From Bloomberg: Big Money Tests Marijuana Waters, With Hedge Funds Leading Charge

Bloomberg Markets take a peek at how hedge funds are testing the waters with investing in Cannabis Companies. Read an excerpt below and click on to read the full article on Bloomberg.


Navy Capital’s one-room office in midtown Manhattan could probably fit in the coat closets of many of its competitors. But the hedge fund’s digs belie the firm’s success in betting on some of its peers will touch: cannabis.

Since the Navy Capital Green Fund launched in May 2017 the company stated it’s increased assets under management to nearly $100 million from $10 million and returned over 100 percent net of fees this past year.

Sean StiefelPhotographer: Christopher Goodney/BloombergAs for 2018, “we’re having a fantastic year so far,” Sean Stiefel, Navy Capital’s 30-year-old founder said in an interview at the company’s office on Lexington Avenue, where the only adornment is a white board branded “prospects. ”

As Canada moves toward legalization of recreational marijuana on Oct. 17 and the U.S. shows signs of growing leniency, hedge funds such as Navy are leading the progress of institutional money into a business that’s so far been dominated by retail investors.

At present, institutions account for just a portion of shares held in several pot companies: big firms hold 6.5 percentage of Aphria Inc. and just 5.2 percent of Aurora Cannabis Inc., both members of the Canada’s S&P/TSX Composite Index, based on data compiled by Bloomberg.

For the few cannabis businesses that are cross-listed on U.S. exchanges, institutional ownership is greater.

Navy Capital’s foray into cannabis investing started in 2016 as it got a call from a Canadian agent urging them to look at ICC Labs Inc., chosen by Uruguay to generate recreational marijuana after it passed a law legalizing the drug in 2013.

John KadenPhotographer: Christopher Goodney/BloombergChief Investment Officer John Kaden, 44, said they nearly didn’t take the call. “I mean, cannabis? ”

But the growth projections couldn’t be ignored and Navy bought in at a C$40 million ($30 million) valuation before Vancouver-based ICC listed on Canada’s TSX Venture Exchange through a reverse takeover. Four months later when it had reached a market value of C$160 million, they sold. It’s worth about C$206 million today.

“We were like, ‘How do we learn as much as we can? ”’ stated Stiefel. “I went to Israel, Australia, Europe, Canada and we really tried to spend the latter half of 2016 understanding the landscape. ”


Released at Thu, 12 Jul 2018 14:40:16 +0000

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