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The vote to legalize will be in June. The sales won't begin until the Aug/Sep timeframe.
I hold a little Namaste stock. Not nearly as large a position as this ETF and CBW.
Re: CBW. O/S is concerning, it's easily the biggest concern. However, they are currently at about 450M O/S with a fully diluted count now that they've bought Robinson's and Dosecann around 625M once milestones are met. That isn't great, but it isn't terrible either. CBW projects to have $1B+ in revenue by 2021, even with 1B O/S (which I don't think they'll ever reach) their stock would be valued at $20US/share (at 750M O/S which is still probably high but closer to their potential total, it's closer to $25/share). At its current $1.28 share price, that's a nice profit. It's no surprise that this ETF has increased it's CBW holdings over the past month. Someone within the ETFMG group sees massive potential with CBW.
It was compelling right up to the part where they talked about demand. Compared the demand in Canada (pop. 36M with $120B+ tourism industry) to Oregon and Washington (pop. 10M with $12B tourism industry). A better comparison of demand will be California with pop. 38M and $125B tourism industry. The demand numbers in Oregon and Washington were 563,000 kg in Year 1 and 902,000 kg in Year 2. Not hard to project double the demand with double the population and a 10x larger tourist industry.
Another factor that they don't take into account is that in America, you can't transport cannabis Internationally or across State lines, it's a Federal offense, so cannabis companies in America are geographically isolated. Canadian Cannabis Companies are already preparing for International distribution.
Another factor is that they are basing the numbers on PROJECTED supply. The problem with that, and it's something that Hugo Alves (President of Cannabis Wheaton (CBW)) touched on in a Q&A he did last month, is that a lot of these companies are planning expansions without the necessary power capabilities. He commented that when CBW would go into these expansions meetings with companies looking for financing, a lot of the deals would fall through in the due diligence portion because the grid that these expansions would occur on couldn't support the power needed grow the product. He said, he no longer is surprised when CBW turns down a deal based on power supply.
Not worried about over supply, at least not for a couple years. But the price per gram will almost assuredly trend downward over time, so there are some points in the piece that I agree with. Trying to estimate demand is just speculation. I am curious to see just how much California sells so I that we can at least get a better comp on how the Canadian market demand will be.
BTW, Cannabis Wheaton is now the #1 holding for this ETF. Disclaimer: I own shares of CBW.
CBW just bought out Robinson's.
https://finance.yahoo.com/news/cannabis-wheaton-announces-acquisition-robinsons-110000657.html
Funny, about a week or so ago, they killed CBW in another article.
CBW now the #1 holding in the MJ ETF.
Not sure you understand this company very well. They are a streaming company who will get product from their streams to sell on the market when recreational use is legal. The medical marijuana market is limited at this point so the companies revenue is limited at this point. Hugo Alves already estimated that they'd have about 8M in revenue in 2018 from their streams for one quarter of recreational sales. What do you think their revenue numbers will look like in 2019 with four quarters of recreational sales and the FV Pharma JV Phase I completed sometime in Q3 2019, $40-60M. To put that in perspective, Canopy Growth had 40M in revenue in 2017 and they are currently in the $20 range (though to be fair they have 120M O/S and CBW has 400M O/S. Just on revenue projections you could project a $5 SP for CBW sometime in 2019. That's a 450% increase from current prices. By 2020 when FV Pharma is at full capacity, the Quiring JV is at full capacity and their other streams are paying off this company could have $1B in revenue. At this point it's all speculation. Canada could vote to not legalize marijuana and this all goes up in smoke.
Time to update the market holdings at the top of the page.
Now up to 5.18%, #3 on MJ ETF asset holdings.
If I put $4500/gram sorry, it should be $4500/kg. CBW's investor presentation says their margin should be $5250/kg. You can set your prices for whatever you like.
https://wheatonincome.com/investors/#presentations
Simple calculations:
kilograms of product available x price per kilogram x EBITDA factor (I used 10x) / shares outstanding
If you think they'll have 100,000 kg capacity in 2019 at $5250 per kilogram with 400M shares outstanding you're looking at $10.17 USD share price. 50,000 kgs would give you a $5 share price. It's all just guessing at this point.
For any who missed it, ETFMG Alternative Harvest ETF (MJ) re-balanced their portfolio holdings and INCREASED their holdings of CBWTF from 2% to 5.39%. CBWTF is now MJ's largest % holding.
With 100% of their streams going and at $4500/gram this stock could be worth $45 USD a share. That's the rosy (and IMO unlikely) prediction.
The chances of them getting 100% streams seems unlikely. And even if they did, some of those streams are only for a limited period of time. It is also unlikely that there isn't some downward pressure on price. So lets say CBW can get 75% of their streams and a 30% ($3251/gram) price reduction. This stock could be worth $25 USD a share.
Now comes another issue. How many share outstanding will this company have? Currently they have ~400M shares outstanding. If they continue to dilute, say ~600M shares outstanding. The 100% stream at 100% price drops the share price to $30 USD and the 75% streams at a 30% price reduction drops the share price to $16.53 USD a share.
Right now it's difficult to project how high (pun not intended) this stock can go, too many variables. I do feel confident in predicting that it will hit $10 a share once Phase I of the FV Pharm JV is complete somewhere in the Q3 2019-Q1 2020 range.
My speculation is that this stock will hit $15 a share sometime in the next 24-36 months. So buying in at these prices you could return 1100% over that period. But again, this is just a guess since there are so many factors that can push the price of this stock down.
I'm a pretty big believer in Cannabis Wheaton. MJ recently re-balanced their holdings and currently have CBWTF as 5.39% of their portfolio and CBWTF is currently their highest % of assets stock they hold.
https://globenewswire.com/news-release/2018/03/16/1441291/0/en/Cannabis-Wheaton-Income-Corp-Provides-Update-on-the-Initial-Development-of-FV-Pharma-Inc-Facility.html
18 months until FV Pharma Phase I complete. Phase II and III will be constructed concurrently with Phase I.
I haven't run the numbers myself, but I believe if all the outstanding warrants are executed the number is 575M shares.
Hugo Alves is having a Q&A on the Cannabis Wheaton Facebook page on March 23rd. I'm sure dilution will be a major topic that he will address.
FV Pharma deal now a definitive agreement. Up 6% on the news.
Cannabis Wheaton has an 18% ownership stake of Sundial Growers. It's in CBW best interests to make sure Sundial is ready to go ASAP since they are the only partnership they have in Alberta.
PA just started (within the last 2 weeks) selling medical marijuana. But the news of different States moving forward with marijuana laws seems to have little to no impact on the ETF. I spoke with our 401(k) analyst last month and they are not allowed to invest in marijuana (or crypto) entities right now. The dam holding marijuana back in the US is that it is a Schedule 1 drug (no legitimate use). Once Congress moves it to Schedule 3 (similar to steriods) and allows it to be prescribed and studied, the marijuana stocks will skyrocket. MJ is a long play that I'm holding until at least it gets lowered to Schedule 3. If you believe that marijuana will eventually be legalized in the US, then this ETF is one that you should be cost-averaging. Every time it dips below $30, pick up $500 worth of shares.
First legal medical marijuana sales in Pennsylvania today.
Every time this dips under $30/share I make sure to pick up a few 100 shares. With Canada going full recreational use this year it's only a matter of time before the US moves this from Schedule 1 to Schedule 3. Then it will be difficult to accumulate shares. Plus a 10% yield, makes this ETF a winner IMO.