Investor Ideas #Potcasts, #Cannabis News and #Stocks on the Move; Episode 449 - Interview with Matt Markiewicz, Managing Director of the Cannabis ETF (NYSE: $THCX)
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Today’s podcast overview/transcript:
Good afternoon and welcome to another episode of Investorideas.com "Potcast" featuring cannabis news, stocks to watch as well as insights from thought leaders and experts.
In today’s podcast Investorideas interviews Matt Markiewicz, the managing director of The Cannabis ETF (NYSE: THCX), where we discussed some of the portfolio’s recent earnings reports, how the last few months of COVID-19 have impacted the ETF as well as expectations moving forward.
Markiewicz commented on the last few months and how COVID-19 impacted the industry, specifically focussing on how while the industry remains federally illegal in the U.S. it was also deemed essential in most states where it is legalized.
“I think we’ve started to see some optimism come back into the sector and I think that’s shown through in the stock prices. After hitting that low in mid-March the ETF is up close to 60% since then, and that’s not uncommon for many of the other ETF’s. We have seen a nice rebound and we seem to have stabilized here in that the ETF’s and the stocks seem to be trading sideways a bit. We have also seen a bit of a decrease in volatility in the sector but it is summer and you do have less market participants involved and we will still have to see how things play out into the fall.”
Markiewicz continued by discussing how this relates to some of the recent earnings reports.
“In terms of earnings. This (last week) was one of the first big weeks for Cannabis earnings reports, we just had Aphria (NASDDAQ: APHA) and Scotts Miracle Gro (NYSE: SMG). The week of August 10th, up in Canada, Canopy Growth (NYSE:CGC) and Tilray (NASDAQ: TLRY) report and then next week (this week) we have Cronos and GW Pharmaceutical earnings as well. In the US on the week of August 10th we get earnings reports from Colombia Care, Harvest, Acreage, Trulieve and Greenthumb, so that’s going to be a major focus week for cannabis in general. Who knows we might even have a renewed media focus on cannabis earnings, which probably should be pretty encouraging based on the sales levels we’ve seen in the past few months.”
Markiewicz then went on to discuss in more detail Scotts recent earnings in more depth.
“For Scotts Miracle Gro most people associate it with golf courses and fertilizer for your house, but this is a company that is an ancillary play on the growth of the US cannabis industry and the fact that its listed on the NYSE means that many investors can buy the issue. It’s been holding in our portfolio since we launched last July and is the 6th largest holding in the fund, just under 6%. Scotts reported an absolute blockbuster quarter. Their division, Hawthorne Gardening, where there are over 40 brands that are leveraged towards the US cannabis industry which saw sales grow 72% year on year in the third quarter. Well above what all analysts thought they’d deliver. To me there is also a very positive readthrough from another company called GrowGeneration Corp. (NASDAQ:GRWG), who is one of the largest US hydroponics stores, and GrowGeneration sells a lot of the brands that are under the Hawthorne Gardening banner. So I think it’s an extremely strong readthrough and a name that investors should keep an eye on. You have to remember that there aren’t many stocks that have leverage to the US cannabis industry that can be purchased by US institutional investors. Only about 9% of the publicly traded cannabis market cap is owned by US institutional investors.”
Markiewicz went on to discuss some of the other upcoming earnings reports and what market expectations are so far as well as what investors should be looking for both in the US and Canada over the next few months.
“After seeing Organigram’s and Aphria’s earnings I’m not expecting any overly positive surprises from any of these LP’s yet to report. The narrative at the beginning of the year was it’s going to be a second half story once we see “2.0” sales kick in and newer products hitting shelves. Obviously COVID has slowed that down but the narrative continues to be more optimistic towards the second half of the year. At what point though is the patience from investors going to wear thin if that second half story doesn’t materialize. I think it’s very much a “put up or shut up” time when the third quarter rolls around, for the Canadian cannabis industry in particular.”
Markiewicz went on to discuss in more detail some of the expectations for the US industry over the next few months as well as the ETF’s views on the still very nascent psychedelic industry.
The Cannabis ETF was constructed to make investing in cannabis easier by helping investors get exposure to a basket of stocks that are expected to benefit from growth of the hemp and legal marijuana industries. To find out more visit their website at https://thcxetf.com/.
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