YOLO: 2nd Quarter 2022 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.

Performance

It was a challenging 2nd quarter 2022 for global cannabis stocks. Based on net asset value (NAV), YOLO was down just over 50% for the full quarter. This was in part driven by broader macro weakness, as the S&P 500 Index also had a significant loss of -16.01% for the quarter.

Portfolio

The positions reduced the most during the quarter were cbdMD (YCBD) and Innovative Industrial Properties (IIPR). However, several positions were increased, including Clever Leaves (CLVR), Greenlane (GNLN), GrowGeneration (GRWG), High Tide (HITI), IM Cannabis (IMCC), Jazz Pharmaceuticals (JAZZ), Leafly (LFLY), Organigram (OGI), Village Farms (VFF) and WM Technologies “Weed Maps” (MAPS).

Winners and Losers

As evidenced by the performance for the quarter, most of all the stocks were down, significantly. The few bright spots were: JAZZ, which was up a few basis points for the quarter; Intercure (INCR), which was down just over 16% for the quarter; and Cardiol Therapeutics (CRDL), which was down just over 15% for the quarter. Everything else was down in a range from approximately 40% to 60% in just the 3 month period.

Top Holdings

Ticker Security Description Portfolio Weight %
MSOS ADVISORSHARES PURE US CANN 34.46%
VFF VILLAGE FARMS INTERNATIONAL 17.63%
IIPR INNOVATIVE INDUSTRIAL PROPER 7.15%
JAZZ JAZZ PHARMACEUTICALS PLC 4.37%
TLRY TILRAY BRANDS INC 4.17%
TRSSF TERRASCEND CORP SWAP REC 4.13%
RIV RIV CAPITAL INC 3.66%
CGC CANOPY GROWTH CORP 2.57%
GRWG GROWGENERATION CORP 2.44%
MAPS WM TECHNOLOGY INC 2.12%

As of 06.30.2022. Cash is not included. Subject to change.

Please see our complete Fund holdings at advisorshares.com/etfs/yolo. The holdings details are updated each market day.

Tune in to AdvisorShares’ Alpha Nooner Show streaming live each regular weekday starting at 12:00 pm (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.

Market Update

Activity for international cannabis companies has been slow. Canada continues to shake out some companies, even those that are highly capitalized. With significant continuous losses, they are mostly left to wait for opportunities to grow in the U.S. Probably the biggest international cannabis news for the quarter was the arrest of Brittney Griner in Russia. While international investment opportunities are limited, but growing, some of the highlights for the quarter include:

  • Bermuda House of Assembly passing adult use cannabis legislation (for the second time)
  • Adult use cannabis pilot program set to launch in Switzerland
  • German health minister announcement to begin cannabis legalization process
  • Ukraine health minister announces a bill to legalize medical cannabis
  • Brazil court rules patients can grow their own cannabis for medical purposes.
  • Spain to allow medical cannabis sales in pharmacies this fall
  • Albania Plans to legalize medical cannabis

In the U.S., there continues to be expansion and growth in terms of new states coming online and others expanding their current cannabis laws. On a state level, commercial sales began in New Mexico on April 1st and in New Jersey on April 21st. While sales are scheduled to begin toward the end of 2022, Connecticut signed into law legislation that legalizes and safely regulates the adult-use of cannabis in the state. This growth and expansion into new and existing states continues to grow the footprint of cannabis companies while putting pressure on neighboring states to also adopt better cannabis laws.

At a federal level, the progress has so far been frustrating. While there have been many bills that have tried to address cannabis like the MORE, CAOA, SRA, and SAFE acts, none have been able to advance to vote. The existence of so many bills is proof to us that cannabis reform is trying to be advanced and additionally, cannabis is a fairly bi-partisan issue. We remain cautiously optimistic that we will see some form of either comprehensive or incremental legislation.

We want to always remind people to think about how they want to invest in the space as YOLO is designed to be fully or mostly fully invested. It’s not a fully tactical strategy. So if you want to have a more aggressive risk managed approach to investing in this space, you will want to have a plan/strategy to trade around YOLO.  Regardless of the type of investor you are, we appreciate your investment and trading of YOLO as we work to grow the ETF and continue to raise awareness around the cannabis industry and its investment opportunities.

Cheers,

Dan Ahrens
AdvisorShares
AdvisorShares Pure Cannabis ETF (YOLO) Portfolio Manager

 

Past Manager Commentary

 

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.