Discrete Mini Vaporizer Red Metal 4-Piece Grander Large Bamboo Pollen Sifter Box

On Friday afternoon, as the markets were getting set to close, the ETFMG Alternative Harvest ETF (NYSE ARCA: MJ), which is managed by ETF Managers Group, rebalanced its $1.05 billion cannabis-focused ETF. Their website now enables investors to see the moves that they made by comparing the holdings at present as well as the ones previously. Note that that there is somewhat of a delay in reporting, perhaps based on settlement date rather than trade date, as the columns in the table below are for “8/12” and the most recent date, “8/13”:

The list is sorted by the percentage change in the holdings, but it’s important to compare the second-to-last column with the average daily trading volume of the stock. For instance, a reduction of 122K shares of GW Pharma is rather meaningless given its liquidity, but the sales of stakes in Vivo Cannabis (TSXV: VIVO) (OTC: VVCIF), Auxly Group (TSXV: XLY) (OTCL CWBHF) and Supreme Cannabis (TSX: FIRE) (OTC: SPRWF) were quite meaningful, as was the additions of MediPharm Labs (TSX: LABS) (OTC: MEDIF) and, especially, CannTrust (TSX: TRST) (NYSE: CTST). The late sale in VIVO Cannabis, for example, represented more than 2X the typical daily trading value in the stock. This is the price action on Friday:

Beyond the irresponsibility of doing such large trades late in the afternoon on a summer Friday, one must question the wisdom of adding to CannTrust, given the issues that the company is facing. At present, it represents 3.8% of the ETF. Of course, this isn’t a fundamental decision, as the ETF tries to match its index, which also has a a similar-sized position in the name.

We have written frequently about the pitfalls of the ETFs in the cannabis space, suggesting that for most investors, they aren’t a great option. The exception is for those with small amounts to invest and who seek diversification. For others, save the 0.75% per year and pick your own stocks. It’s not that difficult to create a diversified portfolio, and we remind readers that these ETFs are very heavily weighted towards Canadian LPs while neglecting U.S. operators and ancillary providers.

After this inept move by ETFMG, we suggest that those who do decide to invest in one of the larger cannabis ETFs, Horizons Marijuna Life Sciences ETF (TSX: HMMJ) (TSX: HMMJ.U) (OTC: HMLSF) is a smarter choice.  That ETF is a lot more pure, not watered down with names that aren’t involved in cannabis, as is the case for many of the holdings in MJ.

Get ahead of the crowd by signing up for 420 Investor, the largest & most comprehensive premium subscription service for cannabis traders and investors since 2013.

Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email


Get Our Sunday Newsletter


Cannabis

View all posts

Add comment

Your email address will not be published.

Ultra Premium CBD Oil / THC FREE / 100% Organic / USA Grown - Visit SwellCBD.com

Ultra Premium CBD Oil / THC FREE / 100% Organic / USA Grown - Visit SwellCBD.com