Dual Shocks Crush Canadian LP Stock Index by 11.four% in July – New Cannabis Ventures


Soon after a 54.9% obtain in Q1, the Canadian Cannabis LP Index  gave up about half the gains in Q2. In July, following the surprise termination of Bruce Linton as co-CEO of Canopy Development and then the shocking revelation that CannTrust broke Well being Canada guidelines by expanding cannabis in unlicensed rooms in its cultivation facility, the index sank 11.four% to 792.12:

The index remains substantially under the all-time closing higher of 1314.33 on September 25th, just ahead of Canadian legalization. It has elevated 25.three% given that bottoming on December 21st and is up 12.four% year-to-date:

The index, which integrated 50 publicly-traded licensed producers that traded in Canada at the finish of June, with equal weighting, is rebalanced month-to-month. Each and every of the members is also integrated in a sub-index, with eight in the Canadian Cannabis LP Tier 1 Index, six in the Canadian Cannabis LP Tier two Index and 36 in the Canadian Cannabis LP Tier three Index through the month.

Tier 1

Tier 1, which integrated the LPs that are creating sales of at least C$10 million per quarter (in 2018, we employed C$four million as the hurdle), fell 19.six%, leaving the year-to-date obtain at 14.two% soon after declining 7.7% in 2018. This group included Aphria (TSX: APHA) (NYSE: APHA), Aurora Cannabis (TSX: ACB) (NYSE: ACB), CannTrust (TSX: TRST) (NYSE: CTST), Canopy Growth (TSX: WEED) (NYSE: CGC), HEXO Corp (TSX: HEXO) (NYSE American: HEXO), MediPharm Labs (TSX: LABS) (OTC: MEDIF), Organigram (TSXV: OGI) (NASDAQ: OGI) and  Zenabis Global (TSX: ZENA) (OTC: ZBISF). CannTrust, declining 52.9%, was the worst performer in this group and amongst all LPs. Only MediPharm Labs, which uplisted to the TSX through the month, accomplished a obtain, increasing six.%.

Tier two

Tier two, which integrated the LPs that produce quarterly sales in between C$two.five million and C$10 million, fell 9.7%, leaving it up 27.two% to start 2019 soon after declining 35.% in 2018.  This group included Cronos Group (TSX: CRON) (NASDAQ: CRON),  Delta 9 (TSXV: DN) (OTC: VNRDF), Supreme Cannabis (TSX: FIRE) (OTC: SPRWF), TerrAscend (CSE: TER) (OTC: TRSSF), VIVO Cannabis (TSXV: VIVO) (OTC: VVCIF) and WeedMD (TSXV: WMD) (OTC: WDDMF). Most of the stocks returned close to the typical.

Tier three

Tier three, which integrated the 36 LPs that produce quarterly sales much less than C$two.five million, declined 9.9%, leaving its year-to-date obtain at 10.six% soon after declining 26.four% in 2018. 7 of the top rated eight performers for the whole sector, like the top rated three, have been all members of Tier three through July as have been the 9 of the 10 worst performers. Neptune Wellness Options (TSX: NEPT) (NASDAQ: NEPT), which priced a secondary supplying through the month, was the clear leader amongst this group and the whole sector, rallying 32.five%.

The returns for the general sector varied considerably, with  eight names posting good returns, when fourteen declined by additional than 20%, for a median return of -12.six%:

For July, the general index now has 49 constituents, with BlissCo removed following its acquisition by Supreme Cannabis. Furthermore, Valens GroWorks (TSXV: VGW) (CSE: VGWCF) moves from Tier three to Tier two following its current monetary report. Readers need to be conscious that Tilray (NASDAQ: TLRY), with no Canadian listing, is not eligible for inclusion in the index, which is denominated in Canadian dollars. Note that the reduce-off date for generating alterations to the index was 7/29.

In the subsequent month-to-month evaluation, we will summarize the functionality for July and go over any additions or deletions. Be certain to bookmark the pages to remain existing on LP stock price tag movements inside the day or from day-to-day.

Get ahead of the crowd by signing up for 420 Investor, the biggest &amp most complete premium subscription service for cannabis traders and investors given that 2013.

Alan Brochstein, CFA
Primarily based in Houston, Alan leverages his expertise as founder of on the net communities 420 Investor, the 1st and nonetheless biggest due diligence platform focused on the publicly-traded stocks in the cannabis sector. With his comprehensive network in the cannabis neighborhood, Alan continues to uncover new techniques to connect the sector and facilitate its sustainable development. At New Cannabis Ventures, he is accountable for content material improvement and strategic alliances. Prior to shifting his concentrate to the cannabis sector in early 2013, Alan, who started his profession on Wall Street in 1986, worked as an independent investigation analyst following more than two decades in investigation and portfolio management. A prolific writer, with more than 650 articles published given that 2007 at Looking for Alpha, exactly where he has 70,000 followers, Alan is a frequent speaker at sector conferences and a frequent supply to the media, like the NY Instances, the Wall Street Journal, Fox Business enterprise, and Bloomberg Television. Make contact with Alan: Twitter | Facebook | LinkedIn | E mail

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