RE:HMUS...any investors out there?
mrwestcoast wrote: This etf's largest holding is Trulieve, only reason I would mention it on this board. I own HMUS, the problem is I feel like I'm the only investor. The volume is garbage. I prefer the US cannabis companies to Canadian lps at the moment. But the volume average is a fraction of HMMJ. Anyone else bored with HMUS? Just weird, love the dividends from both though.
Mrwestcoast, I used to hold very large positions in HMUS and another now defunct american cannabis ETF USMJ. However, I have long since abandoned this strategy in favour of picking individual comapanies. Let me give you some insight on what's lead me to that conclusion.
I have been investing in the canadian sector since the summer of 2016, but for the longest time I avoided the american stocks that traded back then (GLH, EAT, CVSI, CRZ, MPX, IAN, and TGIF are ones I can remember). As a canadian, the american landscape seemed too complex with each state completely different and an administration in the WH that seemed unlikely to pass any reform. However, by late 2018 there was a flurry of IPOs on the CSE and the american investment thesis became a lot more compelling as individual states began to make progress.
I strongly believed in the future of the US industry, but found I found it difficult to pick winners at first. There was only about one or two quarters posted on SEDAR and there were lots of new companies to consider. So I started picking up the ETFs shortly after they debuted in order to have exposure to a basket of american MJ stocks. However, as I conducted more DD, I realized that this is a losing strategy. The problem with the ETF's is two fold:
1) It holds too many stocks - similar to Canada, for every success there will be multiple failures. The ETFs hold stakes in companies like Medmen or Ianthus that will likely fall to zero. Others like HARV, CWEB, and ACRG have been clearly struggling, but the ETF has to hold on to them.
2) It rebalances - The ETF can only have something like 10-12% max in one stock and then it needs to rebalance (Sell). Therefore, the ETF will consistently be selling winners like TRUL and GTII and will have to re-allocate to lower quality stocks.
Now that there is more information and quarters to evaluate, there are clearly some higher quality companies starting to emerge from the pack. As a result, I strongly suggest that you reconsider your ETF strategy and 'build your own' ETF by selecting only the top 5-8 companies in this sector. Something like this:
- MSO large caps: TRUL, GTII, CURA, & CL
- MSO small caps: LHS, TER, AYR.A
- Research: GWPH
- Ancilliary products: GWRG