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The Marijuana ETF Is Lighting It Up As Investors Are Buying In

August 30, 2018 8:27 am
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The Marijuana ETF Is Lighting It Up As Investors Are Buying In

After slumping through much of the past six months, the ETFMG Alternative Harvest ETF (NYSE:MJ) is enjoying an August resurgence. MJ, the only U.S.-listed pure play marijuana exchange-traded fund, is one of this month's best-performing ETFs.

What Happened

As of Aug. 29, MJ's month-to-date gain is 27.69 percent. MJ is one of just seven ETFs sporting month-to-date gains of 20 percent, but five of those products are leveraged funds.

The ETF jumped 5.72 percent Wednesday on volume that was more than quadruple the daily average after Tilray Inc (NASDAQ:TLRY) reported better-than-expected earnings in its first report as a public company.

As Benzinga reported, “Tilray reported a 95.2-percent rise in revenue in Q2 to $9.7 million. Total kilogram equivalents sold were 1,514 kilograms, up 97 percent from a year ago. Even after a huge run-up into earnings, Tilray stock gained another 15.8 percent after the revenue beat. The stock is now up 53 percent in the past five days.”

Why It's Important

Tilray is 2.63 percent of MJ's weight and resides just outside of the ETF's top 10 holdings. Cronos Group Inc. (NASDAQ:CRON) and Canopy Growth Corp. (NYSE:CGC) combine for 21.74 percent of MJ's roster.

Canopy Growth is up a staggering 76.22 percent this month after U.S. spirits giant Constellation Brands Inc. (NYSE:STZ) took a $3.8 billion stake in Canopy, marking the largest such investment to date in the legal cannabis industry while sparking speculation Constellation could eventually acquire Canopy.

“Last week, it was reported that the global liquor giant Diageo Plc (NYSE:DEO)is seeking a cannabis partner, raising market speculation over who that may be,” reports Live Trading News.

MJ, which tracks the Prime Alternative Harvest Index, was home to 38 stocks as of the end of the second quarter. Over 81 percent of the ETF's holdings are Canadian and U.S. companies.

What's Next

Data suggest MJ's recent rally is renewing investors' interest in the fund. The fund is home to nearly $463 million in assets under management, of which $21.69 million has flowed into the fund this month.

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