For the trading week ended August 20, my proprietary Canadian Cannabis Company Index (MCCCI) decreased by 11.2% compared to the prior week when it decreased by 3.6%. The index consists of 23 stocks, many of which are among the most widely held holdings of the 3 ETFs (NY: MJ, CNBS, and THCX) that I consider to be a reliable barometer of the Canadian cannabis sector. MCCCI's differentiated business model is both weighted and market capitalization based because I believe that this approach best represents the current landscape of the Canadian cannabis sector. 

Image by Herbal Hemp from Pixabay

The Good

There were no stocks that increased by more than 10%, which is my metric for inclusion in this category.

The Bad

There were 6 stocks that decreased by more than 10% (but less than 20%) which is my metric for inclusion in this category: OGI -18.6%, ALEAF -16.2%, TRSSF -15.6%, MEDIF -15.2%, NXTTF -12.2% and ROMJF -11.5%.

The Ugly

There were 4 stocks that decreased by 20% or more, which is my metric for inclusion in this category: HEXO -34.5%, NCNNF -28.8%, FLWPF -25.4%, and BHHKF -24.8%. HEXO Corp. has plummeted 58.27% since my “code blue alert” Seeking Alpha article of 1/9/20 much to the benefit of my private clients who trade options. On 8/17/21 48 North Cannabis Corp. announced that their shareholders had approved their business combination with HEXO. In my view, this is a merger of 2 ne’er-do-wells as shown by the poor performance of both companies this week. I also alerted my private clients about other reasons that I am not enthused by this plan of arrangement.

Recap

There was a decrease of 6.1% in the “Big Four” compared to the prior week when there was a decrease of 7.5%. The relative strength index decreased by 9.5% compared to the prior 2 weeks when there was no change. I view this “one-two punch” as a possible portend to increased price pressure going forward, especially since all of the “Big Four” MCCCI stocks decreased. Let us see how this volatile sector has performed at the same time next week, shall we?