YOLO: 1st Quarter 2021 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.

Commentary

In the 1st quarter of 2021, AdvisorShares Pure Cannabis ETF (NYSE: YOLO) gained 38.19 % on its net asset value (NAV) and 38.86 % on its market price for the 3-month period. For the one-year period, April 1, 2020 through March 31, 2021, YOLO gained 208.20 % on its NAV and 210.79 % on market price. Remember that March and April 2020 were a rather low point for the overall market as investors reacted to COVID-19. While these high returns may not be sustainable all the time, we are optimistic for future growth in the space.

The first quarter of 2021 feels like it was a lot longer than three months! It’s had a little of everything. Cannabis stocks as a whole carried strong momentum through January but have lagged since. Historically, cannabis seems to take an annual Spring downturn. And we all know that federal reform is moving much slower than many investors expected. Along with the recent negativity, U.S. cannabis stocks underperformed their Canadian counterparts. I think this is nonsensical and won’t last. We obviously like a number of Canadian LPs of course, but we overweight what we believe are the right ones – those with solid balance sheets, revenue growth and (hopefully) even profitability.

For those that read my commentary from last year, you know that I said cannabis stock performance would separate. From current cannabis stock prices and as we head through 2021, I think there will be a separation between companies with strong balance sheets and those without, companies with growing revenues and profits vs. those without, and in many cases – between those on the U.S. side of the border and besides a select few – those in Canada.

New Positions:

During the quarter, YOLO added new securities of Israeli company IM Cannabis Corp (NASDAQ: IMCC), Columbian-focused company PharmaCielo LTD (TSX: PCLO), and American CBD company HempFusion Wellness (TSX: CBD.u).  We also added a new swap position of SOL Global Investments Corp (OTC SOLCF – swap) that we like for its underlying cannabis exposure and U.S. exposure in particular.

Winners and Losers:

During the 1st quarter, a few of the Fund’s largest holdings were among the best performers. GW Pharmaceuticals (NASDAQ: GW) gained 87% on buyout news. Aphria (MNASDAQ: APHA) was up 165% on its Tilray deal. Largest holding Village Farms International (NASDAQ: VFF) gained 30%. Some ancillary and CBD companies provided good gains. GrowGeneration (NASDAQ: GRWG) was up 23% and GreenLane Holdings (NASDAQ: GNLN) gained 33%. Charlotte’s Web (TSX: CWEB) gained 36%, and cbdMD (NYSE American: YCBD) was up 40%. U.S. multi-state operators were a mixed bag. Curaleaf (OTC CURLF – swap) gained 26%, Trulieve (OTC TCNNF – swap) gained over 43%, and Green Thumb Industries (OTC GTBIF – swap) gained over 20%, and Cresco Labs (OTC CRLBF – swap) gained 26%. The MSOs were solid, but many people viewed them as underperforming. YOLO (and some other competitor cannabis ETFs) outperformed our sister fund – AdvisorShares Pure US Cannabis (ticker: MSOS) – for the three month period, but it’s a little misleading due to the huge returns of Canada’s Aphria and the UK’s GW Pharma.

The Fund’s losers were few, and often involved new positions that may have provided good entry points. Negative returns in the three month timeframe came from smaller existing positions Neptune Wellness (NASDAQ: NEPT) down 15%, Medipharm Labs (TSX: LABS) down 12%, and Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) down 9%. New positions mentioned above HempFusion, IM Cannabis, PharmaCielo were also negative over the quarter.

Top Holdings

Ticker Security Description Portfolio Weight %
VFF VILLAGE FARMS INTERNATIONAL 14.14%
APHA APHRIA INC 10.07%
IIPR INNOVATIVE INDUSTRIAL PROPER 8.33%
CGC CANOPY GROWTH CORP 7.50%
GRWG GROWGENERATION CORP 6.50%
CURLF CURALEAF HOLDINGS INC SWAP REC 5.61%
GTBIF GREEN THUMB INDUSTRIES SWAP REC 5.26%
CRLBF CRESCO LABS INC SWAP REC 4.70%
GWPH GW PHARMACEUTICALS -ADR 4.52%
TCNNF TRULIEVE CANNABIS SWAP REC 4.35%

As of 03.31.2021. Cash is not included.

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

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.