YOLO: 3rd Quarter 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.
In the 3rd quarter of 2020, YOLO continued its 2020 rebound with solid performance. For the 3-month period of July – September, 2020, YOLO gained 6.60%, despite a negative September. The North American Marijuana Index was -2.63% for the same time frame. (At the time of this writing, YOLO is up well in October). In the previous 3-month period of April – June 2020, YOLO gained 32%.
As we approach the November election, we’re continuing to see increased interest in U.S. cannabis markets and the multi-state operators in particular. Continued U.S. cannabis regulatory approvals and expansion are expected. In the particularly interesting states of New Jersey and Arizona, voters are expected to approve recreational adult use cannabis. New York and Pennsylvania are renewing calls for legislative action for approval in the near future as well. U.S. multi-state operators (M.S.O.s) should thrive. Investors need to understand that the Democratic Party platform isn’t call for full federal legalization, but rather, cannabis decriminalization. I expect cannabis banking reform, continued expansion of medical marijuana, and the strengthening of recreational cannabis at a state level. Reforms will happen so that state cannabis laws will not be contrary to federal law. Without full federal legalization and open border laws, Canadian LPs will remain “Canadian.” I don’t expect them gaining the ability to do business in the U.S. for the foreseeable future.
Winners and Losers:
During the 3rd quarter, many for the Fund’s largest holdings were among the very best performers – and they are U.S. focused. GrowGeneration (NASDAQ: GRWG) was up 133% for the 3-month period. Innovative Industrial Properties, Inc (NYSE: IIPR) gained over 42%. M.S.O. positions in our top ten holdings also performed very well in the quarter. Curaleaf gained 18%, Trulieve gained over 43%, and Green Thumb Industries gained over 26%.
While the Fund was up in the 3rd quarter, we actually had more losers than winners. We simply had the best companies overweight for the most part, and losers often quite underweighted. Significant negative returns in the 3-month timeframe came from, pharmaceutical company Corbus (NASDAQ: CRBP) down 78%, Greenlane Holdings down 43%, Charlotte’s Web Holdings (TSX: CWEB) down 39%, Power REIT (NYSE American: PW) down 31%, and even GW Pharma (NASDAQ: GWPH) down 20% . The Fund’s other biggest losers were all Canadian cannabis companies – again – that we purposely hold in only tiny positions. Among all the Canadian losers was the poster-child, Aurora (NYSE: ACB), down another 63% for 3 months.
|Ticker||Security Description||Portfolio Weight %|
|VFF||VILLAGE FARMS INTERNATIONAL||11.57%|
|IIPR||INNOVATIVE INDUSTRIAL PROPER||11.41%|
|GWPH||GW PHARMACEUTICALS -ADR||7.65%|
|ARNA||ARENA PHARMACEUTICALS INC||5.75%|
|GTBIF||GREEN THUMB INDUSTRIES SWAP REC||5.04%|
|TCNNF||TRULIEVE CANNABIS SWAP REC||4.87%|
|CURLF||CURALEAF HOLDINGS INC SWAP REC||4.83%|
|CRLBF||CRESCO LABS INC SWAP REC||3.99%|
As of 9.30.2020. Cash is not included.
Please see our complete Fund holdings at advisorshares.com/etfs/yolo. The holdings details are updated each market day.