Tim Seymour, CIO of Seymour Asset Management and co-host of CNBC's "Fast Money," joined Benzinga’s PreMarket Prep on Thursday, ahead of his appearance at the Cannabis Capital Conference Feb. 24-25. He discussed the current situation in the cannabis space and compared and contrasted Canopy Growth Corp CGC and Aurora Cannabis Inc ACB after the companies reported mixed earnings.
“Aurora continues to see deceleration in their top line and their profitability, and frankly their gross margin. And I think people are a bit concerned about continued impairments and where the balance sheet is going to need some fortification,” Seymour said.
Canopy, on the other hand, doesn’t have the same kind of balance sheet issues.
“I think the most important thing to say [about Canopy] is that they’ve got a management team that has taken the helm. So people talk about 2.0 in terms of the cannabis products market in Canada now coming forward with edibles, gummies, any type of beverage market, but really 2.0 should be more about what’s going in with management teams,” Seymour said.
He said Canopy’s management team has a long track record in consumer products, which bodes well for the company’s near-term outlook.
See Also: 7 Cannabis Stocks To Buy, Sell And Hold
Sees Path To Profitability For Canopy Growth
Even though Canopy shares are down 51.4% in the past year, Seymour said he’s still hesitant to call the stock cheap at its current level.
“Canopy may also have to write down some more assets, but I think they’re on the path to profitability and they have a balance sheet that means they can be opportunistic in this environment,” he said.
Despite the pain in the past year, Seymour said the shakedown in the cannabis space has somewhat separated the winners from the losers in terms of relative performance, and Canopy shares are actually up about 1% since mid-October.
“I’ve probably said no less than 150 times on ‘Fast Money’ over the years you make the most money when things go from terrible to just bad, and that’s part of what I think we’ve seen in the cannabis sector,” he said.
Canopy is the biggest holding in Seymour's Amplify Seymour Cannabis ETF CNBS fund.
It remains to be seen whether or not the cannabis market has hit its ultimate bottom. For now, at least, the safest place to be within the group is in stocks like Canopy that don’t have balance sheets on life support.
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