Ted Ohashi's Marijuana Stock Market Review & Outlook
At the same time as if this wasn’t enough, the Ontario Securities Commission (OSC) disclosed it is dealing with the first securities fraud case in the cannabis group as the notorious Ben Ward and his well-known cohorts are alleged to have siphoned off investor money from Cannada Cannabis Corp. (CCC). Until his sudden resignation in August, Ward was the CEO of Wayland Group that has its own checkered history. I can tell you by the time the OSC wraps its tentacles around you, there is a very good chance you’re done like dinner. I don’t think this is going to end well for Ward, CCC or sad to say, the shareholders who lost money. And because questions have been asked about Ward going back to Maricann days, there may be more to the story we haven’t heard. Yet.
As I have been saying for the past couple of weeks, the Canadian based companies could produce better performance. But this does not mean we should abandon our principal thesis – companies with operations based in the U.S. an internationally will prevail. The Marijuana Indexes owned by MJIC show the Canadian based companies posted a decline last week but outperformed the American Marijuana Index. This can be seen in the two charts above. The Canadian election campaign is underway and we are proving that our politicians can be just as ridiculous as the American scene. Somebody produced a picture of Prime Minister Justin Trudeau almost twenty years ago at an “Arabian Nights” themed costume party, dressed as Aladdin – a very popular Disney cartoon character at the time with his face blackened - as was the Disney character. Although others on the campaign reacted as if this was a capital crime, I don’t see anything wrong with it. What I find totally inane is the Prime Minister’s profuse apology. If elections swing on issues as important as this, I suppose we deserve the politicians we elect.
Conclusion: the cannabis stocks remain under pressure and the ongoing and growing list of scandals doesn’t help. But this is exactly the environment in which bear markets turn into bull markets. Trying to pick the exact bottom is a mug’s game, so just keep adding to positions in the stocks on my list and be ready for some new names coming down the pike. 1933 Industries (CSE: TGIF) (OTCQB: TGIFF), Khiron Life Sciences (TSXV: KHRN) (OTCQB: KHRNF) and Lexaria (CSE: LXX) (OTCQX: LXRP) fit my positive U.S. and international outlook and Sunniva (CSE: SNN) (OTCQB: SNNVF) will be back in my good books when the Okanagan Falls sale closes. I did ask again last week and was told they are working on it. Cannabis Growth Opportunity Corp. (CSE: CGOC) does not neatly fit into this description, but especially in this market, buying value makes sense. CGOC reported a new Net Asset Value of $2.85 per share. At last week’s closing price of $1.34 per share, the shares are trading at a 53% discount to true value based on a portfolio of public and private cannabis companies.