Canopy Growth Corp. (WEED.TO)

He would be selling this right now. The marijuana space valuations are astronomical. If the US moves to legalize then the sector could grow into the valuations, but this is not the kind of company he would hold. He thinks the illegal market will continue to exist.

He has nothing against “sin” stocks. However, he sees the industry in its infancy and does not know what the future margins and earnings will be. The current valuations are too risky. Some players will survive, but would recommend waiting to see how things settle. The easy money has been made.

It was down 10% today. It may be time to take a little profit. Probably, Canopy will lead this industry, but he can't accept its valuation. Cannabis is like the internet in 1999, when you didn't want to own a lot of those stocks.

This is the leader in the cannabis space when it comes to size and scale. Its price is back to its market high. Market leaders command a higher valuation. There is strong international interest. Marchand has been working with Live Well, a new company focused on Ontario and Quebec. She said that it brings the expertise of Canopy in a smaller and less expensive package. This has been given conditional approval to trade on the Venture exchange and is going public.

Bombarded by question from clients on marijuana stocks. He prefers to stay on the sidelines for now until there is more clarity. If you are a responsible portfolio manager, you need more clarity. Little too early.

WEED-T vs. ACB-T. He would pick WEED-T. They are probably building a more sustainable diverse company.

This cannabis company has an advantage with its size. If they have started to make other acquisitions they can grow with scale. Their deal with Constellation Brands will allow them to grow internationally. Its valuation is just too high for him.

Until we have some earnings visibility it is still speculative. The stock seems to be broken, technically. He would like to see more strength before investing. We are seeing more strength in the Marijuana and crypto currency sectors and if people are willing to bet on these, then they should be more willing to bet on more conservative stocks. It may be a good sign. These sectors went down first before the broader market went down and so maybe the broader market will come up more now.

WEED-T vs. ACB-T. He thinks the sector is extremely overvalued. In a 2019/20 recession, which he thinks is a possibility, companies with low quality earnings and an unclear future get hurt the most. These are two of the biggest players and to go with those. He can’t advise who will be the winner of these two.

He has stayed away from this space, choosing to own dominate players in sectors they understand. The concern about this space is what is the margin going to look like? Will it be like soybeans with a 2-4% margin? Or, will it be like branded liquor and tobacco with 40% margins. He does not think it will command those kind of massive margins.

Canopy trades at an incredible multiple of sales. Marijuana stocks trade at 10, 20, or 40 times sales, compared to Amazon which trades at 3x sales. Government regulatory changes could destroy these companies. He doesn’t own anything in this sector. The easy money has already been made.

Rumours of Canopy, Aphria & Aurora merging or being bought by a tobacco company? There will be consolidation in this space down the road. These companies have done phenomenally well, but there's little to go on. Legalization may be pushed back from July 1. How will their products be branded? Lots of froth. Risky. There's no set, established market here. Positive trend is legalization in places like California, here and elsewhere. Don't buy if you expect M&A. The medical side is interesting if laws allow set doses by prescription. A lot of uncertainty. Be careful.

Buy before Wednesday's quarterly report? He truly has no idea why this goes up or down. He doesn't like to gamble on earnings--it's worth waiting for them. Let it come and go and don't jump in tomorrow. Cannabis will be a smaller space with fewer names and lots of amalgamation.

People are concern about this space asking themselves if this is a real thing. These are real companies, but they are very highly valued. With so many companies coming to the market marijuana prices might come down in the future. Very controlled by the government. He doesn’t like it or would involved with these companies for now as it sees it as speculation. He sees it as massively overvalued at the moment.

Finds it very difficult to assign a valuation to marijuana companies. There are political risks, how it is going to look, and is it even going to happen in July. In places like Washington, Colorado and Oregon where they’ve had legalized marijuana, the price of marijuana has dropped on average by 65%. Invest as much money as you are willing to lose.