Whitney Tilson: I nailed the exact top in Marijuana Stocks

Whitney Tilson’s email to investors discussing Canada’s legal high, a business letdown; Tom Carroll on the cannabis sector; A startup fired its CEO for expensing $76,120 at Strip Clubs; Question No. 1 to ask before you marry someone.

startup fired its CEO

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1) Here’s a recent article in the New York Times about the crash in the Canadian cannabis sector: From Canada’s Legal High, a Business Letdown. Excerpt:

When Canada became the first major industrialized nation to legalize recreational marijuana, visions of billions of dollars in profits inspired growers, retailers and investors, sending the stock market soaring in a so-called green rush.

2) I nailed the exact top in September 2018 (click here and here), as you can see in this chart of the ETFMG Alternative Harvest Fund (MJ), which tracks the sector…

ETFMG Alternative Harvest Fund

However, unlike bitcoin and other cryptocurrencies – which are nothing but a techno-libertarian pump-and-dump scheme, so there is no price at which I would recommend them – the cannabis sector is very real and will grow enormously from here. Thus, my instinct is that investment opportunities are beginning to emerge in the sector.

To separate the legitimate stock ideas from the riffraff, I turned to my friend at Stansberry Research, Tom Carroll, who writes the Cannabis Capitalist newsletter.

Regular Empire Financial Daily readers will recognize Tom’s name. He spent nearly two decades as an analyst and managing director at Legg Mason and Stifel Financial. His background as both an award-winning stock-picker and his profound knowledge of the health care market make him well-qualified to analyze the cannabis industry and find undiscovered gems.

I asked Tom for an update on the sector yesterday, and he gave me permission to share the following thoughts:

We remain on the sidelines relative to the Canadian stocks. Their numbers are still abysmal and traditional valuation multiples can’t be calculated (other than price to sales) because of losses and restatements. However, given the hammering the stocks have taken, we are starting to sniff around. The one name I am warming to is OrganiGram (OGI). I haven’t recommended it yet, but it looks interesting.

Best regards,

Whitney



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver