Cashing in on Cannabis

Published on
October 29th, 2018
Topic
Trading, Micro, Sentiment
Duration
16 minutes
Asset class
Equities

Cashing in on Cannabis

Trade Ideas ·
Featuring Tony Greer

Published on: October 29th, 2018 • Duration: 16 minutes • Asset Class: Equities • Topic: Trading, Micro, Sentiment

Tony Greer, founder of TG Macro, sees opportunity in cannabis stocks after the high-flying sector sold off this month. He reveals his favorite stock to buy on the dip and discusses the short-term trade as well as the long-term prospects, in this interview with Justine Underhill. Filmed on October 24, 2018.

Comments

  • TG
    Tony G. | Contributor
    1 November 2018 @ 17:53
    I'll comment on this myself since I assure you - I've been beating myself up for choosing such an aggressive entry. The risk reward was difficult to time and calculate with the steep S&P sell off. I try to prepare for these ideas well ahead of time but to include real time headlines and price action. Figuring out the exact right prices to enter the trade on this format is challenging for me, but the complaints are totally fair. My plan B was to buy it lower and stop out on the south side of the 200dma at $31.50. If I went with Plan B, it would be a home run so far. I saw the lazy comment above lazy research and I don't really think the point of these videos is to bowl the viewer over with research. As Quoth the Raven always says - do your own research. Nobody gets excited to talk about EBITDA, its all on the Bloomberg terminal. I choose trades based on technicals versus sentiment, narrative versus price action, headlines versus stock reaction, not by what company has promising EBITDA. There's also nobody doing a deeper dive in research who is also capable of tweeting "aaaand Canopy just bottomed" at 9:35AM on Tuesday morning like I did from @TGMacro, with the stock trading $33, after I bought the $32.01 opening print. As I type, that's a 13% move in just over 48 hours. The opportunities are plentiful if the readers don't get themselves caught up in the noise of "oh but he got stopped out." "Oh this is just like FCX." I didn't hear anyone write that I've been short builders, social media, and emerging markets since long before they broke down. A good trader only needs to be right a little over 50% of the time and I barely need that much. The key is to know when to send it in like on Tuesday's CGC opening. That was amateur hour, but then again, so was buying CGC ahead of the old highs when I could have made it a more passive idea and said "BUY IT RISKING $31." I'll try to do better on the tactics, but if the message is right, please exploit it with me.
    • LM
      Lawrence M.
      3 November 2018 @ 17:22
      Giving this a re-view, to give it a shot next week, was nice to see the follow-up/update. Thank you!
    • JZ
      Jun Z.
      7 November 2018 @ 20:43
      Now looking back, Tony was actually right. Accurate message and prediction at the right early time. 2 days earlier:) Thanks Tony
  • MC
    Matthew C.
    31 October 2018 @ 00:10
    It's going to take time for Cannabis to become mainstream, and probably a very aggressive marketing campaign along the same lines as Coke and Pepsi in the 80's.
  • VF
    Victor F.
    30 October 2018 @ 16:59
    My friends prefer Cannabis over Tobacco and Alcohol. I don't see why Cannabis can't surpass the demand of those two. There's tons of value added products possible like beverages, pills, edibles, and hemp derivatives. It's also got some permanence. Tobacco was used as a currency back if we roll back the time far enough. What happens if the Canadian economy crashes? Sell our weed to the highest bidder exchange rate included :) The LPs in Canada are an oligopoly, there's high barriers to entry which is why we're on such short supply. Health Canada slowed down the process as well. I'm not a fan of how paradoxical the entire legalization process played out. Illegal growers can't be involved because they broke an unjust law. It's unfair they sit by the sidelines while everyone with legal capital can invest when the "criminals" were the only reason it's now legal anyways. Full disclosure, have 7 figures in the cannabis sector.
  • MB
    Mike B.
    30 October 2018 @ 15:34
    That was interesting - the fastest stop out in RV history. That aside, there were a lot of numbers thrown about that are questionable and to say you are there for the next 5-10 years, suggest to me that more homework is required. The other issue I have is that lack of awareness of the demand-supply imbalance. Yes, there is a large demand/supply imbalance in the short-term but when you add up the sq ft of production coming down the pipe in 2019/20, you will have an extreme over-supply situation. Let's be clear, there really are no barriers to entry other than obtaining the requisite licensing and when the US market opens up, you can bet there will be some very stiff competition. I think the constellation brands investment in Canopy was far too aggressive and they could have saved billions by forming a JV rather than buying the equity position. The easy money was made in the sector, what comes next is consolidation then commoditization. Yes, Canopy will likely survive given the rather substantial cash infusion from Constellation Brands who IMO substantially over-paid.
    • TG
      Tony G. | Contributor
      1 November 2018 @ 17:31
      appreciate that thank you.
  • RO
    Robert O.
    30 October 2018 @ 15:22
    Wait for state taxing authorities to start increasing sales taxes of cannabis products to cover health care and emergency services. News reports of increasing traffic events in states with access to cannabis products are beginning to show up.
  • p5
    peel 5.
    30 October 2018 @ 03:19
    we cant stop you dreaming.
  • RP
    Ryan P.
    30 October 2018 @ 02:50
    Well that's the nature of stock picking, poor timing today. I agree with his thesis on CGC over the next 5-10 years and this dip should be bought up very quickly.
  • MK
    Mike K.
    30 October 2018 @ 02:33
    I'm looking at an entry just at the lows tomorrow (after that 14% negative day), 30th Oct. The setup has a great risk reward, with a clear stop point too. ...I like TG, so hopefully this post will age a bit better :)
    • NP
      Nick P.
      30 October 2018 @ 19:42
      CGC needs to hold 30-31 or look out below. If we get another big down day and a test may be imminent. Sitting on my hands.
  • TS
    T S.
    30 October 2018 @ 01:27
    Did he get stopped out on CGC? His stop was 35.88 and you saw what it did today.
  • DD
    Derek D.
    29 October 2018 @ 22:02
    This is lazy research
    • LM
      Lawrence M.
      30 October 2018 @ 23:35
      Above is lazy criticism. In my view, for the most part, RV contributors have done a great job. Don't get why you would just blast Tony without any reasoning/commentary to your view (there's a thumb down for that). He stuck his neck out, there was a sell off, that's it.
    • DY
      Dmytro Y.
      31 October 2018 @ 05:58
      Well I like hearing from Tony but this same Tony was bullish FCX right before stock tanked and he suggested to sell Gold at about usd 1200 and Gold spiked to 1240... so track records are somewhat questionable :)) though I like to listen to his ideas...
  • DS
    David S.
    29 October 2018 @ 19:41
    Is there any restriction on non-Canadians buying and using cannabis in Canada? DLS
    • MC
      Minum C.
      29 October 2018 @ 22:50
      According to Canada's Cannabis Act, it is legal for a Canadian to "share up to 30 grams of legal cannabis with other adults". So if you're an adult and you're in Canada, find a Canadian friend and you're good to go (maybe buy them a beer or something).
    • NF
      N. F.
      30 October 2018 @ 12:22
      Why would there be a restriction? Cannabis is legal in Canada. If you're of legal age and in Canada you can buy and use cannabis.
    • DS
      David S.
      30 October 2018 @ 21:35
      Thanks. It is reasonable to believe that anyone can buy. Just wanted to know how the law will be enforced. It certainly will make a difference in cannabis sales. DLS
  • NF
    N. F.
    29 October 2018 @ 19:04
    Before the open I upvoted this, now that CGC is down roughly 14% and has smashed through support I'm thinking that was a tad hasty.
  • WB
    Wes B.
    29 October 2018 @ 18:51
    This didn't age well and it was released only minutes ago
  • AS
    Alan S.
    29 October 2018 @ 18:18
    It is worth noting that Canadians are permitted to grow four pot plants per residence. So, lets say you live in the largest province (Ontario), and live mid range in terms of the growing season; you will be able to grow four plants each seven to eight feet tall (my neighbours did it this past summer). The assumption that everyone in Canada will be buying pot from producers is not a built-in given. If you could grow a vodka tree, would you go to the liquor store?
    • NF
      N. F.
      29 October 2018 @ 19:00
      What percentage of people brew all their own beer and wine? My guess is a small percentage, and it will be even smaller for weed.
    • MT
      Mr T.
      29 October 2018 @ 20:30
      Pretty poor argument lol, I grow Basil and many other plants, I still buy loads from supermarket, why? Faster, more, when I WANT IT
    • NF
      N. F.
      29 October 2018 @ 20:59
      Across the country renters are being prohibited from growing or smoking pot in their rental units. The parallel with basil is the weak argument.
    • p5
      peel 5.
      30 October 2018 @ 03:21
      also the black market is big. they will undercut the prices of these companies
  • DB
    Douglas B.
    29 October 2018 @ 17:01
    Damn...i got stopped out 😜😂. J/K