YOLO: June 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.
After a big cannabis stock rebound in April and May following COVID-19, cannabis stocks overall decreased somewhat again in June. YOLO returned -4.12% on its net asset value (NAV) and -4.18% on its market price in June. The S&P 500 Index was slightly positive. For the past 3 months, April 1 through June 30, 2020, YOLO gained 32.74% on its net asset value (NAV) and 31.94% on its market price, while the S&P returned 20.54%.
Since the COVID-19 related lows in March, cannabis stocks as a group have moved up dramatically, but I’d like to remind everyone that cannabis could still have plenty of upside potential. Cannabis stocks were down severely in 2019 and the early months of 2020. Early in the COVID-19 crisis, cannabis dispensaries were deemed essential business and have remained open. CBD and marijuana have sold at record levels throughout Canada and legal states in the U.S.
During the past month or so, we have seen increased interest in U.S. cannabis and multi-state operators in particular as we are entering the 2020 election cycle. It’s widely anticipated that we’ll continue to see U.S. cannabis regulatory approvals and expansion. YOLO is the only cannabis ETF to offer exposure to U.S. multi-state operators. We believe the best future cannabis opportunities are in the United States. On the other hand, continued U.S. expansion should do NOTHING for Canadian cannabis companies.
During the month, we further reduced the fund’s excess cash and selectively added to positions in U.S. Multi-state operators Trulieve (OTC: TCNNF – swap), Green Thumb Industries (OTC: GTBIF – swap), Curaleaf (OTC: CURLF – swap), and in Canadian firms Village Farms (NASDAQ: VFF) and Organigram (NASDAQ: OGI). Unlike many Canadian cannabis companies, we like the balance sheets and profitability profiles of both VFF and OGI.
Winners and Losers:
During June, the Fund has more losers than winners. A handful of stocks were positive. A top holding, Innovative Industrial Properties, Inc (NYSE: IIPR) gained 8.97%. cbdMD Inc. (NYSE: YCBD) was up more than 29%. Ancillary cannabis supporter Greenlane Holdings (NASDAQ: GNLN) gained 15.7%. Pharma companies Corbus (NASDAQ: CRBP) was up 12.47% and Arena (NASDAQ: ARNA) gained 5.32%. A few other gainers had minor impacts.
On the negative side, Zynerba Pharmaceuticals (NASDAQ: ZYNE) was down 35.93% in June based on clinic trial news. We have reduced our position. ZYNE did gain 35% the prior month in May. Charlotte’s Web Holdings (TSX: CWEB) was down more than 29% based on additional stock issuance. We used that news to buy more shares. The Fund’s other biggest detractors from performance were all Canadian cannabis companies
|Ticker||Security Description||Portfolio Weight %|
|VFF||VILLAGE FARMS INTERNATIONAL||9.17%|
|GWPH||GW PHARMACEUTICALS -ADR||8.06%|
|GTBIF||GREEN THUMB INDUSTRIES SWAP REC||6.63%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||6.26%|
|TCNNF||TRULIEVE CANNABIS SWAP REC||6.06%|
|ARNA||ARENA PHARMACEUTICALS INC||5.68%|
|OGI||ORGANIGRAM HOLDINGS INC||4.20%|
As of 06.30.2020. 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