Investment Analysis and Valuation of the Cannabis Industry
Your Comps Are Wrong: Why and How to Use Comp Tables - Click to Toggle
Why do we think comp tables are so important?
They are the key tool in understanding investment opportunities and risks in an industry.
And how can you manage a portfolio with wrong data?
- provide a menu of available public investment choices for purchase or sale
- show the range of valuations of the choices, showing discrepancies that may or may not converge in the future. Public valuations also inform private company valuations and acquisition pricing
- show the size and leverage of the public options
- show the range of operating margins and opportunities for margin expansion or compression
- show the cost of capital for companies and the industry, which can be applied to similar companies in the private market either raising new capital or deciding whether to sell to another company
- on the second page, the stock price performance shows what is moving up and down, helps isolate specific performance vs peers and the broader market
Publicly Available Commentary
Cannabis stocks, like most stocks, are behaving like trading sardines. I’ll let page 18 of Seth Klarman’s Margin of Safety explain the parable: There is an old story about the market craze in sardine trading when the sardines disappeared from their traditional waters...
Cannabis stocks cannot catch a bid. As the small-cap index IWM rose 3% in October, the average US cannabis stock declined 13%, the Ancillary operators declined 7%, and the Canadian LPs declined 9%. A heatmap of stock performance can be downloaded hereThe US operators...
In honor of MJBizCon and MJUnpacked in Vegas this week, we are providing the multiples from our dynamic in-the-money only comp table adjusted for all announced deals here.As always our Premium Members can download the full Premium comp table,...
Average daily trading volumes for U.S. cannabis operators appear to be bottoming out at about $80 million per day, a level not seen since October 2020. Trading volumes have declined 75% since peaking in February. Despite the drop, the volume remains nearly triple the...
There is a disconnect between fundamental performance and stock performance for U.S. cannabis companies, resulting in compressing valuations for those operations. But multiples on 2022 are nearing past trough levels. Strong second quarter earnings have not yet driven...
8th Revolution and the CME? In early June, we were interviewed by 8th Revolution’s Kellan Finney and Bryan Fields, where we discussed the California cultivation supply, sustainability and scalability of margins, Weedmap’s investment thesis and narrative, and Cresco...
As we enter 2Q21 earnings season, we ask, “what has happened with the stocks prices and estimates since 1Q21”? The estimates for the US-Focused operators have increased, while the stock prices themselves have declined, compressing valuation multiples by about 1 turn....
Though access to capital for public cannabis companies improved in early 2021, liquidity remains low for the U.S. plant-touching operators in comparison to the Canadian licensed producers. U.S. operators have access only to lower-volume exchanges, such as the Canadian...
Cannabis stocks have taken a beating since our last comp table on June 10. The average US stock has declined 5%, while the average Canadian stock declined 9% since June 10. The Canadian sales estimates also declined about 2%, while the US estimates actually increased...
In the days after the Great Recession (2008-09), the U.S. government implemented a policy of quantitative easing to boost the recovery. In 2010, after the first round of QE, Mike asked Warren Buffett about his views on inflation and investing. The Oracle of Omaha...
Early signs of consolidation in cannabis nutrients? Over 4,000 years ago, early farmers noticed enhanced crop growth in areas of manure accumulation where animals gathered, and the first fertilizer application practices were born. The Babylonians, Egyptians, and...
Premium Members can download our pro forma in-the-money diluted comp tables below. Cultivation is in vogue At this point in the industry, most operators need to own most pieces of the supply chain because there isn't a consistent, robust, and reliable supply...
Premium Members can download the comp tables priced as of May 7 and May 10th, 2021, below. These have been updated for the Trulieve-Harvest merger, and assume that the $110m Harvest Converts get refinanced by Trulieve as normal debt. The May 10, 2021 table is also...
Comp Table updated for April 30, 2021 - Now using cashless exercises for warrants and options Premium members can download a PDF of our cannabis comp table, updated on April 30, 2021 below. Cannabis stocks were weak in March after peaking in...
Comp Table April 29, 2021, for Premium Members Only: Now with share counts, Cash On Hand, & Pro Forma Net Debt
Premium Members can download the detailed comp table priced as of April 29, 2021, at the button below. Like the previous Free Member ones, this includes only in-the-money warrants and options, counts converts as either shares if in the money or face value if out the...
Cannabis stocks are being driven by market dynamics and not fundamentals, creating opportunities for long term investors that can stomach the volatility. The rising correlations also present hedging opportunities: are you nervous about valuations after 4X gains in...
For the month of February cannabis stocks peaked then declined. The stocks ended up 17% for the US operators and 23% for the Canadian operators, and both groups have declined since peaking around February 8-10 (-13% for US and -26% for Canadian) - when we noted that...
If the past few months of cannabis policy wins were the spark to light investor interest in the industry, the involvement of Reddit-based speculation in the past weeks was the gasoline to this fire. But when the gasoline runs out, the fire must burn from an enduring...
There is an old saying that "bulls make money, bears make money, and pigs get slaughtered". If you're fat on meme stocks, congratulations, you better get out now before you're bacon. Tilray has increased 148% since last Friday, giving the pro forma Tilray-Aphria...
How do US cannabis operator valuations look when compared to other industries?
Cannabis stocks rallied in January on legislative optimism, then paused following capital issuance, and perhaps an unrelated short squeeze. Will systemic risk or tough comps continue to pressure them? For the month of January, cannabis stocks...
The capital drought in cannabis appears to be over. The past week saw furious rallies and a total of $1 billion capital raised, as operators know they will need cash over the long term. The opportunity is a multidecade one, and the market is excited about the...
Why comp tables are key investment tools and why most tables for cannabis are wrong
Canadian cannabis operators outperform US operators despite no fundamental benefit from US legal changes
Comp Tables: Premium Members
- Comp Table Jan. 4, 2022 with MJBiz/Emerald
- Comp Table Dec. 31, 2021 for Premium Members
- Comp Table Dec. 17, 2021 for Premium Members
- Comp Table Dec. 8, 2021 for Premium Members
- Comp Table Nov. 30, 2021 for Premium Members
- Comp Table Nov. 8, 2021 for Premium Members
- Comp Table Oct. 29, 2021 for Premium Members
- Comp Table Oct. 28, 2021 for Premium Members
- Comp Table Oct. 25, 2021 for Premium Members
- Comp Table Oct. 15, 2021 for Premium Members
- Comp Table Oct. 14, 2021 for Premium Members
- Comp Table Oct. 7, 2021 for Premium Members
- Comp Table Sept. 30, 2021 for Premium Members
- Comp Table Sept. 21, 2021 for Premium Members
- Comp Table Sept. 10, 2021 for Premium Members
- Comp Table Sept. 7, 2021 for Premium Members
- Comp Table August 31, 2021 for Premium Members
- Comp Table August 27, 2021 for Premium Members – Flower One Added
- Comp Table August 18, 2021 for Premium Members – 2Q21 Updates
- Comp Table August 6, 2021 for Premium Members - with Agrify & Hyrdofarm
- Comp Table August 4, 2021 for Premium Members
- Comp Table July 28, 2021 for Premium Members - GAGE added
- Comp Table July 27, 2021 for Premium Members
- Comp Table July 22, 2021 for Premium Members
- Comp Table July 19, 2021 for Premium Members
- Comp Table July 16, 2021 for Premium Members
- Comp Table July 8, 2021 for Premium Members
- Comp Table June 30, 2021 for Premium Members
- Comp Table June 21, 2021 for Premium Members
- Comp Table June 10, 2021 for Premium Members
- Comp Table May 28, 2021 for Premium Members
- Comp Table May 17, 2021 for Premium Members
- Comp Table May 14, 2021 for Premium Members
- Comp Table May 10, 2021 for Premium Members
- Comp Table May 7, 2021 For Premium Members
- Comp Table April 30, 2021 For Premium Members Only
- Comp Table April 29, 2021 for Premium Members Only
- Comp Tables Priced March 5, 2021
- Comp Tables Priced February 26, 2021
- Comp Tables Priced February 19, 2021
- Comp Tables Priced February 10, 2021
- Comp Tables Priced February 5, 2021
- Comp Tables Priced January 29, 2021
- Comp Tables Priced January 14, 2021
- Weedmaps Comp Tables Priced January 11, 2021
- Comp Tables Priced January 6, 2021
- Comp Tables Priced December 31, 2020
- Comp Tables Priced December 18, 2020
- Comp Tables Priced December 11, 2020
- Comp Tables Priced December 7, 2020