Aphria Inc (APHA.TO)

ACB-T vs. APH-T. The sector is highly volatile. APH-T is possibly a little higher quality and there have been rumours around them getting a large investment from a strategic player. TRST-T is the one he holds and is the best way to play this sector.

One of the big three producers of cannabis, which combined have a $9 billion market cap. Most of his clients do not understand this space. He is expecting a pullback in October once the reality of legalization hits home. The valuations are so high on projected earnings and thinks he may need to wait until 2019 to be a buyer.

Earnings were not very good. He would likely not have the nerve to short this stock. Shorting a stock has unlimited downside. Has avoided this sector altogether. Marijuana until proven otherwise is an agricultural commodity. This is not a branded product and does not have the margins of branded products. Is more a show me stock.

They've exectue well, but one doubt is what exactly happened in the Nuverra deal from a corporate governance standpoint. asn't seen enough detail and is waiting to hear from management. They're now stockpiling product before the Oct. 17 legalization date. After that we'll see sales data and their performance.

He only follows the space generally. He is not a fan of the space. There is a lot of uncertainty. It is priced for perfection. It looks like it will be a commodity product, so lower margins.

It pulled back recently and he thinks there is more light shed on the recent transactions they were a part of. It has bottomed and is moving up.

The cannabis space for him has been a no-go zone for some time. He cannot get around the valuation of what these companies should be worth. It has rolled off. There was $2 Billion of equity that came to market. There are a lot of trapped buyers that are late to the party. The challenge is what you pay for the business. It is a short for him. There could be takeouts in the space.

Rumours of Canopy, Aphria & Aurora merging or being bought by a tobacco company? There will be consolidation in this space down the road. These companies have done phenomenally well, but there's little to go on. Legalization may be pushed back from July 1. How will their products be branded? Lots of froth. Risky. There's no set, established market here. Positive trend is legalization in places like California, here and elsewhere. Don't buy if you expect M&A. The medical side is interesting if laws allow set doses by prescription. A lot of uncertainty. Be careful.

He prefers to play the broad space rather than figure out who wins the race. He prefers the HMMJ-T ETF. We are close to a market high so he thinks the market risk is high. The next broader market correction will pull this one back. He would keep your powder dry. In a 10% allocation to speculation he would put 1% in Marijuana. Maybe 3 or 4 if you are really speculative. He would prefer speculating more in AI.

One of the larger players – very large greenhouse operations. One of the early movers in the space that has scale. He prefers another (Med Relief – LEAF-T). He was skeptical of the space but now he feels it will be a big industry. APH-T will have reasonably low costs. There is no question there will be large volumes but regulatory pressures are an uncertainty.

There is a lot of uncertainty in this industry. He feels there is going to be a supply/demand imbalance and the price of these stocks should go up, because he understands there is not going to be enough supply to handle the demand there is going to be. We are still not sure what the legislation is going to look like. If he were in this space, he would prefer Canopy (WEED-T), because it seems to have the biggest track record and more of a valuation behind it.

This is the only play he has ever owned in the Marijuana space. He did extremely well on it but before all the hype about it. The market caps are now so large and not spinning off much cash flow so it is hard for him to justify them. He likes the management and they are one of the low cost producers. He stays away because of valuations.

The sector got a little soft recently. Chart is showing a nice upward trend line from early 2016, followed by some pretty big volatility ranging from $8 down to $4.50. It has broken up through its downtrend recently. The 1^st place he would look at is resistance of around $6.50, which is probably not going to be until the peak of around the current level of about $6.60. He would like to see some volume above $6.61.

If you went back to when the original companies first came out, this is the one that probably had the strongest management team. If you believe highly in the sector and are a buy and hold investor, you buy this and hold it, and it will be worth a lot more down the road than it is today. He has been out of this, but is back in it again.

APH-T vs. WEED-T. It’s always good to be diversified, should hold both. They both seem to be moving away from the pack to the upside.