It's been tough times in the past couple of weeks. With the exception of the massive pop this week (as a result of Canopy-Constellation II) the markets have been moving downwards seemingly without a bottom in sight. Many of you are writing to me and asking what you should do.
- Do I get out?
- Should I buy now?
- Should I take some of my profits now?
I hope you guys understand that I cannot answer any of you directly. I am not a financial services representative and thus cannot advise you. But I feel your frustration – it's not going great and you want to know what to do. I get that.
Here are my thoughts on the market right now and the portfolio (and its returns)
The good, the bad and the ugly
The Green Fund is (at time of writing) 34.17% up Year to Date (YTD). Our benchmark (the largest listed ETF in the world), The Horizons Marijuana Life Science ETF, is -24.06% YTD. By far the biggest winner in our portfolio is CV Sciences (an Oregon-based Hemp CBD producer) that we mentioned to our readers in April of this year. We bought in May at $0.80 and it is currently trading at $5.61 (601% gain). CV Sciences is on the run of its lifetime and we've enjoyed every minute of it.
The company is very well run, has just released fantastic earnings and is well positioned to take advantage of the Hemp market, opening up across the US in front of it. The stock is currently at very overbought levels, and we have sold 50% of our holdings. We will wait and hold until we see a better future entry point.
Our worst performer is….scratch that….our two worst performers are Terra Tech and Liberty Health Sciences. Terra Tech (TRTC) a US multi-state licensed producer operating in California, Nevada and areas of the East Coast are the best placed to take advantage of the Californian market. Operating the Blüm chain of medicinal and recreational dispensaries and under the leadership of Derek Patterson, Terra Tech should be doing much better. They have superb revenue and a robust business plan. Still – even though we remain bullish on their strategy and back their play – we remain 56.6% down year to date on them.
Followed closely by Liberty Health Sciences (LHSIF). They are one of the main players in the booming Florida Medicinal Marijuana market. Estimated to reach $1 billion in size by 2020 and with the potential upside of recreational later down the line this is a killer state to be in, and this is Liberty's hometown. And this is also their issue. It's the fact that they're really only a one state pony.
They bought a majority share of a Massachusetts Licensed Producer in order to gain entry to the East Coast (Massachusetts went recreationally legal ion the 1st of July – although it has been a complete dud to date) but that is still a long way off being heavily revenue generating. But at these levels, we feel Liberty Health Sciences offers investors incredible value. We are adding to the portfolio at these levels as belief in Liberty and their executive team.
This month the focus is being able to take advantage of a consolidating bull trend. What I mean is that the market itself is still in bull mode. Over the coming 5 years, these stocks are going to see considerable gains (and losses if you are riding the wrong horse) but they will find new highs and higher lows along the way.
Hence the more I can be in cash right now the better, in order to take advantage of coming into new positions at better prices and dollar averaging down on existing positions. I am not convinced we have seen the bottom yet. I believe there could yet be another 10% to go, before it all bottoms out and gets ready for the summer ride.
And ride it will. The marijuana industry just loves events. This Constellation deal was one of them, make no mistake about it. However, the mother of all events is still coming. Roll on 17 October.