YOLO: April 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/yolo.
In the month of April 2020, YOLO gained 11.64% on its net asset value (NAV) and 11.61% on its market price.
With continued healthy gains so far in May, it would not surprise me at all if the mid-March lows could actually be a bottom for cannabis stocks. We’ll see. Back in March, cannabis stocks took a deep dive down along with the overall market with the spread of COVID-19. As it relates to cannabis in particular, it was quickly proven to be an overreaction – of course, extremely common in the cannabis space. Cannabis dispensaries were deemed essential business and remained open. Home delivery and curbside pickup increased dramatically. CBD and marijuana sales have spiked throughout Canada and states where legal in the U.S.
Regardless of if cannabis stocks have actually found a bottom yet, I feel strongly that the cannabis industry will see a separation in performance between the “haves” and the “have nots” followed by industry consolidation. In the current environment, two things are most important for cannabis producers:
- Cash of a company’s balance sheet.
- Profitability (or a clear path to profitability in the near future).
I firmly believe that it’s easy to differentiate between the cannabis operators that have strong balance sheets and the opportunity for profitability – and those operators with no hope for profitability in the foreseeable future.
During the month, we added to positions in Aphria and Organigram, and have further reduced Tilray – one of the Fund’s very smallest positions. Along with the theme of overweighting based on balance sheets and profitability, we already hold large positions in companies like a Trulieve (OTC: TCNNF – swap), Green Thumb Industries (OTC: GTBIF – swap), and Curaleaf (OTC: CURLF – swap).
Of course, our largest holding is the U.S. listed REIT Innovative Industrial Properties, Inc (NYSE: IIPR).
Winners and Losers:
Among YOLO’s top ten holdings, Corbus Pharmaceuticals (NASDAQ: CRBP) gained 23%, Arena Pharmaceuticals gained 16%, Village Farms (NASDAQ: VFF) gained 18.2% and Aphria (NYSE: APHA) also returned 18%. Smaller positions Greenlane Holdings was up a whopping 86%, and Neptune Wellness gained over 75%. The Fund’s positions in U.S. multi-state operators showed nice performance as well – Green Thumb Industries (OTC: GTBIF – swap) up 23%, Cresco Labs (OTC: CRLSF – swap) gained 32%, Curaleaf (OTC: CURLF – swap) gained 19%, and Florida MSO Trulieve (OTC: TCNNF – swap) returned 13%.
Even with a positive overall month, the Fund still had losers – all of which were Canadian firms. Large holding Organigram (NASDAQ: OGI) dropped 21%, causing us to buy more. Valens GroWorks (TSX: VLNS) lost over 4%. Other losses were from stocks that we already choose to greatly underweight such as HEXO, Emerald Health, Aurora Cannabis, WeedMD, and Green Organic Dutchman.
|Ticker||Security Description||Portfolio Weight %|
|IIPR||INNOVATIVE INDUSTRIAL PROPER||9.37%|
|GWPH||GW PHARMACEUTICALS -ADR||7.24%|
|VFF||VILLAGE FARMS INTERNATIONAL||6.43%|
|GTBIF||GREEN THUMB INDUSTRIES SWAP REC||5.99%|
|CRBP||CORBUS PHARMACEUTICALS HOLDI||5.70%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||5.53%|
|TCNNF||TRULIEVE CANNABIS SWAP REC||5.23%|
|OGI||ORGANIGRAM HOLDINGS INC||4.49%|
|VLNS||VALENS GROWORKS CORP||4.47%|
As of 04.30.2020. Cash is not included.
Please see our complete Fund holdings at advisorshares.com/etfs/yolo. The holdings details are updated each market day.
Past Manager Commentary