Big-Name Investors Dabble in Marijuana Stocks

Big-Name Investors Dabble in Marijuana Stocks

Big-Name Investors Dabble in Marijuana Stocks


  • Shares of marijuana companies are beginning to attract a few big-name investors.

Billionaire Leon Cooperman, 75 anni, chimed in on a recent earnings call for Green Thumb Industries, a Chicago-based grower and seller of medicinal cannabis that recently went public in Canada.

The iconic hedge fund tycoon asked a few questions about marijuana legislation in Illinois, acquisitions in the space and the outlook in California, and revealed after the call last week that he has invested in the company.

“It’s a small personal investment as a result of my friendship with the CEO and his father,” Mr. Cooperman said in an e-Mail.

Green Thumb CEO Ben Kovler is a scion of the Jim Beam bourbon empire, and Mr. Cooperman is a longtime family friend.

Meanwhile, Constellation Brands, the brewer of Corona beer, recently stunned Wall Street by investing nearly $4 billion into the shares of Canopy Growth, a Canada-based marijuana farmer.

Plus, US investors are buying into an ETF (exchange-traded fund) that tracks the Canadian marijuana industry as the country moves toward legalization and liquor producers show growing interest in selling marijuana.

The US-listed $436-M ETFMG Alternative Harvest ETF, (ticker MJ), has taken in about $22-M in August, putting it on track for the largest monthly inflow since February. That asset growth has been fueled by a 35% rise in the fund’s price since 14 August.

Marijuana stocks have been rising on Canada’s pending legalization of recreational marijuana on 17 October and growing speculation that other industries will buy in too.

A major boost for cannabis shares came 2 weeks ago, when alcohol giant Constellation Brands Inc. (NYSE:STX) invested $3.8-B in Canadian marijuana maker Canopy Growth Corp., the biggest deal yet in the growing industry.

Since the move was announced on 15 August, the BI Canada Cannabis Competitive Peers index has gained more than 30%, including 3.7% Wednesday, 28 August.

“This reinforces the interest among large consumer companies in partnering with cannabis producers,” said 1 industry analyst.  “It also signifies the confidence that consumer companies have for the continued rise in consumer demand for legal cannabis-infused beverages in Canada, but also eventually in the US and in international markets.”

Last week, it was reported that the global liquor giant Diageo Plc (NYSE:DEO)is seeking a cannabis partner, raising market speculation over who that may be.

Molson Coors Canada Inc. also announced a joint venture with Hydropothecary Corp. to develop non-alcoholic, cannabis-infused beverages.

However, while the US-listed fund is going strong, a Canada-listed counterpart is not. The Horizons Marijuana Life Sciences Index ETF, ticker HMMJ, is on track for its biggest month of outflows since it began trading in April 2017, with $6.1-M leaving the fund in August, including $5.1-M last Tuesday alone.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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