What’s the Smart Money Doing? Buying Cannabis and Selling Uranium
Petri Redelinghuys of Herenya Capital writes in a Business Day ‘Brokers Report’ that the financial climate around cannabis in the US is shifting and now might be the right time to invest. And by the way, lighten up on your uranium holdings.
Petri Redelinghuys, Herenya Capital
This report first published in Business Day, 28 September 2023.
BUY: AdvisorShares Pure US Cannabis ETF (MSOS)
The puns were legion when cannabis companies started listing in the US. Early cannabis investors, however, have not enjoyed many highs since. Yet the lighter of hope might bring a new ember to the bowl of investment returns. OK, I’ll stop with the jokes. In all seriousness, there are a few reasons we like MSOS. First, the legalisation of cannabis was one of the Biden administration’s election campaign promises. Second, the HOPE Act is looking to address limitations placed on individuals with prior convictions for possession of marijuana. And third, the SAFE Banking Act looks to address issues that cannabis companies have with making and receiving payments for the sale and trade of cannabis, as there are federal impediments within the banking sector due to the plant’s schedule 1 drug status. For these reasons, we really like MSOS for a new long position. It has been absolutely hammered and we think there is much upside to be had.
SELL: Sprott Uranium Miners ETF (URNM)
We should start with a caveat. This is not an out-and-out sell recommendation, but rather a recommendation to trim. We initiated a buy here in late 2021 and are still holding the ETF for the long term. It has just recently started testing historic highs again and we feel it is a good time to bank some profits. Our recommendation is to keep the ETF, but to take some profit. In other words, close half of the position and let the rest sit for a while. Over the past few months uranium has run very hard and a pullback is likely.