple. We’ve seen a lot of that in recent months.

But when sentiment becomes more expansive, these stocks shine. That was the case this week, with my proprietary cannabis index surging 5%, while the broad market stalled.

Of course, there are relative winners and losers in any week. Canopy Growth Corp. (NASDAQ:CGC) is actually down nearly 2% since last Friday.

However, CGC has emerged as one of the weakest stocks in the group. It is one of the largest and a lot of traders simply believe that it’s “boring.”

Boredom is not why people invest in cannabis, so it’s not surprising to see CGC up only 9% year to date (YTD), trailing just about everything else in the industry.

OrganiGram Holdings Inc. (NASDAQ:OGI), CannTrust Holdings (OTC:CNTTQ), Aphria Corp. (NASDAQ:APHA) and Tilray Corp. (NASDAQ:TLRY) all have at least doubled in the last four months.

That’s the opposite of boredom. And it’s why I prefer a balanced approach to any volatile theme.

Pick the right industry and there will be huge winners to capture. There also will be a lot of dead money along the way.

You want to make sure you have the winners in your portfolio. Otherwise, you miss all the fun.

I take a portfolio-focused approach to IPO Edge, where cannabis is only a small piece of a unified buy list. We’re like a venture capital fund in that way, confident that triple-digit-percentage wins will more than compensate for a few missed swings along the way.

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