In this article, we discuss the 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill.
Three lawmakers from the Democratic Party in the United States on July 14 unveiled an ambitious draft bill that would legalize cannabis across the United States, removing it from the list of controlled substances. If the bill is passed, the Drug Enforcement Authority would cease to have control over the drug that would instead fall under the domain of the US Food and Drug Administration. Marijuana stocks have been soaring since the bill was introduced, a final draft of which is expected to be submitted before legislators in September.
Some of the stocks that stand to benefit from the bill include Tilray, Inc. (NASDAQ: TLRY), GrowGeneration Corp. (NASDAQ: GRWG), and Innovative Industrial Properties, Inc. (NYSE: IIPR), among others. As part of the bill, the US government is expected to allow states to control the distribution, possession, and production of cannabis. States that chose not to legalize cannabis will be allowed to block entry to the drug into the state, but not to stop shipments from within the state to other regions in the country where it is legal.
However, in the days since the bill was introduced, Chuck Schumer, the Senate Majority Leader who introduced it, has come forward and said that it does not have enough votes to pass. This uncertainty has hit marijuana stocks, with top executives in the industry, such as Canopy Growth CEO David Klein, expressing frustration over delays in the process but affirming they expected the legalization of cannabis within the next 24 months. Klein said the bill was the beginning on the path to cannabis legalization.
It remains to be seen how the industry reacts to new developments over the fate of marijuana in political power circles. The new bill has plenty that will cause fierce debate, including proposals to expunge criminal records related to marijuana possession, a new tax on marijuana products, and removal of immigration-related consequences linked to marijuana. The bill will have to be approved by both the House of Representatives and the Senate, and signed by President Joe Biden, before it can be formally adopted into law.
Marijuana and cannabis products have transformed the drug world. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. These were ranked keeping in mind the number of mentions on Reddit, hedge fund sentiment, and basic business fundamentals of each.
Marijuana Stocks Reddit Is Buying Amid New Federal Marijuana Legalization Bill
10. AdvisorShares Pure US Cannabis ETF (NYSE: MSOS)
Number of Hedge Fund Holders: N/A
AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) is placed tenth on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. It is an exchange traded fund that invests at least 80% of net assets into firms that derive at least 50% of their net revenue from the marijuana business in the United States. It has $950 million worth of net assets under management. It has year-to-date daily total return of more than 3%.
Some of the top holdings in the AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) portfolio include Green Thumb Industries Swap Pay, Curaleaf Holdings Inc Swap Pay, and Trulieve Cannabis Swap Pay, among others. The three together represent over 18% of the total assets under management of the fund.
Just like Tilray, Inc. (NASDAQ: TLRY), GrowGeneration Corp. (NASDAQ: GRWG), and Innovative Industrial Properties, Inc. (NYSE: IIPR), AdvisorShares Pure US Cannabis ETF (NYSE: MSOS) is one of the marijuana stocks Reddit is buying amid new federal marijuana legalization bill.
9. Sundial Growers Inc. (NASDAQ: SNDL)
Number of Hedge Fund Holders: 7
Sundial Growers Inc. (NASDAQ: SNDL) markets cannabis products for adult-use. The firm is based in Canada. It is ranked ninth on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. The company’s shares have returned 71% to investors over the past six months. On July 7, the firm had revealed that it was expanding a previously disclosed partnership with SunStream Bancorp for exposure to cannabis investments, pledging to $350 million for the effort.
On May 5, Sundial Growers Inc. (NASDAQ: SNDL) announced that it would purchase Inner Spirit, a cannabis firm, in a deal worth $131 million. The share price of the company jumped close to 3.5% after the news was made public. On May 13, investment advisory Canaccord Genuity upgraded the stock to Hold from Sell. The price target was also increased to 70 cents from 65 cents.
At the end of the first quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $18 million in Sundial Growers Inc. (NASDAQ: SNDL), up from 2 the preceding quarter worth $2 million.
Alongside Tilray, Inc. (NASDAQ: TLRY), GrowGeneration Corp. (NASDAQ: GRWG), and Innovative Industrial Properties, Inc. (NYSE: IIPR), Sundial Growers Inc. (NASDAQ: SNDL) is one of the marijuana stocks Reddit is buying amid new federal marijuana legalization bill
8. Village Farms International, Inc. (NASDAQ: VFF)
Number of Hedge Fund Holders: 8
Village Farms International, Inc. (NASDAQ: VFF) stock has returned 80% to investors over the past twelve months. It is placed eighth on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. The company operates from Canada and sells different kinds of plant-based products. In earnings results for the first quarter, posted on May 10, the company reported a quarterly revenue of over $52 million, up 69% year-on-year and beating market estimates by close to $1 million.
On May 13, investment advisory Stifel maintained a Buy rating on Village Farms International, Inc. (NASDAQ: VFF) stock but lowered the price target to C$22 from C$23. Andrew Partheniou, an analyst at the firm, issued the ratings update. The stock has unique advantages when compared to others in the field, with strong leadership, decades of growth experience, extensive retail relationships, and regulatory protections working in its favor. The firm can expect to grow revenue for years to come as the marijuana industry expands.
At the end of the first quarter of 2021, 8 hedge funds in the database of Insider Monkey held stakes worth $35 million in Village Farms International, Inc. (NASDAQ: VFF), up from 6 in the preceding quarter worth $29 million.
Tilray, Inc. (NASDAQ: TLRY), GrowGeneration Corp. (NASDAQ: GRWG), and Innovative Industrial Properties, Inc. (NYSE: IIPR) are popular marijuana stocks on Reddit forums, alongside Village Farms International, Inc. (NASDAQ: VFF).
7. Cronos Group Inc. (NASDAQ: CRON)
Number of Hedge Fund Holders: 10
Cronos Group Inc. (NASDAQ: CRON) is ranked seventh on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. The company’s shares have offered investors returns exceeding 6% over the course of the past twelve months. The firm is run from Toronto and markets different kinds of cannabis-based products. The firm posted earrings for the first three months of 2021 on May 7, reporting a quarterly revenue of $12.6 million, up close to 50% year-on-year.
On June 14, Cronos Group Inc. (NASDAQ: CRON) announced that it had purchased a 10% stake in PharmaCann, one of the largest cannabis firms in the US, worth $110 million. The share price of the company jumped 2.5% after the announcement.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Cronos Group Inc. (NASDAQ: CRON) with 1.5 million shares worth more than $14 million.
Cronos Group Inc. (NASDAQ: CRON) is one of the marijuana stocks Reddit is buying amid new federal marijuana legalization bill, just like Tilray, Inc. (NASDAQ: TLRY), GrowGeneration Corp. (NASDAQ: GRWG), and Innovative Industrial Properties, Inc. (NYSE: IIPR).
6. Aurora Cannabis Inc. (NASDAQ: ACB)
Number of Hedge Fund Holders: 12
Aurora Cannabis Inc. (NASDAQ: ACB) is a firm that makes and sells medical cannabis products. It is placed sixth on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. The firm has a market cap of over $1.4 billion and posted more than $200 million in annual revenue last year. The company recently missed market estimates for revenue when it posted earnings results for the third fiscal quarter. On May 20, it filed a $300 million at-the-money offering.
On July 15, Aurora Cannabis Inc. (NASDAQ: ACB) announced that it had delivered nearly C$8 million worth of cannabis to Israel, affirming that it was a record shipment to the Middle Eastern country and a significant step in advancing the international appeal of the firm.
At the end of the first quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $488 million in Aurora Cannabis Inc. (NASDAQ: ACB), up from 10 the preceding quarter worth $146 million.
Tilray, Inc. (NASDAQ: TLRY), GrowGeneration Corp. (NASDAQ: GRWG), and Innovative Industrial Properties, Inc. (NYSE: IIPR) are some of the marijuana stocks Reddit is buying amid new federal marijuana legalization bill, along with Aurora Cannabis Inc. (NASDAQ: ACB).
5. Canopy Growth Corporation (NASDAQ: CGC)
Number of Hedge Fund Holders: 12
Canopy Growth Corporation (NASDAQ: CGC) is a Canadian firm that makes and sells cannabis for recreational and medicinal purposes. It is ranked fifth on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. The company’s shares have returned 9% to investors over the past year. On July 16, David Klein, the CEO of the firm, said that he remained upbeat about the legalization of marijuana in the United States despite recent setbacks in this regard.
On June 2, investment advisory Eight Capital upgraded Canopy Growth Corporation (NASDAQ: CGC) stock to Neutral from Sell but reduced the price target to C$29 from C$34, noting that the shares of the firm appeared to be fully valued.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Canopy Growth Corporation (NASDAQ: CGC) with 1.3 million shares worth more than $44 million.
4. Innovative Industrial Properties, Inc. (NYSE: IIPR)
Number of Hedge Fund Holders: 13
Innovative Industrial Properties, Inc. (NYSE: IIPR) is placed fourth on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. The stock has returned 122% to investors over the past twelve months. The firm is based in California and primarily manages cannabis facilities. In earnings results for the first quarter, posted on May 5, the firm reported a quarterly revenue of close to $43 million, beating market estimates by over $1.2 million. The company has a market cap of over $5 billion.
On July 2, investment advisory Wolfe Research started coverage of Innovative Industrial Properties, Inc. (NYSE: IIPR) stock with an Outperform rating and a price target of $249, highlighting that the firm had a long time to produce outsized growth.
At the end of the first quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $192 million in Innovative Industrial Properties, Inc. (NYSE: IIPR), down from 23 in the preceding quarter worth $317 million.
3. Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
Number of Hedge Fund Holders: 14
Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) is an American firm that manufactures and distributes different types of agricultural supplies. It is ranked third on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. On June 17, the share price of the firm jumped more than 3.2% after it announced that it would be purchasing Aurora Innovations, a hydroponic products firm, in a deal worth $161 million. The transaction is expected to be complete by the end of this month.
On June 23, investment advisory UBS initiated coverage on Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) stock with a Buy rating and a price target of $66, backing the firm to post positive numbers in the second half of the year.
At the end of the first quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $84 million in Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM), down from 19 in the preceding quarter worth $117 million.
2. GrowGeneration Corp. (NASDAQ: GRWG)
Number of Hedge Fund Holders: 18
GrowGeneration Corp. (NASDAQ: GRWG) stock has offered investors returns exceeding 809% over the course of the past year. It is placed second on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. The company makes and sells organic hydroponic products. It is based in Colorado. It has a market cap of over $2.2 billion and posted more than $193 million in annual revenue last year. The company is expected to benefit from the legalisation of cannabis in the US.
On May 14, investment advisory Alliance Global Partners upgraded GrowGeneration Corp. (NASDAQ: GRWG) stock to Buy from Neutral, raising the price target to $55 from $50 after the firm reported another strong quarter with solid growth in sales.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $127 million in GrowGeneration Corp. (NASDAQ: GRWG), the same as in the previous quarter worth $142 million.
1. Tilray, Inc. (NASDAQ: TLRY)
Number of Hedge Fund Holders: 21
Tilray, Inc. (NASDAQ: TLRY) is ranked first on our list of 10 marijuana stocks Reddit is buying amid new federal marijuana legalization bill. The company’s shares have offered investors returns exceeding 89% over the course of the past twelve months. The firm operates as a pharma company focused on cannabis-related products. It was founded in 2013. The firm is expanding internationally, with a German subsidiary of the company completing the first marijunana harvest for distribution on July 7.
On July 13, Tilray, Inc. (NASDAQ: TLRY) CEO Irwin Simon said that he expected the United States to legalize cannabis at a federal level within the next two years. Talking to news platform CNBC, Simon added that more than 90% of voters wanted the government to legalise cannabis.
At the end of the first quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $257 million in Tilray, Inc. (NASDAQ: TLRY), up from 17 in the previous quarter worth $47 million.
You can also take a peek at 13 Best Hemp Stocks to Buy Now and Billionaire Dan Loeb’s Top 10 Stock Picks.
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Disclose. None. 10 Marijuana Stocks Reddit is Buying Amid New Federal Marijuana Legalization Bill is originally published on Insider Monkey.
