Ideal time to buy Cannabis Growth Opportunity Corp (CSE: CGOC)
Cannabis Growth Opportunity Corp. (CSE: CGOC) publishes its Net Asset Value per share (NAV) on the 15th of each month. The NAV for May 15, 2019 is $3.41 per share, down 3.7% from the NAV of $3.54 posted for April 15, 2019. Speaking with Jamie Blundell, President of CGOC, the results for the recent month were generated from the portfolio of public companies as none of the private companies experienced a liquidity event. The performance of the public company portfolio based on my back of the napkin calculations was in line with the overall cannabis stock market as major cannabis indexes were down for the month ending May 15, 2019.
As a consequence, the discount to NAV of the shares declined slightly from 38.1% on May 16, 2019 based on the previous NAV to 37.2% on May 17, 2019 based on the updated NAV.
CGOC offers all the components of a potentially successful investment:
It is investing in the cannabis industry that we believe is an attractive.
It enables investors to participate in cannabis companies at an early stage.
The managers of both the public and private portfolios are qualified professionals.
In the time since going public, CGOC has put together a successful investment record
The shares are trading at much too large a discount from net asset value in my opinion.
Looking ahead, Blundell reports there are two possible liquidity events from the private company portfolio in the next month. I happen to know Jushi Inc. is one of them as I have been in touch with the company doing due diligence independently.
Jushi is expected to commence trading on June 10, 2019 and I expect it will open comfortably above CHOC’s cost. If the public company portfolio benefits from a general recovery in the cannabis stocks that were weak for almost the entire month prior to May 15th and the private company portfolio makes a positive contribution as well, we can expect a rebound in the NAV for the month to end June 15, 2019. In addition, there could be a further decline in the discount to NAV meaning this appears to be an excellent time to buy Cannabis Opportunity Growth Fund (CSE: CGOC).
Conclusion: It appears this is an ideal time to accumulate shares of Cannabis Growth Opportunity Corp. for the following reasons:
The major cannabis indexes have dropped in five of the past six weeks that suggests an upturn is likely in the offing. It appears some of the private companies will be experiencing a liquidity event. So far, two of the privates have been taken over and one has gone public, all at a sizeable premium to cost. It appears one or two more could go public in the next four to six weeks. We cannot expect private companies to have liquidity events every month but it appears that one or two more events will benefit the portfolio in the very near term. CGOC shares are trading at a 37.2% discount to Net Asset Value which is still much too high in my option. Today’s investor can anticipate the added benefit for a reduction in this discount over time.