[james4beach]

This Horizons ETF (HMMJ) launched yesterday and is the first marijuana ETF in the world! It holds mostly Canadian marijuana related stocks, capped at 10% each. Thoughts?

The fact it's a new sector is intriguing, I'll admit, though all the stocks in it are very high risk. I'm tempted to buy 100 shares as a lottery ticket, purely as a ponzi/bubble play in case tons of money pours into the sector and sparks a bubble.

 

[james4beach]

By the way, the fund is currently tiny, $26 million. I'd watch to see whether this attracts new capital. If it does, money pouring into relatively small stocks like these could drive up their prices tremendously.

 

[james4beach]

The fund is up to $38 million now, so it went from $10 million to $38 million of assets in just a couple days of trading.

Like I said... if tons of money start flowing into this sector, it could be a real crazy bubble. I'm thinking of playing this as a lottery ticket, just in case a billion $ of greed flows in from around the world and creates an enormous bubble.

 

[james4beach]

I haven't seen any ads for HMMJ.

 

[james4beach]

I also like the idea of doing this with an ETF. I would not buy the individual stocks.

This is somewhat like a pharma stock ETF and it's probably going to be damned volatile. If the bubble circumstances are right, it could run up 3x or 6x in value and share price. But join the party late and it could probably tank 90%.

I think the potential upside is greater than the downside. I could see $100 in HMMJ turning into $10 (if bubble bursts) or into $600 (bubble continues).

 

[james4beach]

The main thing I'm going to watch is the rate of inflows (new capital) into the ETF.

The current $38 million AUM is very impressive for a brand new Canadian ETF. Consider that iShares has 14 funds with less AUM and some of them have been around for nine years!

 

[james4beach]

One million shares traded today. This is unheard of for a new Canadian ETF.

 

[james4beach]

Given the volume on this today, I suspect that Net Assets have swelled to over $50 million at this point. We'll see once the web site is updated. This ETF is looking like a huge win for Horizon.

 

[james4beach]

Given the volume on this today, I suspect that Net Assets have swelled to over $50 million at this point. We'll see once the web site is updated. This ETF is looking like a huge win for Horizon.

It's now at $62 million assets. This four day old ETF is now larger than 26 iShares ETFs, including: XID (India Index), XIT (the 16 year old tech index), XCH (China index)

Isn't that crazy? XIT, the tech sector ETF that was created in 2001, is smaller than the four day old HMMJ

 

[james4beach]

Please don't misunderstand my excitement. These are crazy, unjustifiable valuations and insanity across the board. But if you spark that bubble psychology, the thing can really run away... I'm just saying there may be money to be made speculating on the bubble. I wouldn't invest more than 0.5% my portfolio in the sector.

 

[james4beach]

I would approach this acknowledging the possibility of a 90% loss.

The approach I am using is watching the fund NAV and looking at the fund flows. If it establishes a pattern that makes me think that money is steadily flowing in, then I will join with the idea of riding the bubble psychology. If on the other hand there is the initial interest but than NAV stops growing (showing that interest has exhausted) I may not touch it.

 

[james4beach]

I spend lots of time in Oregon & Washington states, where weed is "legal". But the fact it's still a federal crime makes a big difference. People are hesitant to buy marijuana at shops because they have to show their IDs and will be recorded. For example I would never buy weed even in these legal jurisdictions, because I could still get in federal trouble.

Truly legal marijuana in Canada is going to be much different than state-by-state legality in the US

 

[james4beach]

I have no position in this ETF but what a wild looking ride!
http://stockcharts.com/h-sc/ui?s=HMMJ.TO&p=D&yr=0&mn=0&dy=15&id=p28521255985

First up 20%, then down 15%... wow. I'm waiting to see how it shakes out.

 

[james4beach]

Happy 4/20 everyone!

 

[james4beach]

HMMJ is now closed below where it closed on its first day of trading.

That's not what I see in the chart data. First day closed at 10.25 ish, today closed at 10.44
http://stockcharts.com/h-sc/ui?s=HMMJ.TO&p=D&yr=0&mn=0&dy=15&id=p43473877529

Aphria dumped $75M of shares last week. That's nearly 60% of the entire NAV of HMMJ in one day by one company - it certainly can't soak up the supply of stock.

Yup, that's a lot of share issuance. Hard to tell at this point if there's enough investor demand to make this work. Managing a bubble is a delicate business... the MJ companies would be wise to not get too greedy with equity issuance, because they should want equity prices to keep rising (this trend is what fuels the bubble).

If the companies get too greedy and try to issue too many shares, they will suppress price moves in the sector and there will be no bubble momentum.

I still have no position in HMMJ and continue to watch it, assessing whether I think there's enough upward pressure/inflows for a good run-away bubble.

 

[james4beach]

The size of the fund has stagnated around $120 million. New money is not rushing in like I had hoped. I was hoping that a spark of greed and convenience with the ETF would start a runaway bubble price increase, but it's not happening at the moment.

I have no position.

 

[james4beach]

This is doing terribly. Still no bubble enthusiasm. No runaway enthusiasm and inflows.

 

[james4beach]

I've been sampling and recording the fund size. Here's a graph since the fund's creation. There's an interesting recent development, assets under management is hitting new all time highs (currently around $180 million). Graph below:

 

[james4beach]

I agree and think it's in that early start up phase. Very high risk, and how can you reliably choose the winners and losers? I particularly like the sector index here because you will benefit from the sector growing from nothing to more-than-nothing. The same can't be said for mature sectors like banks or energy.

 

[james4beach]

HMMJ has now exceeded the TSX return since its inception.

I have no position, but that's only because US tax issues prevent me from holding Canadian ETFs.