259 Marijuana Stocks, Horizons Marijuana Life Sciences Index ETF, And Jeff Sessions

CNBC is the business news station that I tend to watch during the trading day, and they spent quite a bit of time examining the marijuana and cannabis sector this last week. After the remarks made by U.S. Attorney General Jeff Sessions, they provided increased coverage, focusing on stocks reacting negatively to the news release.

I produced this SA Instablog with links and names for a list of State Attorneys General in U.S. states where recreational marijuana has already been decriminalized. I do not repeat this list or these links in this article, but you can use the hyperlink to examine them and draw your own conclusions. I am not concerned and do not believe that any of these states will use the Jeff Sessions remarks to alter existing, decriminalized policies in their states.

Not the First Time Jeff Sessions Stopped a Marijuana Sector Rally

This last week was not the first time Jeff Sessions put a stop to a marijuana sector rally. See this Seeking Alpha article, where I credit him with the early 2017 decline in the marijuana or cannabis sector, and provided the following:

The comment from this last week is far less aggressive (see above). There is a big difference between “White House may boost…enforcement” (February 2017) and “let state attorneys decide” (January 2018).

They are respecting state rights, which is a theme Trump touted during the presidential election. Therefore, I view the most recent statement as FAVORABLE for the marijuana or cannabis sector.

Note the detectable impact that the Jeff Sessions statement had on the Horizons Marijuana Life Sciences Index ETF (HMLSF) (see red arrow and red volume indicator in the below chart).

Note that a recovery is already in progress (see green volume indicator in the above chart).

I like the Canadian exposure, which has not changed since my last Seeking Alpha article:

Canadian tickers have also not changed, and are listed below:

Therefore, U.S. tickers for the Horizons Marijuana Life Sciences Index ETF remain unchanged, and are listed below:

Name

US Ticker

Percent

1

Canopy Growth Corp.

(OTCPK:TWMJF)

12.14%

2

Aphria Inc.

(OTCQB:APHQF)

11.66%

3

Aurora Cannabis Inc.

(OTCQX:ACBFF)

11.37%

4

The Scotts Miracle-Gro Co.

(SMG)

9.63%

5

GW Pharmaceuticals PLC.

(OTCPK:GWPRF)

9.46%

6

Medreleaf Corp.

(OTCPK:MEDFF)

8.74%

7

Cannitrust Holdings Inc.

(OTC:CNTTF)

4.17%

8

Cronos Group Inc.

(OTCPK:PRMCF)

4.06%

9

Insys Therapeutics Inc.

(INSY)

3.00%

10

Cannimed Therapeutics Inc.

(OTC:CMMDF)

2.88%

11

Supreme Pharmaceuticals Inc NEW

(OTCPK:SPRWF)

2.45%

12

Emerald Health Therapeutics

(TBQBF)

2.15%

13

Organigram Holdiings Inc.

(OTCQB:OGRMF)

2.14%

14

22nd Century Group Inc.

(XXII)

2.08%

15

Radient Technologies Inc.

(OTC:RDDTF)

1.91%

16

Hydropothecary Corp. NEW

(OTC:HYYDF)

1.73%

17

Zynerba Pharmaceuticals Inc.

(ZYNE)

1.32%

18

Newstrike Resources Ltd

(OTCPK:NWKRF)

1.29%

19

Delta 9 Cannabis Inc.

(OTC:VRNDF)

1.13%

20

Maricann Group Inc.

(OTCQB:MRRCF)

0.95%

21

WeedMD Inc.

(OTC:WDDMF)

0.93%

22

Abcann Global Corp.

(OTCQB:ABCCF)

0.89%

23

Emblem Corp.

(OTCPK:EMMBF)

0.86%

24

ICC Intl Cannabis Corp.

(OTC:ICCLF)

0.69%

25

Invictus MD Strategies Corp. NEW

(OTCPK:IVITF)

0.65%

26

Harvest One Cannabis Inc.

(OTC:HRVOF)

0.54%

27

Innovative Industrial Properties

(IIPR)

0.53%

28

Inmed Pharmaceuticals

(OTCQB:IMLFF)

0.53%

Total

99.88%

My Equal-Weighted Portfolio of, Now, N=259 Marijuana or Cannabis Stocks

First, I should thank my followers for recommending additions to my portfolio. I hope I caught all of them in the comments section of my last Seeking Alpha article, but, if not, let me know if others should be added. My methodology for the portfolio is in APPENDIX A.

I computed the Horizons Marijuana Life Sciences Index ETF (N=28) on equal-weighted [EW] portfolio basis at 4.12% for January 5. It is, of course, a value-weighted index, and actually rose 4.76% for January 5.

It made a nice, partial recovery after the Jeff Sessions comments and continues to trade near its all-time high of $18.96 (see below):

I separately computed ETF and non-ETF returns for the first week of January 2018 (see APPENDIX C).

For the first week of January, ETF stocks (N=28) were up an EW average of 23.1%. For the first week of January, non-ETF (N=231) stocks were up an EW average of 10.7%

Some Comparisons between the ETF and Major Indexes

Below is a comparison of [1] the Horizons Marijuana Life Sciences Index ETF [HMLSF] to [2] the Dow Jones Industrial Average [DJIA], [3] the NASDAQ, and [4] the S&P500. I use monthly measures beginning on April 1, 2017, which is when the ETF began trading on the Grey market. The data I used to create this chart in contained in APPENDIX B.

I use Fidelity to trade this ETF. I, also, have a TD Ameritrade account, but do not use that account to trade this ETF.

Some are having trouble trading this ETF through their broker. I maintain 2 separate brokerage accounts to avoid these issues, as I have had problems of this sort, in the past, with other stocks and it has cost me money in lost profits.

Summary

It would appear that the world economy is “off to the races.” I am approaching a semi-retirement stage, so I am taking money off the table. I still maintain some “play dough.”

If the economy heats up and the Federal Reserve increases interest rates and inflation stays low, in the short run, I see an opportunity to do the following:

1. remain or increase my debt position with a low interest rate, long-term fixed mortgage, in anticipation of future inflation;

2. rotate out of riskier equity securities before Federal Reserve interest rate increases lead others to select safer, debt instruments with relatively higher rates of return and a more attractive alternative to returns on equity alternatives; and

3. still dabble with a few dollars in marijuana and cannabis stocks and others that overreact, just as the Horizons Marijuana life Sciences Index ETF and other selected marijuana and cannabis stocks overreacted to the downside this last week with remarks made by Jeff Sessions.

In brief, I am feeling pretty warm and fuzzy these days, and hope you are, as well, as we all consider options and alternatives for long-term, profitable investments.

APPENDIX A: Methodology for my Portfolio of N=254 Marijuana or Cannabis Stocks

I did receive one concern about my list of marijuana or cannabis stocks, so I will provide the alternatives I was faced with and the decision I made and why:

Alternative 1 is to maximize the population or universe of marijuana or cannabis stocks in my equal-weighted index or portfolio. This is the alternative I have selected. When a Seeking Alpha comment recommends that I add a stock to the population I [1] investigate support in the form of a press release or news item, [2] include the stock and ticker if there is evidence to support inclusion, and [3] never remove the stock or ticker from the population.

Alternative 2 is Alternative 1, but I could delete stocks and tickers when I determine that the firm is not really in the marijuana or cannabis sector. I do not do this. In order to do this, I would have to develop an algorithm and this would please no one. It would introduce subjectivity and bias. I prefer a slight error term to the alternative of subjectivity and bias. I suspect most social scientists would agree, but if someone disagrees, they can copy\paste the list I provide into an Excel file and use their own algorithm to delete stocks or tickers.

Alternative 3 is to focus only on the big caps or Canadian stocks or narrow my focus in some other fashion. Others are doing this, so I am providing for an alternative to perspectives already available in the market.

NOTE: The concern expressed by one person commenting was that I included some stocks and tickers that might have been involved in a past pump and dump scheme and were not really in the marijuana or cannabis sector. This is a legitimate concern, but, as addressed in Alternative 2, above, I will let the reader decide which to eliminate. I can say with near certainty that were I to use such a methodological approach in an article submitted to an academic journal, all reviewers and the editor would reject the article and or introduce bias with respect to their own, personal preference for the “correct” methodology for stock or ticker symbol elimination to be used. And given an infinite number of algorithms, none would agree.

APPENDIX B: The Excel Data I Used for the Comparison Line Graphic

APPENDIX C: The N=259 Population of Marijuana or Cannabis Stocks

4-Jan

5-Jan

5 less 4 Jan

ETF

ETF

ETF

ETF

non-ETF

LAST

LAST

LAST

1 WK

1 WK

SYMBOL

Firm Name

PRICE

PRICE

PRICE

PERF

PERF

1

(OTCQB:ABCCF)

ABcann Global Corp.

$1.42

$1.53

$0.11

25.40%

2

(OTCQB:ACAN)

Americann, Inc.

-17.10%

3

(OTCQX:ACBFF)

Aurora Cannabis, Inc.

$10.47

$10.61

$0.14

39.10%

4

(OTCQB:ACCA)

Acacia Diversified Holdings

-15.30%

5

(OTCPK:ACGX)

Alliance Creative Group, Inc.

12.50%

6

(OTCPK:ACOL)

Acology, Inc.

-25.40%

7

(OTCPK:ACRL)

Atacama Resources International, Inc.

-30.00%

8

(OTCPK:ADVT)

Advantis Corp.

-28.00%

9

(OTCQB:AERO)

Aero Grow International, Inc.

14.20%

10

(OTCPK:AFPW)

AlumiFuel Power Corp.

0.00%

11

(OTCQB:AGTK)

Agritek Holdings, Inc.

-0.50%

12

(OTCPK:AMFE)

Amfil Technologies, Inc.

-16.10%

13

(OTCQB:AMMJ)

American Cannabis Company, Inc.

1.70%

14

(OTCQB:APHQF)

Aphria, Inc.

$14.91

$15.37

$0.46

4.30%

15

(OTCPK:ASNT)

Arias Intel Corp.

0.50%

16

(OTCQB:ATTBF)

Abattis Bioceuticals Corp.

38.40%

17

(AVT)

Avnet, Inc.

5.50%

18

(OTCPK:AVTCQ)

AVT, Inc.

19

(OTCQB:AXIM)

AXIM Biotechnologies, Inc.

-16.80%

20

(OTCPK:AZFL)

Amazonas Florestal Limited

0.00%

21

(OTCPK:BABL)

Buildablock Corp.

80.00%

22

(OTCPK:BAYP)

Bayport International Holdings, Inc.

0.00%

23

(OTCPK:BLDV)

Blue Diamond Ventures, Inc.

-6.70%

24

(OTCPK:BLOZF)

Cannabix Technologies, Inc.

28.50%

25

(OTCPK:BLPG)

Blue Line Protection Group, Inc.

103.40%

26

(OTCPK:BTFL)

Monarch America, Inc.

-16.70%

27

(OTCPK:BUDZ)

Weed, Inc.

43.40%

28

(OTCPK:BXNG)

Bang Holdings, Inc.

239.50%

29

(OTCPK:CAFS)

Café Serendipity Holdings, Inc.

128.30%

30

(OTCPK:CANL)

CannLabs, Inc.

68.00%

31

(OTCQB:CANN)

General Cannabis Corp.

24.40%

32

(CARA)

Cara Therapeutics, Inc.

2.50%

33

(OTCPK:CBCA)

Crown Baus Capital Corp.

270.70%

34

(OTCQB:CBDS)

Cannabis Sativa, Inc.

7.90%

35

(OTC:CBGI)

Cannabusiness Group, Inc.

-6.30%

36

(OTCPK:CBIS)

Cannabis Science, Inc.

-5.10%

37

(OTCPK:CBMJ)

Canna Consumer Goods, Inc.

-44.40%

38

(OTCPK:CBNT)

Cabinet Grow, Inc.

0.00%

39

(OTCPK:CBSC)

CB Scientific

13.30%

40

(OTCPK:CCAN)

Canadian Cannabis Corp.

3.60%

41

(OTCPK:CGRA)

Cgrowth Capital, Inc.

-10.40%

42

(OTCPK:CGRW)

Cannagrow Holdings, Inc.

-15.00%

43

(OTCPK:CHUM)

Chuma Holdings, Inc.

15.80%

44

(OTCQB:CIIX)

Chineseinvestors.com, Inc.

-12.90%

45

(OTCQB:CLSH)

CLS Holdings

-5.00%

46

(OTC:CMMDF)

Canimed Therapeutics, Inc.

$19.49

$21.54

$2.05

20.30%

47

(OTCQB:CNAB)

United Cannabis Corporation

-16.40%

48

(OTCQB:CNBX)

Cannabics Pharmaceuticals, Inc.

12.70%

49

(OTCQX:CNNRF)

CannaRoyalty Corp.

21.50%

50

(OTC:CNTTF)

Canntrust Holdinigs Inc.

$7.76

$8.32

$0.56

14.00%

51

(OTCQB:CNZCF)

Canadian Zeolite Corp.

8.20%

52

(OTCPK:CPMD)

CannaPharmaRx, Inc.

120.00%

53

(OTCPK:CRLRQ)

Crailar Technologies, Inc.

33.30%

54

(OTCQB:CRPGF)

CNRP Mining, Inc.

-6.10%

55

(OTCPK:CRTL)

Cartel Blue

13.30%

56

(OTCPK:CRWG)

Crowdgather, Inc.

21.80%

57

(OTCPK:CSAX)

CSA Holdings, Inc.

-2.30%

58

(OTCQB:CURR)

Cure Pharmaceutical Holding Co.

24.40%

59

(OTCQB:CVSI)

CV Sciences, Inc.

-29.60%

60

(OTCPK:DEWM)

Dewmar International BMC, Inc.

-18.20%

61

(OTCQB:DIGP)

Digipath, Inc.

-1.60%

62

(OTCPK:DIRV)

DirectView Holdings, Inc.

63

(OTCQB:DPWW)

Diego Pellicer Worldwide, Inc.

-23.70%

64

(OTCPK:DSCR)

Discovery Minerals, Ltd.

0.00%

65

(OTCPK:EAPH)

Easton Pharmaceuticals, Inc.

-6.70%

66

(OTCPK:ECIGQ)

Electronic Cigarettes International Group, Inc.

20.70%

67

(OTCPK:EDXC)

ENDEXX Corp.

-10.30%

68

(OTCPK:EFFI)

Efftec International, Inc.

-12.50%

69

(OTCQX:EMHTF)

Emerald Health Therapeutics, Inc.

$5.65

$5.79

$0.14

35.20%

70

(OTCPK:EMMBF)

Emblem Corp.

$1.82

$1.93

$0.11

4.80%

71

(OTCPK:ENCC)

Trailblazer Resources, Inc.

45.80%

72

(OTCPK:ENDO)

Endocan Corp.

-20.40%

73

(OTCQB:ENRT)

Enertopia Corp.

10.90%

74

(OTCPK:ERBB)

American Green, Inc.

-5.90%

75

(OTCQB:ESPH)

Ecoshere Techs, Inc.

2.40%

76

(OTC:ESSI)

Eco Science Solutions, Inc.

0.00%

77

(OTCPK:ETST)

Earth Science Tech, Inc.

-22.50%

78

(OTCQB:EVIO)

EVIO, Inc./Signal Bay, Inc.

22.40%

79

(OTCPK:FBEC)

FBEC Worldwide

-50.00%

80

(OTCPK:FFFC)

FastFunds Financial Corp.

0.00%

81

4.50%

82

(OTC:FITX)

Creative Edge Nutrition, Inc.

50.00%

83

(OTC:FNREF)

Finore Mining, Inc.

84

(OTCQB:FRLF)

Freedom Leaf, Inc.

16.30%

85

(OTC:FSPM)

Fusion Pharm, Inc.

0.00%

86

(OTCPK:FTPM)

420 Property Management, Inc.

25.00%

87

(OTCPK:FUTL)

FutureLand Corp.

20.00%

88

(OTCPK:FWDG)

FutureWorld Corp.

0.00%

89

(OTCPK:GBHL)

Global Entertainment Holdings, Inc.

-30.60%

90

(OTCPK:GBHPF)

Global Hemp Group, Inc.

-3.70%

91

(OTCQB:GBLX)

GB Sciences, Inc.

23.10%

92

(OTCPK:GEAR)

Gear International, Inc.

93

(OTCPK:GLAG)

Gala Global, Inc.

94

(OTCQB:GLDFF)

Golden Leaf Holdings Ltd.

31.90%

95

(OTCQB:GNBT)

Generex Biotechnology

96

(OTCPK:GRCU)

Green Cures & Botanical Distribution, Inc.

-24.20%

97

(OTCPK:GRCV)

Grand Capital Ventures, Inc.

33.30%

98

(OTCPK:GRNH)

GreenGro Technologies, Inc.

-20.20%

99

(OTCPK:GRSO)

Grow Soutions Holdings, Inc.

-9.40%

100

(OTCPK:GRWC)

Grow Condos, Inc.

-34.20%

101

(OTCQX:GRWG)

GrowGeneration Corp.

-6.70%

102

(OTCQB:GTBP)

GT Biopharma, Inc./Oxis International, Inc.

-7.90%

103

(OTCPK:GTSO)

Green Technology Solutions, Inc.

18.00%

104

(GWPH)

GW Pharmaceuticals, PLC

1.10%

(OTCPK:GWPRF)

$11.49

$11.15

-$0.34

-0.10%

105

(OTCPK:GYOG)

Green Energy Enterprises, Inc.

-50.00%

106

(OTCPK:HALB)

Halberd Corp.

-9.10%

107

(OTCPK:HEMP)

Hemp, Inc.

108

(OTCQB:HLIX)

Helix TCS, Inc.

36.70%

109

(OTCQB:HLSPY)

Heliospectra AB ADR (Sponsored)

35.90%

110

(OTC:HMKTF)

Highmark Marketing, Inc.

0.00%

111

(OTCPK:HMPQ)

Hemp Americana, Inc.

-21.90%

112

(OTC:HRVOF)

Harvest One Cannabis Inc.

$1.17

$1.42

$0.24

40.10%

113

(OTC:HYYDF)

Hydropothecary Corp.

$3.41

$3.54

$0.13

8.70%

114

(OTCPK:ICBU)

IMD Companies, Inc.

-16.70%

115

(OTC:ICCLF)

ICC International Cannabis Corp.

$0.93

$0.98

$0.05

18.70%

116

(OTCPK:ICNM)

Icon Media Holdings, Inc.

0.00%

117

(IGC)

India Globalization Capital, Inc.

5.00%

118

(OTCPK:IGPK)

Integrated Cannabis Solutions, Inc.

159.70%

119

(OTC:IGRW)

Interactive Health Network

120

(IIPR)

Innovative Industrial Properties, Inc. (Class A)

$26.01

$29.43

$3.42

-8.90%

121

(OTCPK:IJJP)

IJJ Corp.

50.00%

122

(OTCQB:IMLFF)

InMed Pharmaceuticals, Inc.

$1.50

$1.71

$0.21

63.70%

123

(OTCPK:INCC)

International Consolidated Companies, Inc.

0.00%

124

(OTCPK:INMG)

Innovativ Media Group, Inc.

21.70%

125

(OTCQB:INQD)

Indoor Harvest Corp.

-20.70%

126

(INSY)

INSYS Therapeutics, Inc.

$9.86

$10.70

$0.84

11.20%

127

(OTCPK:ITNS)

Itonis, Inc.

128.60%

128

(OTCPK:IVITF)

Invictus MD Strategies Corp.

$1.33

$1.79

$0.46

39.80%

129

(OTCQB:KAYS)

Kaya Holdings, Inc.

-26.50%

130

(OTCPK:KGKG)

Kona Gold Solutins, Inc.

-31.10%

131

(OTCQB:KSHB)

Kush Bottles, Inc.

2.40%

132

(OTCPK:LATF)

Latteno Food Corp.

0.00%

133

(OTCQB:LBUY)

Leafbuyer Technologies, Inc.

16.90%

134

(OTCPK:LCTC)

Lifeloc Technologies, Inc.

6.20%

135

(OTCQB:LDSYF)

Lifestyle Delivery Systems, Inc.

-27.40%

136

(OTCPK:LGBI)

Cannabiz Mobile, Inc.

133.30%

137

(OTCPK:LSCG)

Lighting Science Group

0.80%

138

(OTCPK:LVVV)

Livewire Ergogenics, Inc.

-28.90%

139

(OTCQX:LXRP)

Lexaria Bioscience Corp.

12.10%

140

(OTC:MBOO)

Medbook World, inc.

141

(OTCQB:MCIG)

MCIG, Inc.

-25.50%

142

(OTCPK:MCOA)

Marijuana Company of America, Inc.

-15.00%

143

(OTCPK:MCPI)

Med-Cannabis Pharma, Inc.

25.70%

144

(OTCQB:MDCL)

Medicine Man Technologies, Inc.

-1.30%

145

(OTCPK:MDCN)

Medican Enterprises, Inc.

146

(OTCPK:MDEX)

Madison Technologies, Inc.

0.00%

147

(OTCPK:MDRM)

Modern Mobility Aids, Inc.

-16.00%

148

(OTCPK:MEDFF)

Medreleaf Corp.

$21.85

$21.67

-$0.18

31.00%

149

(OTCPK:MEDT)

Media Technics Corp.

0.00%

150

(OTCQB:MGWFF)

Maple Leaf Green World, Inc.

103.30%

151

(OTCPK:MJLB)

Ultrack Systems, Inc.

37.50%

152

(OTCPK:MJMD)

MediJane Holdings, Inc.

0.00%

153

(OTCPK:MJMJ)

MaryJane Group, Inc. (The)

0.00%

154

(OTCPK:MJNA)

Medical Marijuana, Inc.

-10.60%

155

(OTCPK:MJNE)

MJ Holdings, Inc.

17.70%

156

(OTCQB:MJTK)

CannaSys, Inc.

-3.60%

157

(OTCQB:MNTR)

Mentor Capital, Inc.

-11.60%

158

(OTCQB:MPXEF)

MPX Bioceutical Corp.

14.10%

159

(OTCPK:MQPXF)

Matica Enterprises, Inc.

5.60%

160

(OTC:MQTRF)

Mettrum Health Corp.

161

(OTCPK:MRNJ)

Metatron, Inc.

0.00%

162

(OTCQX:MRPHF)

Marapharm Ventures, Inc.

-8.10%

163

(OTCQB:MRRCF)

Maricann Group Inc.

$2.30

$2.44

$0.14

17.90%

164

(OTCQB:MSRT)

MassRoots, Inc.

17.30%

165

(OTCPK:MYDX)

MyDx, Inc.

5.60%

166

(OTCPK:MYEC)

MyECheck, Inc.

-25.90%

167

(OTCQB:MYHI)

Mountain High Acquisition Corp.

45.90%

168

(OTCPK:NDEV)

Novus Acquisition & Development Corp.

-2.60%

169

(OTCPK:NGBL)

Notis Global, Inc./Medbox

0.00%

170

(OTCPK:NGMC)

Next Generation Management Corp.

36.80%

171

(OTCPK:NHLE)

Nhale, Inc.

45.50%

172

(OTCQB:NMUS)

Nemus Bioscience, Inc.

18.40%

173

(OTCPK:NOHO)

Novation Holdings, Inc.

0.00%

174

(OTC:NRTI)

Inergetics, Inc.

0.00%

175

(OTCPK:NSAV)

Net Savings Link, Inc.

25.00%

176

(OTCQB:NSPDF)

Naturally Splendid Enterprises Ltd.

20.50%

177

(OTCQB:NTRR)

Neutra Corp.

-10.20%

178

(OTCPK:NVGT)

Novagant Corp.

34.60%

179

(OTCPK:NWKRF)

Newstrike Resources LTD

$0.86

$1.22

$0.36

167.50%

180

(OTCPK:NWWTF)

Newnote Financial Corp.

0.00%

181

(OTCQB:NXTTF)

Namaste Technologies, Inc.

10.50%

182

(OTCQB:OGRMF)

OrganiGram Holdings, Inc.

$3.57

$3.86

$0.29

19.20%

183

(OTCPK:ONCI)

On4 Communications, Inc.

-9.90%

184

(OTCPK:OPMZ)

1PM Industries, Inc.

-50.00%

185

(OTCQB:OWCP)

OWC Pharmaceutical Research Group

5.10%

186

(OTCQB:OXIS)

OXIS International, Inc.

187

(OTCPK:PHOT)

Growlife, Inc.

-28.90%

188

(OTCPK:PKPH)

Peak Pharmaceuticals, Inc.

-3.40%

189

(OTCPK:PLPL)

Plandaí Biotechnology, Inc.

-16.50%

190

(OTCQB:PMCB)

PharmaCyte Biotech, Inc.

7.50%

191

(OTC:PNPL)

Pinapple Express, Inc.

100.00%

192

(OTCQB:PNTV)

Players Network, Inc.

-43.60%

193

(OTCPK:POTN)

Potnetwork Holdings, Inc.

67.70%

194

(OTCPK:PRMCF)

Cronos Group, Inc.

$7.75

$8.48

$0.73

9.70%

195

(OTCPK:PRRE)

Praetorian Property, Inc.

-16.50%

196

(OTC:PTOG)

Petrotech Oil and Gas, Inc.

100.00%

197

(OTCPK:PUFXF)

PUF Ventures, Inc.

12.90%

198

(OTCPK:PZOO)

Pazoo, Inc.

199

(OTCPK:QEDN)

QED Connect, Inc.

-25.00%

200

(OTCPK:QRSRF)

Tinley Beverage Company, Inc.

-9.00%

201

(OTC:QUDCF)

Quadron Cannatch Corp.

27.00%

202

(OTC:RDDTF)

Radient Technologies Inc.

$1.38

$1.45

$0.07

4.40%

203

(OTCPK:REFG)

Medical Cannabis Payment Solutions

-10.50%

204

(OTCPK:REVI)

Resource Ventures, Inc.

46.20%

205

(OTCPK:RFMK)

Rapid Fire Marketing, Inc.

206

(OTCQB:RMHB)

Rocky Mountain High Brands, Inc.

-17.80%

207

(OTCQB:RSSFF)

Affinor Growers, Inc.

8.70%

208

(OTCPK:SAGD)

South American Gold Corp.

2.90%

209

(OTCQB:SGBY)

Signal Bay, Inc.

210

(OTCPK:SGMD)

Sugarmade Inc.

-26.40%

211

(OTCQB:SIGO)

Sunset Island Group Inc.

8.10%

212

(OTCPK:SING)

SinglePoint, Inc.

-15.80%

213

(OTCPK:SIPC)

Sipp Industries, Inc. – New

-49.70%

214

(OTCPK:SLNX)

Solanbridge Group, Inc.

100.00%

215

(OTCQB:SLTK)

Solis Tek, Inc.

-1.70%

216

(SMG)

Scotts Miracle-Gro Co., The

$106.17

$107.66

$1.49

0.60%

217

(OTCPK:SNNC)

Sibannac, Inc.

23.30%

218

(OTCQB:SPLIF)

Nutritional High International, Inc.

-18.80%

219

(OTCPK:SPRWF)

Supreme Pharmaceuticals, Inc.

$2.46

$2.45

-$0.01

34.00%

220

(OTCQB:SRNA)

Surna, Inc.

1.70%

221

(OTCPK:SSOF)

Sixty Six Oilfield Services, Inc.

-9.10%

222

(OTCPK:STEV)

Stevia Corp.

17.00%

223

(OTCQB:STNY)

Stony Hill Corp.

3.40%

224

(OTCPK:STWC)

STWC Holdings, Inc.

55.90%

225

(STZ)

Constellation Brands, Inc.

-3.80%

226

(OTCPK:SVSN)

Stereo Vision Entertaimnent, Inc.

-2.50%

227

(OTCPK:TAUG)

Tauriga Sciences, Inc.

0.00%

228

(OTCPK:TBEV)

High Performance Beverages Co.

0.00%

229

(OTCQB:TBPMF)

Tetra Bio-Pharma, Inc.

25.80%

230

(OTCQB:TECR)

TechCare Corp.

-4.70%

231

(OTCQB:THCBF)

THC Biomed International, Inc.

165.00%

232

(TRPX)

Therapix Biosciences, Inc.

4.70%

233

(OTCQX:TRTC)

Terra Tech Corp.

-11.70%

234

(OTCPK:TWMJF)

Canopy Growth Corp.

$25.89

$27.34

$1.45

15.80%

235

(OTCPK:UAMM)

UA Multimedia, Inc.

-25.10%

236

(OTCPK:UBQU)

Ubiquitech Software Corp.

-20.10%

237

(OTC:UMBBF)

Umbral Energy Corp.

274.50%

238

(OTCPK:UNGS)

Sylios Corporation

0.00%

239

(OTCPK:USEI)

U.S. Energy Initiatives Corporation, Inc.

-38.10%

240

(OTCPK:USMJ)

North American Cannabis Holdings, Inc.

0.00%

241

(OTCPK:VAPE)

Vape Holdings, Inc.

-36.60%

242

(OTCQB:VAPI)

Vapir Enterprises, Inc.

139.00%

243

(OTCPK:VAPR)

Vaporbrands International, Inc.

-11.90%

244

(OTCPK:VATE)

Elev8 Brands, Inc.

-42.70%

245

(OTCQX:VFFIF)

Village Farms International Inc.

0.60%

246

(OTCPK:VHUB)

Vapor Hub International, Inc.

25.00%

247

(OTCPK:VNTH)

Nano Mobile Healthcare, Inc.

0.00%

248

(VPCO)

Vapor Corp.

0.00%

249

(OTCPK:VPOR)

Vapor Group, Inc.

-28.00%

250

(OTC:VRCI)

Verde Science, Inc.

66.70%

251

(OTC:VRNDF)

Delat 9 Cannabis Inc.

$2.07

$2.17

$0.10

-0.70%

252

(OTCPK:VRTHF)

Veritas Pharma, Inc.

-6.60%

253

(OTCPK:WCIG)

Wee-Cig International Corp.

63.40%

254

(OTC:WDDMF)

WeedMD Inc.

$2.25

$2.32

$0.06

17.00%

255

(OTCPK:WDRP)

Wanderport Corp.

-39.10%

256

(OTCPK:WTII)

Water Technologies International, Inc.

0.00%

257

(XXII)

22nd Century Group, Inc.

$3.11

$3.20

$0.09

14.30%

258

(OTCQX:ZDPY)

Zoned Properties, Inc.

-7.30%

259

(ZYNE)

Zynerba Pharmaceuticals, Inc.

$12.70

$12.50

-$0.21

-0.20%

$11.06

$11.52

$0.46

23.1%

10.7%

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

A Growth REIT At A Cheap Price, 5.6% Yield, And 30% Upside

This research report was jointly produced with High Dividend Opportunities co-authors Jussi Askola and Philip Mause.

Introduction

Opportunities are rare these days. This is especially true in growth sectors as the almost euphoric optimism of investors has pushed valuations of some “growth stocks” to what we consider over-stretched levels. One good example of such sector is the industrial REIT sector as it is today priced at an above average FFO multiple relative to most other REIT sectors.

Source: NAREIT

Industrial REITs trade currently at an average of 33 times expected 2017 FFO, and 21.6 times expected 2018 FFO. Many names such as Prologis (PLD), Rexford (REXR), and Terreno (TRNO) trading well in excess of 22 times 2018 FFO.

To some extent, these lofty valuations are well justified as industrial REITs have kept posting solid results and have good prospects, but nonetheless, it is difficult for us to get excited about 3-4% dividend yields.

Yes, it is true that the demand for industrial space remains particularly strong – allowing REITs to grow NOI at superior rates, but this appears to us to be already priced in for most REITs.

At “High Dividend Opportunities”, our aim is to identify high-yield stocks trading at cheap valuations. Today, we would like to highlight a particular stock that comes with great growth prospects and is still trading at attractive valuations. In fact, this is a Property REIT that gets little attention compared to other industrial REITs.

We are talking about Gramercy Property Trust (GPT) here: A REIT generating about 80% of its NOI from industrial assets, but trading at up to 40% discount to its industrial peers. GPT is listed at NAREIT as a “Diversified Property REIT”:

Source: NAREIT

We don’t like to risk overpaying for growth stocks, and this is why we consider Gramercy to be so attractive. In short, it allows us to gain exposure to a favorable growth market at a value stock price.

Gramercy Property Trust: a Hidden Gem in an Overpriced Sector

Gramercy is a REIT with a complex history. It used to be a hybrid between equity and mortgage REITs owning a diverse portfolio of properties outright and lending money to different real estate projects. This changed after the financial crisis as the company experienced large losses – leading it to reconsider its strategy and eventually make the decision to re-position its portfolio towards industrial assets.

Since then, the company has done a 180-degree strategy change, as it has grown its industrial allocation from a low 47% at the end of 2015 to almost 80% today:

Source: Gramercy

This transition in portfolio strategy has already resulted in massive market outperformance, and we expect this to continue as Gramercy remains a bargain relative to its peers:

Source: Gramercy

Nowadays, Gramercy is among the largest industrial property owners of the nation with over 280 industrial properties in its portfolio. The main focus is on top tier markets such as Atlanta, Chicago, Dallas, Houston, LA, NY, and others. Today, about half of the company’s ABR is being generated from Tier 1 markets with the rest coming from other primary e-commerce fulfillment hubs (21% of ABR), and fast growing sunbelt/western markets (15%).

Source: Gramercy

Warehouses and light industrial assets make up the largest segment of the industrial portfolio, with 71% of the NOI being generated by warehouses. This is a property type with superior fundamentals as it greatly benefits from the growth of e-commerce. It is expected to keep the demand for space high and support rent growth over the long run. Moreover, it possesses many of the advantages of office properties, but typically requires less CAPEX over time, may be bought at higher cap rates (market dependent), and with even longer lease terms.

Source: Gramercy

While industrial assets make up the greater portion of the portfolio (77% of NOI) today, Gramercy also has a minority exposure to office (18.6% of NOI) and specialty retail (4.4% of NOI). This particular portfolio structure allows for opportunistic acquisition behavior as Gramercy can look for best risk-to-reward scenarios in different markets. Moreover, we consider these non-industrial assets to be a catalyst for Gramercy’s shareholders as they are really the reason why the shares are being offered so cheaply in comparison to other industrial peers. Put differently, because Gramercy isn’t a pure-play industrial REIT (yet), its valuation multiple is significantly inferior – allowing us to gain exposure at a more opportunistic price.

Source: Gramercy

The key portfolio statistics point out to QUALITY. The occupancy is sky high at 97.4%, over 90% of the assets are located in target markets with a clear focus on top tier locations, and the weighted average remaining lease term (“WALT”) is a high 7.2 years. The long WALT is really a big deal for us as it reduces risk significantly for many years to come. With few lease expirations anticipated in the coming years, we expect the income to keep on coming with minimal risk of vacancy or unexpected CAPEX.

Source: Gramercy

Finally, this focus on quality is well reflected in the leasing spreads of the industrial portfolio which are fairly significant. If Gramercy had troubles finding tenants, it certainly couldn’t achieve such high spreads over past leases:

Source: Gramercy

Gramercy vs. STAG Industrial

We note that the portfolio compares favorably with STAG Industrial (STAG) which is a very popular name among Seeking Alpha readers. Comparing both companies, we have difficulties understanding why Gramercy is getting so little attention: it owns higher quality assets and yet sells at a lower valuation. On average, the targeted property locations are of higher quality and the weighted average remaining lease term is 7.2 years, well in excess of the 4.7 years for STAG.

Moreover, STAG compares especially poorly when looking at the average building age of both companies. While Gramercy owns mostly relatively new assets with an average age of 13 years, STAG has an average building age of 28 years which is a LOT for industrial assets.

Source: Gramercy

While we are not bearish on STAG by any mean, we favor Gramercy for these exact reasons. Primary markets, with longer lease terms, and newer better buildings offered at a discounted valuation sounds much better to us than secondary markets with shorter lease term, old properties, higher risk of vacancy, and elevated capex needs, sold in the markets at a higher valuation.

It may be true that STAG has better short-term growth prospects, but over the long run, we consider the risk-to-reward ratio of Gramercy to be the most favorable here.

Finally, it is worth noting that Gramercy stacks up well against its peers in asset clear heights comparisons. This is another essential issue to consider as it causes lots of assets to become obsolescent over time as the clear height may not meet the future tenant’s expectations.

Source: Gramercy

On the other hand, the old properties of STAG may have higher obsolescence risk. This combined with short lease terms, volatile retention rates, and old properties requiring capex and located in secondary markets really makes us wonder why STAG gets so much love compared to Gramercy today. We expect this to eventually change as Gramercy becomes even closer to being a pure-play industrial REITs – unlocking capital appreciation to its shareholders.

An Industrial REIT Sold at a cheap price

Gramercy is today generating 77% of it NOI from industrial assets, and soon this will exceed 80% as the management expects to keep moving heavily towards this direction. Yet the company trades far from the valuation of other industrial REITs as seen in our introduction. While the average 2018 FFO multiple of the industrial peer set is close to 22, Gramercy is currently being offered at a low 12.5 times FFO.

This is a company that is 77% Industrial, but trading at a massive discount. Even if you gave 0 value to the remaining 23% and essentially made GPT a pure-play industrial REIT, it would still trade at a very reasonable valuation relative to its peers.

As such, Gramercy allows us to gain exposure to industrial assets at a much lower price today, which we expect to result in strong outperformance over the long run.

The Reason Behind this Inefficiency

So, what is causing this large valuation gap?

The answer can be attributed to 2 reasons:

  1. The market has overlooked the big changes that have occurred at Gramercy during the last 12 months, and consequently, it continues to categorize it within the “Diversified REIT” peer group rather than the “Industrial REIT” group. In fact, even NAREIT still classifies Gramercy in the diversified peer group. It is then not surprising that Gramercy may be mispriced as many classify it as a “Diversified REIT”, and “Diversified REITs” tend to trade at high discounts relative to “Pure-Play REITs”. The market prefers REITs to specialize in one specific sector because this results in maximizing efficiencies and becoming “experts” in that one area rather than investing in many sectors with no competitive advantage. As such, diversified REITs trade on average at about a 30% discount to the broad REIT market, and 40% discount relative to industrial REITs.
  2. Gramercy saw significant price decline in the past few months after an earnings miss in its 3rd quarter results. The reason for the earnings miss was due to the company’s portfolio re-positioning whereby 51 new industrial properties were acquired during quarter for $868.9 million. This earnings weakness should be temporary as the income for these new properties will show its full impact in future quarters. In fact, the share price of GPT pulled back by almost 12% in the past 3 months providing a unique buying opportunity.

Now, with that said, the market is not giving any credit to the latest portfolio transition – making Gramercy an “almost” pure-play industrial REIT. With close to 80% of the NOI coming from industrial properties, we argue that Gramercy’s FFO multiple should be closer to the average of the industrial sector (22x) rather than its current 2018 FFO of 12.5 times.

Some discount is certainly warranted given that Gramercy isn’t a pure-play just yet, but the current discount appears overdone and unjustified.

Should Gramercy’s FFO valuation multiple increase to 17 time FFO, which is still almost 5 notches lower than industrial REITs, the shares would be trading at least 30% higher from the current price of $26.66/share. We believe a Price to FFO of 17 is very reasonable for Gramercy and should be achievable over the next 12 months, as Gramercy continues to sell non-industrial assets and gets even closer to a pure-play. We expect the FFO multiple to expand and result in market outperformance.

Risks

Investors buy REITs mainly for higher income and for long-term growth. REITs also help investors diversify their income streams. However, every investment comes with certain risks:

  1. Macro-economic risk: The performance of Property REITs is dependent on the state of the U.S. economy. REITs tend to underperform when the U.S. economy hits a recession, as property prices and rents tend to go down. Having said that, the recession risks in the United States are at their lowest since the last financial crisis. Therefore, the risks of investing in property REIT companies such as Gramercy are currently pretty low.
  2. Execution risk: Although Gramercy has already converted about 80% of its portfolio into Industrial Properties, the company could continue converting the rest of its non-industrial assets into industrial ones. This presents some execution risks as the company will have to sell some of its existing assets and buy new ones, resulting in one-time costs and expenses. Should these cost be excessive, it could keep the price of the stock depressed for a longer period of time.

Final Thoughts

Growth stocks tend to be expensive. The industrial REIT market is no exception with lofty average FFO multiples and low dividend yields. Fortunately, there still exist few exceptions that allow investors to gain exposure to industrial real estate at a much lower price. One clear exception is Gramercy Property Trust, which offers today a yield of 5.6% with over 30% upside potential. Investors are getting well paid to wait until the stock recovers, and a price recovery could happen very soon.

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Disclosure: I am/we are long GPT.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.