Cannabis has also been a hot topic on the stock market for a number of years. Nevertheless, from 2018 the initial high was followed by extensive consolidation. However, pot stocks have been catching the eye of investors again in recent months. Fanned by the electoral success of the Democrats in the USA, and with politicians such as Chuck Schumer having constantly put forward proposals for loosening drugs policy in the past, cannabis stocks began to shoot up. There have also been multiple M&A deals. Canadian industry giants Aphria and Tilray announced a merger at the end of last year, for instance. A few weeks ago GW Pharma, which specialises in cannabis medication, was taken over, triggering a further wave of takeover fantasies. How positive the mood in the sector currently is was also demonstrated by the IPO of Israeli industry representative Kanabo in mid-February. The stock was the first cannabis share to début on the London stock exchange, rocketing more than 230% in the first day of trading.
The new momentum in the market has also given wing to the Swissquote Cannabis Portfolio, which was brought into being around three years ago. The corresponding tracker (ISIN CH0372704327) from Leonteq has risen more than 50% since the turn of the year. As the participation product is expiring in a few weeks, though, it makes little sense to get on board here. Instead, prospective investors may like to cast their eye over the successor product on the Cannabis 2.0 Portfolio. Leonteq has again launched an actively managed certificate that reflects the new basket of Swissquote Bank 1:1. The certificate hits two birds with one stone: on the one hand it gives diversified access to this highly promising area, while on the other it is actively managed. This ensures that the composition is always up to date. In a still young market, which the hemp sector undoubtedly is, this is an important criterion. Takeovers, IPOs and political decisions could result in significant movement in the industry. Another advantage of the new tracker is its indefinite term. Cannabis has what it takes to turn from a fashionable theme into a sustainable, fast-growing economic sector as the years go by. As a consequence, a medium to long-term investment approach is certainly to be recommended. The tracker is also suitable for short-term, speculative purposes as well, however, because it can be bought and sold on the stock market daily.
To reflect the current opportunities of the sector as best possible, the Swissquote experts are focusing primarily on companies from the USA and Canada. The current heavyweight, though, is the British GW Pharma, which has a takeover offer worth USDbn 7.2 from Irish pharmaceutical company Jazz Pharmaceuticals on the table. Among the other giants in the portfolio is the Canadian TerrAscend. Only founded in 2017, the company is oriented almost entirely around the "magic plant". The product portfolio includes cannabis dispensaries, for instance, as well as treatment centres. TerrAscend was the first cannabis company to do business both in the USA and Canada and also in Europe. Chicago-based Cresco Labs likewise has a particularly broad base. The company covers the entire value added range, from cultivation through to the end product. Cresco Labs is active in 9 US states and operates 15 production facilities.
Aurora Cannabis and Canopy Growth, companies which are particularly well known to investors, can also be found in the starting line-up of the Cannabis 2.0 Portfolio. The latter recently attracted positive headlines with its results, when Canadian cannabis producer Canopy Growth managed to increase its sales by 23% to CADmn 153 in the third quarter of the 2020/21 financial year. Although Canopy Growth again posted high losses, the management – unlike many of its competitors – is now looking to get into the black. It is set to record a profit in the second half of the coming financial year. To that end a range of measures to improve profitability, such as cutting costs, have been taken recently. The company also expects to launch on the US market before the end of the year. In the medium term, i.e. between 2022 and 2024, Canopy Growth is hoping to increase its sales by 40 to 50%.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.