MSOS: 1st Quarter 2023 Portfolio Review
While the cannabis space continues to be challenging and despite this past quarter, our belief in the long term opportunities in the sector remains strong. For the three-month period that this commentary covers (January 1, 2023 through March 31, 2023) the net asset value (NAV) on MSOS dropped -18.72%.
Similar forces to the previous quarters proceeded to hold the sector back – mainly, lack of clear federal reform and higher sensitivity to short selling pressures. We believe these depressed valuations still represent good buying opportunity for our shareholders in the long term.
The portfolio maintains a high concentration in its top holdings in the largest multi-state operators (MSOs). This is a continuing trend as the top five holdings represented 58.5% of the portfolio at the end of Q1 2022, 66.8% of the portfolio by the end of Q2 2022, 73.5% of the portfolio at the end of Q3 2022, 81.3% of the portfolio at the end of Q4 2022, and 78.66% of the portfolio at the end of Q1 2023.
Assets have been driven substantially lower due to the contractions all over the cannabis space but total shares outstanding remain high. We believe this shows the strength and opportunity in cannabis for the long term. While the performance is painful, we believe this is an opportunity to take advantage of what we believe to be extremely undervalued companies.
There were no new additions for this quarter, but we continued to shift and adjust weightings to manage the portfolio. Hydrofarm Holdings Group Inc. (HYFM) was removed from the portfolio.
Winners and Losers
There were a few winners this quarter: Glass House Brands (GLASF) was up 47.12% for the quarter, Terrascend Corp (TRSSF) was up 34.51% for the quarter, and Planet 13 Holdings (PLNHF) gained 27.87% for the quarter. The majority of the fund’s holdings had losses during the quarter: among the Fund’s largest positions, Curaleaf (CURLF) was -34.61%, Trulieve (TNCCF) was -26.16%, and Cresco Labs (CRLBF) was -13.89%.
Despite the punishing stock prices as of late, there continues to be expansion and growth in terms of new states coming online and expanding their current cannabis laws. Legal recreational sales started in Connecticut in January and in Missouri in February. This growth and expansion into new and existing states continues to enlarge the footprint of cannabis companies while putting pressure on neighboring states to adopt better cannabis laws.
Twitter became the first major social media platform to allow cannabis advertisements in February, although with numerous restrictions.
At a federal level, while the progress has so far been frustrating, we remain cautiously optimistic that we will see some form of either comprehensive or incremental legislation.
|Ticker||Security Description||Portfolio Weight %|
|GTBIF||GREEN THUMB INDUSTRIES SWAP REC||26.14%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||18.17%|
|TCNNF||TRULIEVE CANNABIS SWAP REC||15.19%|
|VRNOF||VERANO HOLDINGS CORP SWAP REC||11.61%|
|CRLBF||CRESCO LABS INC SWAP REC||7.66%|
|TRSSF||TERRASCEND CORP SWAP REC||7.55%|
|CCHWF||COLUMBIA CARE INC SWAP REC||3.42%|
|JUSHF||JUSHI HOLDINGS INC SWAP REC||2.18%|
|GLASF||GLASS HOUSE BRANDS||1.85%|
|PLNHF||PLANET 13 HOLDINGS SWAP REC||1.74%|
As of 03/31/2023. 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’ AlphaNooner Show streaming live each regular weekday starting at 12:00 pm (East Coast time), where I am a guest almost every Tuesday. Other important guests from the cannabis world often join too. Find it on most major social media platforms or visit our the AdvisorShares “Events” webpage for more information.