MSOS: 4th Quarter 2021 Portfolio 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.

Commentary

For another calendar quarter, cannabis stocks overall have been difficult. Cannabis stocks hit price highs on about February 10th and the drawdown since that time has been painful.

For the 4th quarter, MSOS dropped  -19.09% on its net asset value (NAV) and -18.62% on its market price. For the full calendar year 2021, the Fund’s one year return is -29.52% on its NAV and -29.65% on market price. Obviously, the losses since the February 2021 highs have been much greater.

AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) launched on September 2, 2020 and is still less than 18 months old. Despite negative performance, the Fund’s assets have held fairly steady and outstanding shares have continued to grow, finishing 2021 with over $1.1 billion in assets. I believe this shows that investors have patience and believe in the future potential of U.S. cannabis. Since the Fund has continued to get new investor cash in-flows, we’ve continued to buy shares. Significant losses since last February would be very painful without cash flows. With the Fund receiving in-flows, while losses are still painful, we’ve had the ability to buy underlying shares at lower prices. We add shares at times that we believe are advantageous and have lowered the cost basis of our highest conviction positions. We hold very high concentrations in the top 5 of our largest positions and feel that we have the Fund prepped for the bounce back that we think is on the way in U.S. cannabis stocks.

New Positions:

During the quarter, MSOS added just one position of AFC Gamma (NASDAQ: AFCG). During this calendar quarter we added to a number of cannabis ancillary names for liquidity and stability. We also maintained a much larger balance of cash in the Fund, which has turned out to be a smart move in this negative market.

Contributors / Detractors:

During the 4th quarter, most of the fund’s holdings had losses. A couple bright spots (again) were the cannabis REITS Innovative Industrial Properties (NYSE: IIPR), up 14% and Power REIT (NYSE American: PW), up more than 37%. Virtually all planting-touching US cannabis was negative.

Top Holdings

Ticker Security Description Portfolio Weight %
TCNNF TRULIEVE CANNABIS SWAP REC 13.15%
GTBIF GREEN THUMB INDUSTRIES SWAP REC 12.19%
CURLF CURALEAF HOLDINGS INC SWAP REC 9.47%
IIPR INNOVATIVE INDUSTRIAL PROPER 8.65%
VRNOF VERANO HOLDINGS CORP SWAP REC 8.61%
CRLBF CRESCO LABS INC SWAP REC 7.18%
AYRWF RECV AYR WELLNESS INC 4.98%
TRSSF TERRASCEND CORP SWAP REC 4.33%
HYFM HYDROFARM HOLDINGS GROUP INC 4.03%
GRWG GROWGENERATION CORP 3.90%

As of 12.31.2021. Cash is not included. Subject to change.

Please see our complete Fund holdings at advisorshares.com/etfs/msos. The holdings details are updated each market day.

To get updates on the funds, tune in to AdvisorShares’ Alpha Nooner Show streaming live each regular weekday starting at 11:50 am (East Coast time), where I am a guest almost every Tuesday.  Find it on most major social media platforms or visit our the AdvisorShares “Events” webpage for more information.

 

Cheers,

Dan Ahrens
AdvisorShares
AdvisorShares Pure US Cannabis ETF (MSOS) Portfolio Manager

 

Past Manager Commentary

Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.

The Fund is subject to a number of risks that may affect the value of its shares. This section provides additional information about the Fund’s principal risks. The degree to which a risk applies to the Fund varies according to its investment allocation. Each investor should review the complete description of the principal risks before investing in the Fund. As with investing in other securities whose prices increase and decrease in market value, you may lose money by investing in the Fund.

Cannabis-Related Company Risk. Cannabis-related companies are subject to various laws and regulations that may differ at the state/local and federal level. These laws and regulations may (i) significantly affect a cannabis-related company’s ability to secure financing, (ii) impact the market for marijuana industry sales and services, and (iii) set limitations on marijuana use, production, transportation, and storage. Cannabis-related companies may also be required to secure permits and authorizations from government agencies to cultivate or research marijuana. In addition, cannabis-related companies are subject to the risks associated with the greater agricultural industry, including changes to or trends that affect commodity prices, labor costs, weather conditions, and laws and regulations related to environmental protection, health and safety. Cannabis-related companies may also be subject to risks associated with the biotechnology and pharmaceutical industries. These risks include increased government regulation, the use and enforcement of intellectual property rights and patents, technological change and obsolescence, product liability lawsuits, and the risk that research and development may not necessarily lead to commercially successful products.

Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times.

Holdings and allocations are subject to risks and to change.

The views in this commentary are those of the portfolio manager and may not reflect his views on the date this material is distributed or any time thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.