MSOS: 3rd 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 have been quite challenging overall while we have been waiting for new catalysts. Whether Canadian or U.S. cannabis stocks, they seemed to hit their highs about February 10th and have been largely negative since.

AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) launched on September 2, 2020 and now has hit its 1-year anniversary. Having been over $1 billion at times earlier in the year, the Fund ended September 2021 with over $870 million in assets under management. Despite frustrating performance from underlying cannabis stocks, the Fund’s assets, in the form of outstanding shares, have grown.

For the 3rd quarter, MSOS returned -21.35% on its net asset value (NAV) and -21.36% on its market price. From lows back on October 1, 2020, the Fund’s trailing 1-year returns through the end of September 2021 are 45.21% (NAV) and 43.79% (market price). As I’m writing this commentary, the downtrend since February of this year has continued as politicians continue to play politician games, negatively affecting cannabis stocks as investors await reforms.

Investors need to remember that cannabis stocks are going to be extremely volatile. This market volatility is amplified for those stocks trading on the U.S.’s over the counter (OTC) market. In our opinion, U.S. cannabis fundamentals are very strong and revenues are growing. While it’s widely agreed that U.S. cannabis reforms are coming, we simply don’t know the timing or the extent.

New Positions:

During the quarter, MSOS added new positions in Urban-Gro Inc (NASDAQ: UGRO) and Agrify Corp (NASDAQ: AGFY). In a reversal from earlier in the year, we’ve been adding to these stocks, as well as, a few other quality cannabis ancillary names for liquidity and stability purposes.

Contributors / Detractors:

During the 3rd quarter, most of the fund’s holdings had losses. A few bright spots (yet again) were cannabis REITS, notably, Innovative Industrial Properties (NYSE: IIPR) and Power REIT (NYSE American: PW). Most planting-touching U.S. cannabis stocks were negative.

Top Holdings

Ticker Security Description Portfolio Weight %
GTBIF GREEN THUMB INDUSTRIES SWAP REC 9.15%
CURLF CURALEAF HOLDINGS INC SWAP REC 7.91%
IIPR INNOVATIVE INDUSTRIAL PROPER 6.40%
TCNNF TRULIEVE CANNABIS SWAP REC 6.22%
CRLBF CRESCO LABS INC SWAP REC 5.84%
AYRWF REC AYR WELLNESS INC 5.78%
CURLF CURALEAF HOLDINGS INC SWAP REC 4.77%
GTBIF GREEN THUMB INDUSTRIES SWAP REC 4.44%
VRNOF VERANO HOLDINGS CORP SWAP REC 4.31%
CRLBF CRESCO LABS INC SWAP REC 4.05%

As of 09.30.2021. 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

 

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.