CannaRoyalty Corp C.CRZ

Cannabinoid Investor Note for Apr. 3/19

[doobiebaby]

Cannabists, some of you have been reaching out to me asking about CWEB. It has had a very good run and some people are wondering about whether it is time to take profits. Here is my perspective on this and what other companies to invest in if you want to take some profits now.

 

I am not selling the bulk of my CWEB shares because I believe in $50 minimum, but I am trimming my position in CWEB and I will explain why below. There is no shame in taking a bit off the table if it makes you feel more comfortable. These things can drop in half and its a real gut punch when it happens. If you feel more comfortable reducing your exposure to CWEB then I say do it. Taking profits is always a good thing even if more profits are possible. The catalysts for CWEB right now include:

 

1. Uplisting to the TSX, NASDAQ and maybe NYSE;

2. Announcements that they have secured big box retailers like Walgreens, CVS, Walmart, etc. for retail distribution;

3. They get bought out for a nice premium price or expand into other markets like Europe.

 

Are these events priced in yet? Maybe and maybe not. I think there is still room to run, but I have also been maintaining my overall position in CWEB by trimming shares as it has gone up. What I mean by trimming is that I am keeping CWEB at about 10% of my overall portfolio. How does this trimming work? As the price goes up I have been selling a few shares here and there to maintain CWEB's position at 10% of the portfolio. If you don’t trim and a stock keeps running it will soon take an overweight position in your portfolio. And if CWEB is overweight in your portfolio you will make out like a bandit if it keeps running and you might start crying like a baby if it collapses leaving you holding bags.

 

If you decide to trim CWEB a bit to keep it balanced in your portfolio there are some names that I recommend diversifying too. One play that I think makes sense right now is to buy CannaRoyalty (this company is also known as Origin House and the ticker is OH on the CSE). The reason why I say this is because there is a nice arbitrage opportunity with CannaRoyalty right now. The reason why this opportunity exists is because Cresco is offering to provide 0.8428 Cresco shares for each CannaRoyalty share. Right now as I write this Cresco’s shares are trading at $16.65. And $16.65 x the conversion rate of 0.8428 equates to a share price for CannaRoyalty of $13.99. And right now CannaRoyalty’s share price is only $12.08. So if you like the deal and think it goes through then you want to own CannaRoyalty and hope that Cresco’s share price continues to run and you make out well on this arbitrage opportunity. This deal is supposed to close in June. If the deal looks like it is going to go through the arbitrage opportunity should start to close and the two companies should start trading in lock step i.e. CannaRoyalty’s share price starts to more closely reflect the conversion rate of 0.8428. I also still recommend diversifying to other leading US MSOs including Acreage, Green Thumb Industries, CuraLeaf, Harvest and Ianthus. These should continue to run until they are billions of dollars more in market capitalization…each and every one of them. CWEB and all these other names should all reach a $10 billion market capitalization in almost no time at all or within 12-24 months for sure in my estimation. What I have done and what I recommend is to make your own fund out of the top names. Put 10% into the top 10 companies and you should do really well as the US continues to liberalize its failed drug policies.

 

Here is a list of the top publicly traded cannabis companies. The top US MSOs currently have the most cash and cleanest balance sheets to keep expanding and buying up the smaller players. I think big is going to get bigger and bigger is going to get HUGE like the Trumpy likes to say. The momentum of these US MSOs is now palpable and the trading volumes and prices are increasing daily. Some people like to call this making the easy money. And it is rather easy to make if you have a perspective that these companies that are now worth $2 billion or $3 billion and in some cases like CuraLeaf almost $5 billion are all going to be worth $10 billion and $20 billion in a year or two. It is easy to make money if you think that these companies are going to be worth 5 times or 10 times more and your thesis proves out to be true. And I have a very firm belief that this will turn out to be true for many of these top US MSOs. And I love making easy money, but to be honest without the perspective of where the value of these companies is going it is not that easy to make money this way. Either you believe in $10 billion market cap minimums for many of these top US MSOs or you don’t. And if you don’t then you are a trader and not an investor. And there is nothing wrong with being a trader except in my case I can’t be a trader because every time I have attempted to time the market I have pretty much failed miserably. So now I take a perspective on where the value is headed and hold like a son of a gun with the conviction of a bloody zealot. The top publicly traded company listing is here: https://www.newcannabisventures.com/44-top-revenue-generating-cannabis-stocks-ranked-as-of-march-31st/