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Why Professional Management is Necessary in a Volatile New Industry

The CAMS Cannabis + Portfolio

December 19, 2018

We introduced our CAMS Cannabis + Portfolio in October and it continues to draw tremendous interest.  Investors seemingly have a healthy appetite for investments in this industry.  But, is their appetite untimely? With professional management and a tactical approach to we believe this can be a great opportunity.

When we began researching the industry, we started our internal database of Cannabis & Cannabis-related companies with a handful of names.  Our large database now covers 125+ names of companies we cover for potential investment in the portfolio.

A very interesting fact we’re finding though is that this maturing industry is just that – immature.

A commonly used reference point in determining a stock’s “health” is its relation to its 200-day moving average.  Quite simply put – what’s the average price of the stock for the previous 200 days?  Each day it’s recalculated with the oldest day (i.e. day 201) falling off. Each new day creates a data point, connect the dots and it creates a line on a stock’s chart.  In very simple terms – a healthy stock stays above it’s 200-day average, a not-so healthy stock cannot.

So why do I bring this up in the context of an immature Cannabis industry? Because, quite frankly, the numbers are ugly.  Over 82% of the Cannabis stocks we follow are currently under their respective 200-day moving averages.  Let that sink in for a minute.

If this industry is robust, or ripe for huge upswing – then why are so many of the stocks in the industry ‘unhealthy’? The answer is not an easy one. But one reason is there is a tremendous disconnect with public perception and reality.  Public perception seems to be – take a dart and throw it at the list of cannabis stocks and I’ll make a fortune! As our friend Lee Corso, on College GameDay likes to say – “Not so fast my friend!”

Our opinion has been and continues to be – this emerging industry has a long ways to go to maturity.  There will be many opportunities for dramatic gains to be made.  There will also be even more opportunities for dramatic losses to be taken and you absolutely must have patience and discipline and do your homework.

That is why we feel professional management and a tactical approach to investing in this industry is needed.

The CAMS Cannabis + Portfolio is open and accepting capital allocations.  The portfolio will provide market exposure to publicly traded companies involved in the cannabis industry.  The portfolio provides a broad approach to not only cannabis growers, but also the complimentary businesses that provide service to this growing and developing industry.

Initial minimum investment amounts can fall into two tiers:

  1. Tier I: $10,000 minimum, provides basic exposure to the industry

  2. Tier II: $30,000 minimum, provides full exposure to the broad industry

For more information about the portfolio and investment process, reach out to me directly via email nick@cornerstoneassetmgmt.com or in the office at (440) 746-0707 ext. 13.

Nicholas E. Anastasakis

Senior Vice President

Portfolio Manager – Mutual Funds & ETF’s

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