As Matt predicted, another one of his “Jumper Stocks” is headed to the U.S., and it’s up big on the news
It’s starting to feel like Matt McCall is the Nostradamus of marijuana.
Two weeks ago today, he wrote the following to his Early Stage Investor subscribers about Canadian marijuana company, Organigram Holdings:
Organigram (OGRMF), a licensed producer of products for the medical and recreational cannabis markets in Canada, could be next in line to jump to a major exchange. It is in great position in the industry as one of only three companies with supply agreements in all of the country’s provinces.
It turns out that last Friday, Organigram did exactly what Matt predicted. The company announced its application to list on the NASDAQ.
And how did the market react?
Organigram popped nearly 11% on Monday, on triple the volume.
On Tuesday, it pushed up as high as another 3.6% at one point, hitting a new all-time high.
***Let me back up and explain what’s going on for any newer Digest readers
Regular Digest readers know that we believe legalized marijuana is creating one of the most lucrative investment opportunities we’ll see in our lifetime. The industry is set to grow 10-fold over the coming decade. The amount of wealth this will create is going to be staggering.
Matt McCall is our resident marijuana expert. In his newsletter, Investment Opportunities, he’s been recommending marijuana stocks that have been positioned to produce huge returns for investors, and we’ve already seen solid gains.
For instance, as I write, since Matt’s recommendation to subscribers, Charlotte’s Web is up 68%, Elixinol has added 117%, and Innovative Industrial Properties has climbed 152%.
Matt’s strategy here is to find the strongest marijuana companies with the best financial positioning. It involves a strict screening process based on a 5-step analysis of various fundamental criteria.
Now, Matt is also the editor of Early Stage Investor, in which he recommends additional, select marijuana stocks. But in this case, one of his strategies is a bit different, involving a specific market anomaly. And it’s what’s behind the pop in Organigram.
You see, because marijuana is still illegal on the federal level, most marijuana companies don’t trade on U.S. exchanges. Instead, they trade on what’s called the “OTC” market, which stands for “over the counter”.
At this point, I’m going to let Matt take over from his monthly issue of Early Stage Investor:
Here’s where it gets interesting: As legalization spreads and marijuana is rescheduled, the door will open for many of these companies to uplist — or “jump” — to the big exchanges. It’s like being called up from the minor leagues to the major leagues.
As you would expect, there are big benefits for OTC stocks that make that jump. But by the time they do, the first wave of big gains will have already been banked.
That’s especially true in the marijuana industry. Consider this: A lot of people really want to invest in marijuana stocks. Normally, when a lot of folks want to invest in a sector, there are plenty of U.S.-listed stocks for them to buy. But because of the federal marijuana laws, there are not many U.S. listed marijuana stocks … only a handful.
As a result, the ones that actually do exist have received an extraordinary amount of attention and money … and they’ve soared hundreds — even thousands — of percent. There simply aren’t many options available for large U.S. investors that want to take positions in legal marijuana stocks.
We’re seeing Matt’s explanation play out exactly as described with Organigram’s stock over recent trading sessions.
***More capital will be flowing into Organigram
The biggest reason Organigram is making the jump to the NASDAQ is “more investors.”
Consider this — in the most recent quarter, Organigram sold the second-most amount of recreational marijuana in Canada. Only Canopy Growth Corp. sold more. Organigram sold twice as much as rival Aphria, Inc.
However, you’d never know this by looking at the respective market caps of the companies. Organigram is only half the size of Aphria, and just 5% of Canopy.
So, how is it that a company that’s selling twice as much marijuana as its competitors is just a fraction of the size of its competitors?
Access to investor capital.
You see, both Aphria and Canopy trade on major U.S. exchanges. That gives them access to the enormous investment capital here in the U.S. Bottom line, Organigram wants in on the action.
Attracting larger investors is also one of the likely reasons (Organigram) has applied for a Nasdaq listing. Highly valued rivals such as Canopy, Cronos Group and Aurora Cannabis are listed on major exchanges in the U.S.
Currently, like the vast majority of the cannabis sector, Organigram’s investor base is primarily retail investors, not institutional investors that typically buy larger blocks of stocks. According to FactSet, funds own just more than 11% of Organigram shares — the vast majority of which is owned by two exchange-traded funds — while about 80% of the float does not have to disclose holdings, which suggests most are retail investors. On average, stocks in the S&P 500 index show an inverse ownership trend, with about 88% ownership by funds.
For any Early Stage Investor subscribers who are reading this and thinking it sounds familiar, that’s because Matt specifically mentioned this as one of the key reasons why smaller OTC companies will be looking to jump to U.S. exchanges.
Nearly every mutual fund, ETF, and big institutional investment advisor is prohibited from buying stocks that do not trade on the NYSE or NASDAQ. After jumping to a major exchange, the stock can be purchased by the largest funds in the world …
Money from large institutional funds, pension funds, and the like will also add to the inflow of cash into marijuana stocks listed on the NYSE and NASDAQ.
***What to expect next for Organigram and other stocks that jump to an exchange?
Matt described how this works to his Early Stage Investor subscribers:
With money from large financial institutions comes the initiation of coverage by the big investment banks …
A byproduct of more analyst coverage is increased press. When a new investment firm initiates coverage of a stock, it puts out a press release. That leads to more media attention and competitors also launching coverage of the Jumper Stock, which in turn sparks more buying. Wall Street is famous for keeping up with the Joneses — which in turn sparks more buying.
If Matt’s predictions continue to be spot-on, then Organigram is just at the beginning of a groundswell of new investor dollars. That said, Matt’s buy-up-to price for the moment is $7.50.
***Don’t be left behind on the marijuana investment trend
A majority of Americans now support marijuana legalization …
Certain medicinal benefits of marijuana have been proven and studies continue to highlight positive health effects …
The public demand for consumers goods using CBD — a derivative of marijuana and hemp, is booming, to the point where U.S. farmers are having trouble keeping up with demand …
The ultra-rich are reallocating their portfolios to include marijuana investments …
The biggest pension fund in the United States has already invested in marijuana …
John Boehner, former Speaker of the United States House of Representatives, is hinting that the U.S. government is closer than ever to fully legalizing marijuana …
***News today confirms the huge opportunity in marijuana stocks
Wednesday morning, as we’re trying to go to press, we’ve learned that there’s a new, nearly $1 billion-dollar deal in the cannabis industry. Curaleaf Holdings — the highest valued U.S. marijuana company — is buying the regulated cannabis business of Cura Partners for $950 million. It’s the largest acquisition ever between U.S. cannabis companies.
Real, life-changing wealth is being made today. Right now.
If you’ve been meaning to put some money to work in marijuana but haven’t yet, it’s time to be intentional about it.
From a timing perspective, it appears we’re standing on the edge of the real upswing in marijuana’s J-curve. This is because it’s only now that we’ve nearly arrived at that tipping point of broad marijuana acceptance, leading to legislative reform, which spurs widespread public adoption (whether through CBD products, medicinal application, or recreational use).
Here’s how Matt puts it:
Marijuana stocks are already on the move, but you still have time to position yourself to make a lot of money as legalization sweeps the globe and the industry grows many times over.
I am more excited than ever about the opportunity to make life-changing gains as the marijuana industry grows exponentially in the coming years. Now is the time to act.
Organigram’s news from last Friday is proof that now is the time to act. After all, you don’t know when the next small marijuana company will announce its plan to jump exchanges.
If you want to learn more from Matt about these exchange-jumping marijuana companies, he’s put together a free video that will tell you all you need to know. It’s also not too late to get involved. Matt still has several companies in his Early Stage Investor portfolio that could be making an exchange jump any day.
The video is available for a limited time, but you can click here to watch it now.
The legalized marijuana investment industry is reaching critical mass and speed. If you’ve been meaning to get involved but haven’t yet, I hope you’ll make the choice to finally take the leap.
Have a good evening,