Mutual fund cutting back on smaller LP.s
First Marijuana Mutual Fund Cutting Back On Small LPs Even the large funds know that there are too many small LPs that have been elevated to crazy valuations. Like I keep saying, the smrt money is getting out of the hyped plays that have meagre to no earnings and getting into the large LPs that are already generating millions per quarter and are going to generate over a $100 million in sales for 2018. Therell be no other sector spikes that floats all the LPs since most of them are already trading at hypothetical earnings that are at least a year or two away. Some of the valuations are crazy to the point an astute investor would have a heart attack. A good example is EMH trading at a $500 million market cap with under a $1million in revenue for 2017 - thats gotta be a record of some sort. WEED would be valued at $168/share if they were trading at the same price to earnings ratio. The small hyped LPs like EMH are in a bubble themselves that aregoing to pop by the mid summer. Its coming down to crunch time to pick the sound LPs over the hyped ones - your fortune will depend on it. Is this a good sign? The first marijuana mutual fund is cutting back on pot stocksTime to take profits. Heres why Bloomberg News Kristine Owram April 6, 2018 12:55 PM EDT Canadas first cannabis mutual fund is cutting back on pot stocks. The UIT Alternative Health Fund has pared its holdings in recreational marijuana companies to 33 per cent, from 44 per cent at the end of 2017, while raising cash and shifting to health-care stocks like Jamieson Wellness Inc. and Pinnacle Foods Inc. The UIT fund, run by Toronto-based Faircourt Asset Management Inc., is cutting its exposure to pot as the sector pares gains following a surge at the end of last year. The BI Canada Cannabis Competitive Peers index has dropped 30 per cent this year, after almost tripling in 2017. The last six months those cannabis names were on fire, so some people just figured, you know what? Until the dust settles from a macro perspective, were going to take some profits, said Charles Taerk, chief executive officer at Faircourt, which has more than $700 million in assets. Investors are fleeing risky assets amid growing fears of a global trade war, raising concerns about the valuations on some of the pot stocks, many of which have little or no revenue.Canopy Growth Corp. has a market value of $5.5 billion on 2017 sales of about $70 million. This whole trade war has ripple-effect ramifications because if youre investing in equities, now you take a look and say, Whats safe and what isnt? said Taerk. These are higher beta names and people usually pull back from those, so were seeing a retrenchment out of the cannabis names. Doug Waterson, who manages the fund, said it has recently added to its positions in CannTrust Holdings Inc. and MedReleaf Corp. because of their exposure to the global medical marijuana market, which generates higher margins than recreational products. Cannabis stocks tend to move in tandem, but Taerk said higher quality names with larger institutional followings like Canopy Growth the funds second biggest holding are less volatile than companies with mostly individual investors like Aphria Inc. and Aurora Cannabis Inc. Canopys biggest investors include Constellation Brands Inc., the seller of Corona beer, along with Horizons Investment Management Inc. It is still retail driven, so the swings and the volatility in it are perhaps greater than in other sectors just because there is definitely a bit of a herd mentality both on the way in and on the way out, Taerk said. Pot stocks tumbled more than 11 per cent in the first three trading days of the week amid broader market volatility, before rebounding Thursday. Eight Capital analyst Daniel Pearlstein said now is the time to buy into larger Canadian companies with international initiatives. We believe these will appeal to the broader institutional investor community as the next wave of capital continues to enter the space, he wrote in a note published Wednesday. SOURCE Read more at https://www.stockhouse.com/companies/bullboard?symbol=t.weed&postid=27846691#dV7TZMUeAdkdJFKg.99