Commodities and Gold

Canopy Did the Right Thing

After a great couple of weeks, cannabis stocks took a big step back on news that giant Canopy Growth Corp. (NASDAQ:CGC) is scaling back its Canadian operations.

A nervous market took the announcement as a negative factor. I think it’s a great decision for the industry, if not for Canopy itself.

Management wants the operation to be profitable. Evidently, running so many cannabis-growing facilities across Canada doesn’t fit into that agenda.

Cutting 220 jobs and closing several farms will save the company about $200 million a year. What I like about this is the way it will also remove incremental supply from an already glutted market.

Big Cannabis has a supply problem. Too many companies tried to grow their way to economies of scale and flooded the world with cheap plant product.

Canopy has given up on that infinite growth plan. Consumer demand just isn’t there. Management sees that now.

I wish all the cultivators would follow suit. Until they do, I’d rather own the small retail and next-generation cannabis stocks than the giants.

We’re in the green in my IPO Edge. I can’t wait to add new names. Canopy and company don’t qualify . . . they’re too big, and frankly, they’re old news.

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis. Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Triple-Digit Trader, 2-Day Trader, IPO Edge and Inner Circle. Ms. Kramer, a Certified Fraud Examiner, has also testified as an expert in investment suitability, risk management, compliance, executive compensation, and corporate governance. Ms. Kramer received her MBA from the Wharton School at the University of Pennsylvania and her BA with honors from Wellesley College. Ms. Kramer has provided testimony regarding investment policy to the U.S. Senate and is a frequent speaker on the markets, portfolio management and securities fraud and compliance. Ms. Kramer is also the author of “Ahead of the Curve” (Simon & Schuster 2007) and “The Little Book of Big Profits from Small Stocks” (Wiley 2012).