Market Overview

Viridian's President On Cannabis Stocks: All Marijuana-Related Sectors Are Spiking As Investors Buy On Weakness

Viridian's President On Cannabis Stocks: All Marijuana-Related Sectors Are Spiking As Investors Buy On Weakness
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The Viridian Cannabis Stock Index, which tracks cannabis (and verticals) stocks, gained 4.8 percent the week ended December 16, with all 12 index sectors showing positive returns. This surge marked a change of direction in relation to the previous week’s slight decline.

After the release of the latest report, Benzinga had its weekly chat with Viridian Capital Advisors' founder and president, Scott Greiper, who shared some insight into the most relevant moves in the space.

Why Such A Big Move?

Benzinga commenced by asking about the reasons behind the move. As per the report, the spike was likely driven by “increased confidence in the cannabis industry following the release of the Canadian government's report supporting the legalization of recreational cannabis.”

However, Greiper added, there were some other factors driving the surge. “After it rocketed up in anticipation of the November 8th state voting, the index had begun to sell off — which is a natural result of profit taking.”

“I think investors who were looking and the industry and either had not jumped in or didn’t feel they had full positions in the space, looked at some of the selloff and thought that it was time of weakness to establish positions. So, I think it was just opportune buying as the stocks started to come off their highs,” he concluded.

Sectors On The Move

Moving on to the moves seen in each of the twelve sectors tracked by the Cannabis Stock Index, the expert pointed out that, the buyers taking advantage of the weakness in the space seemed especially bullish on the sectors that had been underperforming so far.

“The leading sectors for the last year or year-and-a-half had been biotech and cultivation [while] the true underperforming sectors had been software and consumption devices [...] If you look at last week, the top performing sector was consumption devices [which gained 16.8 percent], followed by software [which spiked 16.5 percent],” he explicated.

“So, I think there’s starting to be more of a trading mentality in some of these stocks, and you are seeing people looking to buy (1) on weakness, when the stocks sell off of their highs, and (2) what often smart investors do, which is to look at underperforming sectors within the industry over time, looking for them to catch up,” Greiper continued. “I think that’s what we saw last week, specifically with software and consumption devices.”

“I think this general narrative about people looking to buy on weakness applies overall to the ancillary products and services category, versus touching the plant,” he ended. “You’ve seen from Viridian that one of the main trends that we have been seeing, that went counter to general perception, was that it’s no longer a ‘I’m not investing in anything that touches the plant, because that’s where the regulatory risk is’ [...] In fact, the category of ‘touching the plant’ has outperformed the ancillary products and services for the last year. But, last week, that flipped toward the ancillary products.”

Liked this interview? Now check out Greiper’s comments the most recent investment and M&A activity in the marijuana industry, including Scotts Miracle-Gro Co (NYSE: SMG), Supreme Pharmaceuticals Inc (CNSX: SL) (OTC: SPRWF) and GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH).

Posted-In: Biotech Long Ideas Sector ETFs Emerging Markets Politics Topics Markets Movers Best of Benzinga


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