YOLO: July 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.
YOLO continued its 2020 rebound in a big way in July. After solid cannabis stock performance in April and May following the COVID-19 lows, cannabis stocks overall decreased slightly last month in June. AdvisorShares Pure Cannabis ETF (NYSE: YOLO) was strong again in July gaining 12.98% on its net asset value (NAV) and 13.07% on its market price. The S&P 500 Index returned just 5.64%. For the past 3 months, May 1 through July 31, 2020, YOLO gained 33.52% on its net asset value (NAV) and 34.47% on its market price, while the S&P 500 returned 12.87%.
In the past few months, we’ve continued to see increased interest in U.S. cannabis markets and multi-state operators in particular. With elections approaching in November, most Americans expect continued U.S. cannabis regulatory approvals and expansion. In the recently released draft for the Democratic Party Platform, cannabis reform is certainly prominent, but without a call for full federal legalization. It is along the lines of what I have been saying all along. I expect cannabis banking reform, continued expansion of medical marijuana, and strengthening of recreational cannabis at a state level. Reforms will help so that state cannabis law will not be contrary to federal law. But without full federal legalization and open border laws, Canadian LPs will remain just that – Canadian – and U.S. multi-state operators (MSOs) will only be strengthened.
YOLO is the only cannabis ETF to offer exposure to U.S. MSOs. We believe the best future cannabis opportunities are in the United States – not in Canada where other cannabis ETFs concentrate their investments. I grow increasingly frustrated with the level of cannabis misinformation in the mainstream press and in what seems to be every platform of social media. Far too often, people discuss momentum in U.S. cannabis reform, booming public support for marijuana and states’ need for tax revenue – and then tag ticker symbols and drop Canadian names such as Canopy, Cronos, Tilray and Aurora. Please – Stop It! Those companies cannot do marijuana business in the United States!
Last month, I mentioned that we had added to positions in U.S. MSOs Trulieve (OTC: TCNNF – swap), Green Thumb Industries (OTC: GTBIF – swap), Curaleaf (OTC: CURLF – swap), and in Canadian Village Farms (NASDAQ: VFF). Those moves paid off very well, as I will mention in the next paragraph. We also added to Organigram (NASDAQ: OGI), only to reduce Organigram again during July. We made very few other moves while the portfolio was performing extremely well in July.
Winners and Losers:
During the month, the Fund had a number of big gainers, particularly among the Fund’s largest holdings. Top holding Village Farms gained 27%. Second largest holding Innovative Industrial Properties, Inc (NYSE: IIPR) gained 18%. cbdMD Inc. (NYSE: YCBD) was up more than 72%. Ancillary cannabis supporter GrowGeneration (NASDAQ: GRWG) gained 23%. As mentioned above, our top ten MSO positions performed very well in July. Curaleaf returned 38%, Trulieve gained 28%, Green Thumb Industries gained 34%.
On the negative side of things, Pharmaceutical company Corbus (NASDAQ: CRBP) was down more than 25%. That’s OK as its bouncing back since and was up more than 75% for April through June. Charlotte’s Web Holdings (TSX: CWEB) was down more than 9%. The Fund’s other biggest detractors from performance were all Canadian cannabis companies -again. Previously mentioned Organigram was down over 22%. Valens (TSX: VLNS) lost more than 11% on disappointing earnings. Other significant losers, comparatively quite small positions in our fund, include Aurora (NYSE: ACB) down 17% and WeedMD (TSXV: WMD) down over 25%.
|Ticker||Security Description||Portfolio Weight %|
|VFF||VILLAGE FARMS INTERNATIONAL||10.30%|
|IIPR||INNOVATIVE INDUSTRIAL PROPER||9.48%|
|GWPH||GW PHARMACEUTICALS -ADR||7.41%|
|GTBIF||GREEN THUMB INDUSTRIES SWAP REC||6.54%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||6.32%|
|TCNNF||TRULIEVE CANNABIS SWAP REC||5.75%|
|ARNA||ARENA PHARMACEUTICALS INC||4.90%|
|CGC||CANOPY GROWTH CORP||3.51%|
As of 7.31.2020. Cash is not included.
Please see our complete Fund holdings at advisorshares.com/etfs/yolo. The holdings details are updated each market day.