Here’s a Marijuana Investment Portfolio that’s flying Sky high

By | October 13th, 2016 11:10 PM EST | posted in CIO Letters, Custom Strategy Insights, Growth Strategy Insights, Spotlight

Back in June of this year I published a video titled “How to Invest in Marijuna”.  In the video I provided an in depth summary of five companies that Perry and I found compelling enough to select for a diversified marijuana investment portfolio. We ended up selecting 4 of the 5 firms with each receiving an equal share of capital. Today, less than 5 months later, the portfolio has nearly doubled in value (it’s up 95%). For the the same period (June 1, 2016 –  October 13, 2016) the S&P 500 has gained a mere 1.45%.

cannabis-index-coverIndex Strategy Advisors, Inc. Cannabis Index Strategy vs. S&P 500 Return History

Here’s a recap and breakdown of the analysis and predictions I made for each of the marijuana companies in the June video:

COMPANY # 1: Terra Tech Corp

marijuana investment portfolio - Terra Tech

Terra Tech Corp., through its subsidiaries, engages in the design, marketing, and sale of hydroponic equipment with proprietary technology to create sustainable solutions for the cultivation of indoor agriculture in Newport Beach and Irvine, California. It operates through two segments, Hydroponic Produce and Cannabis Products.

What I predicted:

“ Terra Tech had strong revenue growth in 2015 and is on track to do better than that in 2016 with May sales up over 42% from January. Terra Tech’s marijuana grower “Edible Garden” even sells herbs and spices in the grocery market,  NOT the black market so it can operate for long-term success.  I love Terra Tech’s vertical control of their business.  Edible Garden harvests the product, IVXX Elevate innovatively packages the product, and their dispensary retail chain Blum distributes it.  Blum stores literally have lines out of the door and around the block. This shows me they are on the right track despite the financial losses. “

How Terra Tech has performed within our marijuana investment portfolio since June 1, 2016:

Terra Tech is up 42% since June 1, 2016 versus 1.45% for the S&P 500. Terra Tech represents 20% of the total holdings within the Index Strategy Advisors, Inc. marijuana investment portfolio.

marijuana investment portfolio - Terra Tech marijuana investment portfolio - Terra Tech

COMPANY # 2: Kush Bottles, Inc.

marijuana investment portfolio - Kush Bottles

Kush Bottles, Inc. markets and sells packaging products and solutions for the medical and recreational cannabis industries in the United States. It offers pop top bottles; child resistant exit, paper exit, and foil barrier bags; tubes; and polystyrene, polypropylene, or silicone containers to urban farmers, green house growers, and medical and recreational cannabis dispensaries. The company also sells its products through an online store. Kush Bottles, Inc. was founded in 2010 and is based in Santa Ana, California.

What I predicted:

“Kush Bottles does not excite me, but I must give credit where credit is due. Lets face it, you can’t get marijuana to consumers without it first being packaged and that’s Kush Bottles’ sweet spot. These products: Packaging Supplies, Glass Pipes, vapes etc. are not unique.  However, I do see a strategic fit here in our portfolio for another reason:  As a specialty firm in a new, fast moving market, Kush Bottles would be a good acquisition target, and acquisitions move stock prices up, way up.  For this reason, I am making an allocation to them despite not loving their business. “

How Kush Bottles has performed within our marijuana investment portfolio since June 1, 2016:

Kush Bottles is up 192% since June 1, 2016 versus 1.45% for the S&P 500. Kush Bottles represents 20% of the total holdings within the Index Strategy Advisors, Inc. marijuana investment portfolio.

marijuana investment portfolio - Kush Bottles

kshb-chart

COMPANY # 3: Zynerba Pharmaceuticals, Inc.

marijuana investment portfolio - Zynerba Pharmaceuticals

Zynerba Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on developing and commercializing proprietary synthetic cannabinoid therapeutics formulated for transdermal delivery. Its products candidates include ZYN002, which is in Phase I clinical trial for the treatment of refractory epilepsy, Fragile X syndrome, and osteoarthritis; and ZYN001 that is in preclinical stage for the treatment of fibromyalgia and peripheral neuropathic pain. The company was formerly known as AllTranz, Inc. and changed its name to Zynerba Pharmaceuticals, Inc. in August 2014. The company was founded in 2007 and is headquartered in Devon, Pennsylvania.

What I predicted:

“Zynerba offers “The Patch” for marijuana smokers.  But its products will also benefit the tens of millions who suffer from epilepsy, fibromyalgia and arthritis. If it can get regulatory approval, Zynerba could be a big hit because its clinical trials show a lower incidence of diarrhea and vomiting compared to current treatments on the market and it has better interaction with other drugs. Commercialization is set for 2018 and Zynerba’s patents are protected through 2031 so there’s enough time after a successful debut to richly reward investors.  Zynerba is one of two public pharmaceutical companies focused on cannabis related drug treatments.  The other company is  GW Pharmaceuticals which offers an orally delivered solution.  I like both firms and have important, strategic investments in them for our cannabis investment strategy.”

How Zynerba has performed within our marijuana investment portfolio since June 1, 2016:

Zynerba is up 33% since June 1, 2016 versus 1.45% for the S&P 500. Zynerba Pharmaceuticals, Inc. represents 20% of the total holdings within the Index Strategy Advisors, Inc. marijuana investment portfolio.

marijuana investment portfolio - Zynerba Pharmaceuticals marijuana investment portfolio - Zynerba Pharmaceuticals

COMPANY # 4: OrganiGram Holdings Inc.,

marijuana investment portfolio - Organigram

OrganiGram Holdings Inc., through its subsidiary, Organigram Inc., produces and sells medical marijuana in Canada. The company was founded in 2013 and is based in Moncton, Canada.

What I predicted:

“OrganiGram is a compelling investment because marijuana growth in Canada is even stronger than here in the U.S.. The Canadian market is also newer as the Marijuana for Medical Purposes Regulations (“MMPR”) act only came into effect On April 1, 2014.  The market in Canada is also simpler: Patients obtain a prescription from a physician stating quantity of grams permitted per day, Licensed producers (LPs) register patients directly and ship medicine direct to the patient’s home. Organigram’s margins are great, with a cost per gram of $2.03 and an Avg. selling price of $8.42 . When you combine these 400% margins with 38% 2nd quarter sales growth, you can see why there’s a very high potential for this firm. “

How Organigram has performed within our marijuana investment portfolio since June 1, 2016:

Organigram is up 118% since June 1, 2016 versus 1.45% for the S&P 500. OrganiGram Holdings Inc., represents 20% of the total holdings within the Index Strategy Advisors, Inc. marijuana investment portfolio.

marijuana investment portfolio - Organigram

COMPANY # 5: MassRoots, Inc.

marijuana investment portfolio - MassRoots

MassRoots, Inc. operates a technology platform for the cannabis community in the United States. The company’s mobile network enables users to share cannabis content to connect with the legalization movement. Its network is accessible as a free mobile application through the iOS App Store and the Google Play marketplace; and as a Website at massroots.com. The company also operates MassRoots.com/shop, an e-commerce platform that allows visitors to order MassRoots T-shirts, jars, and stickers; and MassRoots for Business, a free online portal for dispensaries to schedule posts, view analytics, and gain insights into followers. MassRoots, Inc. was founded in 2013 and is headquartered in Denver, Colorado.

What I predicted:

“I’m a little skeptical about the future revenue prospects of any firm trying to compete in the social media space.  Let’s face it, Facebook is the 800lb gorilla in the room and they are able to outspend anything or anyone that threatens them. Although some upstart social media platforms have managed to succeed: Snapchat, Instagram, etc. these firms were OPEN portals which allowed unique communities to organically form within.  MassRoots wants to build a marijuana focused community on its own terms and within its own social network . I do respect that they have taken the company public and grown to a million users…  Neither is an easy feat to accomplish, especially for such an offbeat idea such as this, but for them to generate enough profits from advertisers to move the stock price, they would have to grow to a scale larger than what the marijuana community can deliver.  I’m not very excited about nor including this company as an investment in our cannabis investment strategy.”

How MassRoots has performed within our marijuana investment portfolio since June 1, 2016:

MassRoots, Inc. is down 40% since June 1, 2016 versus 1.45% for the S&P 500. MassRoots, Inc.  was rejected for inclusion within the Index Strategy Advisors, Inc. Cannabis Index Strategy Portfolio and represents 0% of the total holdings.

marijuana investment portfolio - MassRoots

 

How to invest in the Marijuana Investment Portfolio

It’s important to point out that while the marijuana investment portfolio has performed well so far, several risk factors including but not limited to legislation, company financing, and increased competition could dramatically change the fortunes of these firms (and their stock prices) overnight.  It is our fiduciary responsibility to monitor these and other factors on an ongoing basis and to maintain a rigorous risk management system to protect investor capital.  We highly discourage investors from attempting to personally invest in any of these stocks and to consult with a professional before embarking on any investment strategy involving high risk equities.

To speak with me about how to invest in our professionally managed cannabis index Strategy, please visit www.indexstrategyadvisors.com and click “Talk to an advisor”.  Or email me at james@indexstrategyadvisors.com to schedule an appointment. I look forward to our call.

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Sources: Index Strategy Advisors, Inc.. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of its stamped publication date, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Index Strategy Advisors to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.