MSOS: 2nd Quarter 2021 Portfolio Manager Review
It’s been frustrating waiting for new catalysts in U.S. cannabis stocks. Whether it’s Canadian or U.S. cannabis stocks, they seemed to hit highs on or about February 10th and have been largely negative since.
The AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) launched on September 2, 2020, with $2.5 million in assets and has been over $1 billion, but ended June with about $950 million in assets under management. Investors need to remember that cannabis stocks are going to be extremely volatile. For cannabis stocks trading over the counter (OTC), the volatility is amplified. U.S. cannabis fundamentals are strong and revenues are growing. While virtually everyone agrees that U.S. cannabis reforms are coming, we simply don’t know the timing and extent. Politicians are politicians and extremely slow.
For the 2md Quarter 2021, MSOS returned -5.54% on its net asset value (NAV) and -5.56% on its market price. The Fund has existed for just-under 10 months as of June 30. Its total cumulative return since inception is 60.86% on NAV and 60.32% on market price.
My thoughts on the remainder of the year are unchanged. From current cannabis stock prices, I expect a scenario we’ve seen before. As we head through year end 2021, there will be a separation in price performance between companies with strong balance sheets and those without, companies with growing revenues and profits vs. those without, and particularly – a separation between U.S. MSOs and Canadian LPs. For this to happen, we don’t necessarily need Federal reform. U.S sales are growing and into a continuously growing list of new locations. Federal reform (which I think will come piecemeal), will simply be a big boost. I think we’ll soon see headway on SAFE Banking as a first domino to fall.
During the quarter, MSOS didn’t add any new positions. We have gradually shifted into even heavier weightings in plant-touching multi-state operations (MSO’s) with a focus on the top 4, 5, or 6 positions. We’ve slightly deceased some smaller positions in the Fund’s lower half.
Contributors / Detractors:
During the 2nd quarter, most of the fund’s holdings had losses. A few bright spots were Innovative Industrial Properties (NYTSE: IIPR) up 6.79%, Green Thumb Industries (OTC GTBIF – swap) up over 13%, and Tessascend (OTC TRSSF – swap), up over 15%.
Losers were significant. Among larger holdings, Curaleaf (OTC CURLF – swap) lost almost 7%, Trulieve (OTC TCNNF – swap) lost over 17%, and Cresco Labs (OTC CRLBF – swap) lost 12%. Two newer positions added in 2021 lost for the 2nd quarter in a row: Verano Holdings (OTC VRNOF – swap) lost over 13% and The Parent Company (OTC GRAMF – swap) was down over 25%.
A number of the Fund’s smaller and / or ancillary holdings actually helped the portfolio by having only slight losses such as Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM), down just 2.01%
|Ticker||Security Description||Portfolio Weight %|
|GTBIF||GREEN THUMB INDUSTRIES SWAP REC||9.99%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||8.50%|
|TCNNF||TRULIEVE CANNABIS SWAP REC||7.96%|
|CRLBF||CRESCO LABS INC SWAP REC||6.58%|
|AYRWF||REC AYR WELLNESS INC||5.76%|
|TRSSF||TERRASCEND CORP SWAP REC||5.48%|
|HRVSF||HARVESTHEALTH SWAP R||4.53%|
|IIPR||INNOVATIVE INDUSTRIAL PROPER||4.22%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||3.79%|
As of 06.30.2021. Cash is not included.
Please see our complete Fund holdings at advisorshares.com/etfs/msos. The holdings details are updated each market day.
Past Manager Commentary