MSOS: 4th Quarter 2020 Portfolio Manager Review
Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. For the fund’s most recent standardized and month-end performance, please click www.advisorshares.com/etfs/msos.
AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) launched on September 2, 2020 with $2.5 million is assets. By year-end December 31, its assets under management had increased to over $220 million, and to over $600 million by the time of this writing in mid-January. Investor interest in the first U.S. listed ETF focused solely on the U.S. cannabis market has been tremendous.
For the last quarter, MSOS was a top performer among all cannabis-focused ETFs, gaining 66.70% on its net asset value (NAV) and 66.33% on its market price. (Its predecessor and sister fund here at AdvisorShares, YOLO, was also a top performer with 58.57% on NAV and 59.02% market price for the same period).
With a Democratic Presidential victory in the November election, a positive sweep of six cannabis ballot measures in five states, followed by Democrats narrowly gaining control of the Senate through January run-off elections, cannabis momentum is extremely high. Wide-ranging cannabis reform is now expected. But – cannabis investment education is still badly needed in many circles. Investors need to understand that even the Democratic Party’s platform never called for full federal legalization of marijuana. I expect cannabis banking reform, 280e tax reform, continued expansion of medical marijuana, and strengthening of recreational cannabis at a state level. Reforms will happen so that state cannabis law will not be contrary to federal law. These can all be considered major victories for U.S.-based multi-state operations (MSOs). Cannabis reform will still be debated, negotiated and messy. The many smaller steps of changes in cannabis-related laws can lead to the home-run victory for U.S. cannabis companies of uplisting to major exchanges such as the NYSE or NASDAQ. Once that occurs, I expect investment capital should follow in a big way. Without full federal legalization and open border laws, Canadian LPs will remain Canadian and I do not expect them to do business in the U.S. for the foreseeable future.
MSOS added a great deal to existing positions during the quarter, but we did not add any new names. (We have added some in January). A few small positions from the original launch portfolio have since been removed.
Winners and Losers:
During the 4th quarter, many of the Fund’s largest holdings were among the very best performers. MSO positions were up strongly across the board. In our top five holdings, Curaleaf (OTC CURLF – swap) gained 56%, Trulieve (OTC TCNNF – swap) gained over 62%, and Green Thumb Industries (OTC GTBIF – swap) gained over 89%, Cresco Labs (OTC CRLBF – swap) gained 64%, and Terrascend (OTC TRSSF – swap) gained a big 132%. Each MSO position we held was positive for the period. It feels strange to say that those gaining less than 66% actually detracted from performance of the Fund.
GrowGeneration (NASDAQ: GRWG) was up 151% for the three-month period. Innovative Industrial Properties, Inc (NYSE: IIPR) gained over 48%. Greenlane Holdings (NADAQ: GNLN) gained over 76% There were plenty of other double-digit gainers as the sector was up dramatically in general.
With the Fund up dramatically for the period, it’s hard to find losers. A very small position in Zynerba Pharmaceuticals (NASDAQ: ZYNE) was down 0.30%.
|Ticker||Security Description||Portfolio Weight %|
|GTBIF||GREEN THUMB INDUSTRIES SWAP REC||10.88%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||10.37%|
|CRLBF||CRESCO LABS INC SWAP REC||10.00%|
|TCNNF||TRULIEVE CANNABIS SWAP REC||9.98%|
|TRSSF||TERRASCEND CORP SWAP REC||7.24%|
|CCHWF||COLUMBIA CARE INC SWAP REC||4.86%|
|AYRWF||RECV AYR STRATEGIES INC||4.83%|
|JUSHF||JUSHI HOLDINGS INC SWAP REC||4.60%|
|HRVSF||HARVEST HEALTH & RECREATION SWAP REC||4.58%|
|PLNHF||PLANET 13 HOLDINGS SWAP REC||4.24%|
As of 12.31.2020. Cash is not included.
Please see our complete Fund holdings at advisorshares.com/etfs/msos. The holdings details are updated each market day.