A New Benchmark for Cannabis Stocks and Our Alpha Winner

We declare our Alpha and check in with a new benchmark for the sector. Cannabis isn't going anywhere anytime soon and this is just more evidence...

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When we wrote you on Wednesday, we had so much to say about our three Alpha candidates, we didn’t have a chance to talk about the new benchmark for cannabis stocks. So let’s take a look before we declare our Alpha…

On Wednesday, OTC Markets Group Inc announced the launch of the OTCQX Cannabis Index (OTCQXMJ). A stock index is a measurement of a section of the stock market. It uses a weighted selection of the market to provide a benchmark for that sector.

The OTCQX Cannabis Index is a performance benchmark for cannabis companies trading on the OTCQX Best Market. There are around 56 cannabis-related securities out of the over 450 traded on the OTCQX market. The Index is made up of 30 of those securities.

We bring this up for two reasons. First, the establishment of an Index proves that cannabis investment isn’t going anywhere. It’s becoming more and more like any other established sector. Second, all three of this week’s Alpha candidates are included in this Index. Other companies that we have discussed made that list as well including Auxly Cannabis Group and Organigram Holdings.

The base of the index is 1,000 and began on April 1, 2019. So, what’s the index looking like now?  Right now, it’s around 757. The big slide from 865 of course began on the 28th as investors started panicking about the FDA meeting. The low happened on June 3rd of 741.19.

It will be interesting to track the index between now and the next time that cannabis stocks pop up on our radar. And since it has all three stocks that our algorithm picked for our Alpha contest this week, we’re thinking there might be some good reasoning behind the set up.

First up, we’ve got The Green Organic Dutchman Holdings Ltd. (TGODF). This was our one Canadian play for the contest and our mid-week leader on Wednesday. TGODF is the largest Canadian producer of 100% certified organic cannabis flower and oils.

Shares opened on Monday at $2.58 and closed yesterday at $2.67. That’s down slightly from its Wednesday close of $2.75, but still a gain for the week. We will have to wait to see if 3.48% is enough to secure the lead.

Next up, we’ve got MenMen Enterprises (MMNFF). MedMen is a US company that manages leading retail stores that happen to sell marijuana and marijuana products.

Shares opened on Monday at $2.15 and closed yesterday at $2.05. It looks like share prices started recovering yesterday. At one point yesterday afternoon, shares reached $2.16. Maybe investors are realizing that MedMen isn’t really affected by the debacle at the FDA.

MedMen has a game plan, it has the retail spaces planned out and it will continue to sell flower, oil and other merchandise. If it has the opportunity to add edibles, whether THC or CBD great, if not, it’s going to keep doing what it’s doing.

But, MedMen is not our Alpha with its loss of 4.6% over the four days of our Alpha contest.

Finally, we’ve got Charlotte’s Web Holding, Inc (CWBHF), global leader in CBD products.

Shares opened on Monday at $13.41 and closed yesterday at $13.05. That’s an improvement over the Tuesday close of $12.68, but still an overall loss for the week. Charlotte’s Web is a global CBD company. But right now, CBD seems to be in the fate of the FDA.

With a loss of 2.6% Charlotte’s Web is in last place for the week.

That means that The Green Organic Dutchman (TGODF) keeps its lead.

We’ll be keeping an eye on the cannabis market to see how investors keep reacting. It’s going to be a long road while the FDA figures out their stance. While it all unfolds, there is sure to be money to be made.

 

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