Marijuana Stocks: Seeking Alpha Followers Tend To Be About 80% In Agreement With Horizons Life Sciences Marijuana Index ETF Holdings

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Includes: CGC, HMLSF, SMG, TLRY
by: Anthony Cataldo

Summary

I like to examine "SA follower" metrics as an indicator of sentiment for the marijuana or cannabis sector.

In this article, I compute the correlation, using a regression model, to compare [1] Seeking Alpha Followers to the [2] HMLSF portfolio distribution.

I arbitrarily selected 4% as a break point, where SA followers tend to like [1] Canopy more and like [2] Tilray and [3] Scotts less than the HMLSF.

SA follower metrics are "cumulative flow" measures and the HMLSF is a "stock" measure for a "point" in time.

SA followers appear to prefer a "pure play," which excludes Scotts and appear to expect Canopy to emerge as the market share leader for the marijuana sector.

Source 1 and Source 2

Seeking Alpha follower metrics tend to favor Canopy Growth (CGC) when compared to the Horizons Life Sciences Marijuana Index ETF (OTC:HMLSF). Alternatively, Tilray (TLRY) and Scotts Miracle-Gro (SMG) are of relatively lesser interest to SA followers.

Seeking Alpha followers represent a relatively sophisticated group of investors, primarily interested in long-term buy-and-hold strategies. Using SA followers as a proxy for interest and long-term buy-and-hold security targets, Canopy appears to be the favorite for both SA followers and the HMLSF.

Methodology

Using the HMLSF October 4 portfolio percentage [PCT] as a starting point [column [A]], I hand-collected SA follower measures for each security on October 8 [column [B]], after the market close. Then, by merely adding the SA follower measures to develop a divisor, I computed an SA follower relative percentage [PCT] [ column [C]], so that I could compare the relative percentages [see [A]-[C]].

The below is a portion of the table, which is included in the APPENDIX, where I restrict my focus to the 3 securities with a variation [or break point] in excess of 4% [an arbitrarily selected measure]:

[A]

[B]

[C]

[A]-[C]

SA

Follower

HORIZONS HMMJ HOLDINGS

Portfolio

SA

Relative

as at 10/04/2018

PCT

Followers

PCT

CANOPY GROWTH CORP.

11.37%

75,681

15.9%

-4.5%

TILRAY INC.

10.62%

30,313

6.4%

4.3%

THE SCOTTS MIRACLE-GRO CO.

7.45%

13,713

2.9%

4.6%

Descriptive Observations

Below is a graphic developed from the entire table [see APPENDIX]:

Below are Pearson product moment correlation and r-squared measures, where about 80% of one measure explains the other [e.g., explanatory power]:

I was surprised that the 80% measure was achieved, as I was by the below, where about 36% of the SA followers are focusing on [1] Aurora, [2] Canopy, and [3] Tilray, and where each of these 3 securities enjoy 10% or more of the HMLSF portfolio:

SA

HMLSF

Followers

Portfolio

35.9%

170,739

>10%

26.0%

123,833

>5%

17.8%

84,945

>1%

20.4%

97,194

<1%

100.1%

476,711

HMLSF securities representing more than 5% of the portfolio [26%], more than 1% of the portfolio [about 18%], and less than 1% of the portfolio [about 20%] are also indicated in the above.

Summary

While the preference for Canopy is (and has been) "intuitively appealing," I like to "measure" or "quantify" intuitively appealing positions and/or sentiment. At this time, I am taking the position that Canopy should represent a security or holding for anyone interested establishing and maintaining a marijuana or cannabis stock portfolio. I am thinking in terms of "years" and not a day-trade or short-term hold, barring significant, negative news or events.

Furthermore, I agree with this SA contributor and would exclude Tilray [and Scotts] from a long-term buy-and-hold marijuana or cannabis portfolio.

Of course, I continue to suggest that the long term, passive investor simply buy-and-hold the HMLSF or an alternative ETF.

APPENDIX

[A]

[B]

[C]

[A]-[C]

SA

Followers

HORIZONS HMMJ HOLDINGS

Portfolio

SA

Relative

as at 10/04/2018

PCT

Followers

PCT

AURORA CANNABIS INC.

12.09%

64,745

13.6%

-1.5%

CANOPY GROWTH CORP.

11.37%

75,681

15.9%

-4.5%

TILRAY INC.

10.62%

30,313

6.4%

4.3%

APHRIA INC.

8.55%

38,277

8.0%

0.5%

GW PHARMACEUTICALS PLC.

8.01%

39,434

8.3%

-0.3%

THE SCOTTS MIRACLE-GRO CO.

7.45%

13,713

2.9%

4.6%

CRONOS GROUP INC.

5.35%

32,409

6.8%

-1.4%

HEXO CORP.

4.19%

9,364

2.0%

2.2%

GREEN ORGANIC DUTCHMAN HLDGS

3.44%

4,763

1.0%

2.4%

CANNTRUST HOLDINGS INC.

2.94%

5,114

1.1%

1.9%

ORGANIGRAM HOLDINGS INC.

2.25%

14,802

3.1%

-0.9%

EMERALD HEALTH THERAPEUTICS

1.89%

8,510

1.8%

0.1%

TERRASCEND CORP.

1.81%

620

0.1%

1.7%

INSYS THERAPEUTICS INC.

1.54%

20,806

4.4%

-2.8%

FSD PHARMA INC. CL B SUBORDINATE VTG

1.50%

699

0.1%

1.4%

SUPREME CANNABIS CO INC. THE NEW

1.41%

7,705

1.6%

-0.2%

NAMASTE TECHNOLOGIES INC.

1.09%

7,706

1.6%

-0.5%

VIVO CANNABIS INC.

1.08%

4,856

1.0%

0.1%

NEPTUNE WELLNESS SOLUTIONS INC.

0.99%

6,232

1.3%

-0.3%

NEWSTRIKE BRANDS LTD.

0.97%

1,507

0.3%

0.7%

22ND CENTURY GROUP INC.

0.79%

17,191

3.6%

-2.8%

MARICANN GROUP INC.

0.71%

2,488

0.5%

0.2%

INNOVATIVE INDUSTRIAL PROPERTIES

0.65%

6,549

1.4%

-0.7%

ALEAFIA HEALTH INC.

0.65%

2,274

0.5%

0.2%

ICC LABS INC.

0.63%

1,083

0.2%

0.4%

WEEDMD INC.

0.57%

2,205

0.5%

0.1%

VILLAGE FARMS INTL INC.

0.55%

3,688

0.8%

-0.2%

EMBLEM CORP.

0.49%

4,546

1.0%

-0.5%

RADIENT TECHNOLOGIES INC.

0.47%

3,439

0.7%

-0.3%

CHOOM HOLDINGS INC.

0.44%

1,292

0.3%

0.2%

LEXARIA BIOSCIENCE CORP. PAR$.001

0.37%

5,203

1.1%

-0.7%

DELTA 9 CANNABIS INC.

0.36%

1,403

0.3%

0.1%

TETRA BIO-PHARMA INC.

0.35%

1,600

0.3%

0.0%

INVICTUS MD STRATEGIES CORP. NEW

0.35%

2,927

0.6%

-0.3%

HARVEST ONE CANNABIS INC.

0.34%

2,266

0.5%

-0.1%

NATIONAL ACCESS CANNABIS CORP.

0.34%

235

0.0%

0.3%

ISODIOL INTL INC. NEW

0.32%

1,849

0.4%

-0.1%

ZYNERBA PHARMACEUTICALS INC.

0.27%

10,681

2.2%

-2.0%

THC BIOMED INTL LTD.

0.25%

3,256

0.7%

-0.4%

HEMPCO FOOD AND FIBER INC.

0.23%

990

0.2%

0.0%

EVE & CO INC.

0.23%

183

0.0%

0.2%

GTEC HOLDINGS LTD.

0.23%

248

0.1%

0.2%

INMED PHARMACEUTICALS INC.

0.22%

4,630

1.0%

-0.8%

BELEAVE INC.

0.19%

1,110

0.2%

0.0%

ABATTIS BIOCEUTICALS CORP.

0.15%

7,415

1.6%

-1.4%

JAMES E WAGNER CULTIVATION

0.14%

115

0.0%

0.1%

INDIVA LIMITED

0.14%

321

0.1%

0.1%

AUSTRALIS CAPITAL INC.

0.08%

134

0.0%

0.1%

AUSTRALIS CAPITAL INC. WT 19-SEP-2019

0.07%

134

0.0%

0.0%

Total

99.12%

476,711

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.