YOLO: 4th Quarter 2020 Portfolio Manager Review
With a Democratic Presidential victory in the November election, a positive sweep of six cannabis ballot measures in five states, followed by Democrats narrowly gaining control of the Senate through the January run-off elections, cannabis momentum is extremely high. Wide-ranging cannabis reform is now expected. However, cannabis investment education is still badly needed in many circles. Investors need to understand that even the Democratic Party’s platform never called for full federal legalization of marijuana. I expect cannabis banking reform, 280e tax reform, continued expansion of medical marijuana, and strengthening of recreational cannabis at a state level. Reforms will happen so that state cannabis law will not be contrary to federal law. These can all be considered major victories for U.S.-based multi-state operations (MSOs). Cannabis reform will still be debated, negotiated and messy. The many smaller steps of changes in cannabis-related laws can lead to the home-run victory for U.S. cannabis companies of uplisting to major exchanges such as the NYSE or NASDAQ. Investment capital should follow in a big way. Without full federal legalization and open border laws, Canadian LPs will remain Canadian. I don’t expect them to do business in the U.S. for the foreseeable future.
YOLO added Power REIT (NYSE: PW) as a new equity position during the quarter. We also increased the theme of U.S. multi-state operators by adding Acreage Holdings (OTC ACRHF – swap), AYR Strategies (OTC AYRWF – swap), Columbia Care (OTC CCHWF – swap), Harvest Health (OTC HRVSF – swap), and Terrascend (OTC TRSSF – swap).
Winners and Losers:
During the 4th quarter, many of the Fund’s largest holdings were among the very best performers, again. Village Farms International (NASDAQ: VFF) was up 123% for the 3-month period. GrowGeneration (NASDAQ: GRWG) was up 151%. Innovative Industrial Properties, Inc (NYSE: IIPR) gained over 48%. There were plenty of other double-digit gainers as the sector was up dramatically in general. MSO positions in our top ten holdings also performed very well in the quarter. Curaleaf gained 56%, Trulieve gained over 62%, and Green Thumb Industries gained over 89%. All of the MSO swap positions were up significantly.
While the Fund was positive in the 4th quarter, there were holdings that were losers, although most were small positions in the portfolio. Significant negative returns in the 3-month timeframe came from Corbus Pharma (NASDAQ: CRBP) down 30%, Neptune Wellness (NASDAQ: NEPT) down 26%, Medipharm Labs (TSX: LABS) down 36%, Intec Pharma (NYSE: NTEC) down 31%, and a few others. Again, they were smaller holdings.
|Ticker||Security Description||Portfolio Weight %|
|GTBIF||GREEN THUMB INDUSTRIES SWAP REC||8.79%|
|VFF||VILLAGE FARMS INTERNATIONAL||8.77%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||8.67%|
|IIPR||INNOVATIVE INDUSTRIAL PROPER||7.04%|
|TCNNF||TRULIEVE CANNABIS SWAP REC||6.41%|
|AYRWF||RECV AYR STRATEGIES INC||4.98%|
|CCHWF||COLUMBIA CARE INC SWAP REC||4.84%|
|GWPH||GW PHARMACEUTICALS -ADR||4.82%|
|CRLBF||CRESCO LABS INC SWAP REC||4.47%|
As of 12.31.2020. Cash is not included.
Please see our complete Fund holdings at advisorshares.com/etfs/yolo. The holdings details are updated each market day.