Arcadian Fund Founder and CEO Matthew Nordgren provides his outlook for cannabis stocks in both Canada and the United States
SmallCapPower | December 18, 2018: In a recent interview with the Financial Post, Arcadian Fund Founder and CEO Matthew Nordgren discussed investing in cannabis stocks, touching upon investing themes for 2019, U.S. cannabis market opportunities as well as an ancillary company he thinks will do well.
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When asked what he thinks is the biggest investing theme for the cannabis sector in 2019, Mr. Nordgren said he thinks 75% of the big stocks are going to underperform in 2019 because they’re overvalued. He suggests sticking with the Big Three because the market will move with them. Retail and institutional buyers like those small mid caps, and the market thrives on that, so he thinks the market goes back to where it’s always had success — and that’s where you’ve got to focus.
Mr. Nordgren believes iAnthus Capital Holdings, Inc. (CSE:IAN) is poised to become the next market darling in the cannabis industry, as it has a significantly lower valuation than many of its peers, and its stock has performed better than (almost) anyone else’s during 2018.
As the cannabis industry expands south of the border, Matthew Nordgren says he finds KushCo Holdings, Inc. (OTCQB:KSHB) “really exciting,” adding that he sees an up-listing at some point from its current over-the-counter trading in the United States.
“When that happens, the institutional guys will be more on board than they already are and Kush has an opportunity to go out and consolidate in a major way,” he told the Financial Post.
As the legal cannabis market continues to expand in the U.S., Matthew Nordgren contends that companies such as MedMen Enterprises Inc. (CSE:MMEN), Acreage Holdings, Inc. (CSE:ACRG.U), and iAnthus Capital should do well. “Those guys are going to continue to get bigger and open up new places throughout the U.S. and buy existing ones.”
For cannabis investors looking for places to put their money to work in 2019, Mr. Nordgren suggests that they take note of what institutional buyers are doing. Until cannabis become legal federally in the United States, ancillary companies (those providing services to cannabis companies) will likely become the focus. “I think the big dollars start to look in the U.S. and I think they end up investing in companies they have less risk with.”
Finally, when asked which cannabis stock he would buy if he has $1 million to invest, he said for Canadians it would be Canopy Growth Corporation (TSX:WEED) (NYSE:CGC). “It’s the same reason you buy Amazon.com. The whole market moves one way or another and Canopy is going to go up and down with it,” he added.
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