E The Canadian Cannabis Report - Monday, May 18

MACRO

For the trading week ended 5/15/20 my Canadian Cannabis Company Index (MCCCI) increased by 4.4%, compared to the prior week’s decrease of 2.4%

The index consists of 25 stocks, many of which are among the most widely-held holdings of the 3 ETFs (MJ, CNBS, and THCX ) that I consider to be a reliable barometer of the industry as a whole. The MCCCIs 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 industry. As I’ve said here before, I believe there will be a pronounced reset in this sector, likely in Q3 or Q4 of this year. including but not limited to business failures, consolidation, and a significant downtrend in valuation. The survivors will be those companies that can operate profitably when the equilibrium price is established by the supply/demand dynamics I will post a link to an article I wrote in 2019 in which I said that I did not expect a final equilibrium price to be determined in late 2020 Let’s look at this week’s good, bad and ugly stocks.

MICRO THE GOOD

This week there were 2 stocks that increased more than 10%, which is my threshold for this category. CBWTF gained 17.7% for the week and closed at $0.2730. NXTTF gained 10.5% for the week and closed at $0.2640.

THE BAD AND THE UGLY

There were 2 stocks in the MCCCI that decreased by more than 10%, which is my threshold for this category. BHHKF plunged 26.5 % and closed at $0.2046. ALEAF, which has shown up several times both as a good and bad performer, also had an ugly week and declined 22.7% and closed at $0.4370 for the week.

RECAP

The relative strength indicator increased by 4.4 % compared to the overall index which increased by 10.3%. This is mainly due to the higher capitalization stocks on an overall basis performed much better than their low capitalization peer More specifically 9 of the 10 largest cap MCCCI stocks closed higher for the week. Let’s see how this volatile sector will perform at the same time next week shall we?

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James Grover 1 month ago Member's comment

How's this compare to the US cannabis market?