Horizons ETFs Archives - Green Market Report

Adam JacksonJuly 27, 2022
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4min150

Canadian-based Horizons ETFs Management Inc. is beefing up its cannabis index funds for investors, with consolidation moves set to kick in a week from now.

The news comes as marijuana companies continue to post declining profits amid a tightening economic landscape that finds most asset classes and equity indices in the negative.

Horizons’ posted a consolidation ratio of 1:4 for their U.S. marijuana index ETF (HMUS) and a 1:2 ratio for its BetaPro Marijuana Companies 2x Daily Bull ETF (HMJU) – which tracks the North American MOC Marijuana Index (NTR). Their Marijuana Life Sciences Index ETF (HMMJ) saw a 1:2 ratio. The consolidations will kick in after the Toronto Stock Exchange and the NEO Stock Exchange close on Friday.

Those active in the industry have signaled cooling demand for marijuana stocks. Investors and analysts took bearish positions on the “second-worst performing asset class by performance” in a recent third-quarter sentiment survey conducted by Horizons ETFs.

The North American Marijuana Index fell 42.54% in the second quarter this year, and outlooks among analysts surveyed remain relatively flat, with advisors fortifying their bearish stance. The survey added two percentage points of negative sentiment for 44% bearishness. Investors’ negative opinion remained unchanged at 37% bearishness.

At the same time, their North American Psychedelics Index ETF (PSYK) saw a 1:4 consolidation ratio. 45% of analysts surveyed are bearish about the asset class.

Morgan Paxhia, co-founder and managing partner of Poseidon, noted in an interview with The Green Market Report that many ETFs launched products at a time when markets were “a lot more robust.” He attributed the drop to shaved sources of capital brought by stalled banking legislation as well as the cyclical nature of the economy.

“They probably saw overlap within their strategy where it wasn’t really making much sense,” he said. “I think it’s a good thing. Ultimately, this is kind of like a natural process, and we’re seeing this on the private side as well.”

As interest wanes with stock prices declining, firms will see fewer opportunities in a bear market.

“The speed at which they can move is is probably going to catch some people off guard,” he said, adding that ETFs are “an incredible vehicle for capturing those movements, because you’re just buying one ETF and getting a whole basket.”

“They can do very well when this market does finally turn,” he said.


Debra BorchardtJune 20, 2022
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10min250

Just about anyone in the cannabis industry will tell you how hard it is. Legalization issues, banking constraints, and a preponderance of OTC stocks make it even harder to be a cannabis ETF (exchange traded fund). Recently the sponsor of the Cannabis Growth ETF (BUDX), Foothill Capital Management, chose to close the fund, roughly six months after it converted it from a mutual fund into an ETF with $3.9 million in assets under management. April 25 was expected to be its last day of trading.

BUDX Shuts Down

There is so much interest in trading cannabis stocks that an ETF seems like an easy sell. When BUDX launched as a marijuana ETF, it was entering a very crowded market, with several existing ETFs tracking cannabis representing billions of dollars in assets. The largest is currently the $1 billion AdvisorShares Pure US Cannabis ETF (MSOS), which launched in 2020 and usurped the original ETFMG Alternative Harvest ETF (MJ) as the largest U.S.-listed marijuana ETF. MSOS has pulled in nearly $760 million over the last 12 months, while MJ lost more than $145 million. 

The backdrop to the cannabis sector along with many others is the overall bear market. Prices for marijuana stocks overall have plunged. For the past year, the Horizons US Marijuana Index ETF and the US Marijuana Companies Index ETF are both down 64%. The Horizons Marijuana Life Sciences ETF has dropped 61% for the past year and the North American Marijuana Index has fallen by 64%. It’s pretty hard to convince new money to invest in an ETF that has experienced a huge valuation loss. 

Matt Hawkins, founder and managing principal of Entourage Effect Capital said, “Investors in any sector are generally more skittish in a bear market. This is especially true for retail investors, a group that the public cannabis industry heavily relies upon. As primarily private-side investors in the cannabis industry, we feel that the depressed valuations create a tremendous investment climate for this emerging market.”

Back in September 2021, Foothill Managing Director Max Banhazl told ETF.com that the mutual fund had trouble getting shelf space on securities broker platforms, and it may have run into the same problem after it adopted the ETF wrapper. Hawkins added, “It is definitely challenging to have so many stocks on the OTC instead of the NASDAQ and NYSE, and this is something we expect to continue for the foreseeable future. When differentiating cannabis ETFs, it is our opinion that the larger multi-state operators (MSO’s) and sizable single-state operators (SSO’s) in the larger state markets have an advantage over other public companies on the plant-touching side.”

Cannabis ETNs Close

BUDX is the first ETF converted from a mutual fund into an ETF to close, but it wasn’t the only cannabis product to shut down. At the end of December, the Bank of Montreal closed out two of its cannabis Exchange Traded Note products. Both the MicroSectors Cannabis ETN that used the symbol MJJ and the MicroSectors Cannabis 2X Leveraged ETN using the symbol MJO. 

In general, it hasn’t been great for ETFs overall. The total number of announced and completed closures of all types of ETF’s for the year comes to 33. A total of 16 ETFs have closed so far this year compared with 19 last year. However, the planned closures of BUDX, eight funds issued by ProShares and five funds issued by Transamerica that are set to be complete by early May boost the total well ahead of last year’s comparable number for the same period

New Cannabis ETFs

While some are finding the space, difficult, others are continuing to jump in. Roundhill Investments launched the Roundhill Cannabis ETF (WEED) on April 20. The fund invests in various cannabis-related companies and says it may utilize total return swaps to provide exposure to U.S.-focused cannabis companies. The Advisor is waiving 0.16% of its management fee for the Fund until at least April 30, 2023. The NAV though has plunged from its initial price of $15.32 to lately closing at $11.68. It currently has $1.8 million in assets under management. Its gross expense ratio is 0.75% and it is listed on the Cboe Exchange. 

In November, AdvisorShares rolled out its third ETF to focus on marijuana. The AdvisorShares Poseidon Dynamic Cannabis ETF (PSDN) joins the AdvisorShares Pure US Cannabis ETF (MSOS)—the largest marijuana ETF trading in the U.S. with $1.24 billion in assets under management—and the $258 million AdvisorShares Pure Cannabis ETF (YOLO)PSDN comes with an expense ratio of 0.92% and lists on the NYSE Arca.

The fund, like all AdvisorShares offerings, is actively managed, with Poseidon Investment Management listed as its subadvisor. Poseidon has been involved in managing cannabis assets since 2013 via hedge funds. What sets PSDN apart, in particular, is its ability to implement leverage on select securities in its portfolio. The ETF, according to its prospectus, can apply up to 1.5x leverage to individual securities in the fund.

Tyler Grief, Portfolio Manager at Poseidon Asset Management seems to think that smart money sees a bear market as a buy signal. “Whenever a sector is underperforming, like cannabis, it is more difficult to attract investors. However, those investors which do have the foresight to invest in the tougher times generally outperform over the longer term. We have experienced increasing interest from investors, especially institutional, as the sector has taken a beating. Many of them see opportunity and are waiting for the right time to pull the trigger.”

 Poseidon though faces the same structural stock issues as the other ETF’s. Grief added, “The main disadvantage is that institutional investors are less likely to invest in OTC stocks. This lack of institutional investment impacts liquidity and influences valuations. We are optimistic that up-listing to NYSE and NASDAQ of U.S. cannabis stocks will happen in the future. Canadian cannabis companies are allowed to list on the NYSE and NASDAQ, yet US cannabis companies are not. This should obviously change and it is up to Congress to do so.”

 


StaffApril 3, 2020
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12min50

Horizons ETFs Management Inc. has completed the quarterly rebalance of the constituent holdings of the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) and the Horizons US Marijuana Index ETF (NEO:HMUS).

This quarter, four companies were removed from HMMJ’s portfolio:

Deletions

Company Name

Ticker

Exchange

Abacus Health Products Inc.

ABCS

Canadian Securities Exchange

Agraflora Organics International Inc.

AGRA

Canadian Securities Exchange

Flower One Holdings Inc.

FONE

Canadian Securities Exchange

CBDMD Inc.

YCBD

New York Stock Exchange

Performance Update as of March 31, 2020,

1
Month

3
Month

6
Months

YTD

1
Year

Annualized
Since Inception**

HMMJ

-15.28%

-28.36%

-45.68%

-28.36%

-69.05%

-9.55%

NAMMAR Index

-17.27%

-32.10%

-43.98%

-32.10%

-69.91%

-15.89%

TX60AR Index

-15.30%

-18.48%

-16.49%

-18.48%

-11.68%

-0.79%

HMUS REBALANCE

Launched in April 2019, HMUS is the world’s first U.S.-focused marijuana index ETF. HMUS seeks to replicate, to the extent possible, the performance of the US Marijuana Companies Index, net of expenses. This index is designed to provide exposure to the performance of a basket of publicly-listed companies having significant business activities in, or significant exposure to, the marijuana or hemp industries in the United States. Constituents of this index are selected from Canadian and U.S. exchanges. While some securities may be listed on major North American exchanges, the majority of the securities currently trade on North American exchanges that include but are not limited to the Canadian Securities Exchange and the Aequitas NEO Exchange.

This rebalance resulted in the removal of six companies from the portfolio:

Deletions

Company Name

Ticker

Exchange

Abacus Health Products Inc.

ABCS

Canadian Securities Exchange

Body & Mind Inc.

BAMM

Canadian Securities Exchange

Ignite International Brands

BILZ

Canadian Securities Exchange

Green Growth Brands Inc.

GGB

Canadian Securities Exchange

Plus Products Inc.

PLUS

Canadian Securities Exchange

CBDMD Inc.

YCBD

New York Stock Exchange


William SumnerMay 22, 2019
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5min30

It’s time for your Daily Hit of cannabis financial news for May 22, 2019.

On the Site

Green Market Report Stock Index Releases 2019 Q1 Summary Report

The Green Market Report (GMR), the cannabis industry’s most trusted source for credible in-depth financial and economic reporting, today released its 2019 Cannabis Company Index Q1 Summary Report. The report can be downloaded at GreenMarketReport.com/reports.

A Simple Guide To Making An Investment In Marijuana Stocks

As well as advances in the treatment of pain relief and other medical symptoms, and the cultural aspects which surround recreational use, there is now a growing investment industry around marijuana. In fact, investing in marijuana stocks represents a great opportunity for even the greenest (pun intended) investor. Here are all the things that potential investors need to know.

Organigram Holdings

Due to investor demand, Organigram Holdings Inc. CEO Greg Engel decided to move the company’s exchange listing to the NASDAQ Marketplace. It is one of the few Canadian cannabis companies that the NASDAQ has allowed to list for trading. Engle and CFO Paolo De Luca spoke with Green Market Report on the day the company joined the NASDAQ.

In Other News

Horizons ETFs

Horizons ETFs Management Inc. announced the launch of the BetaPro Marijuana Companies 2x Daily Bull ETF (HMJU) and the BetaPro Marijuana Companies Inverse ETF (HMJI). HMJU will provide leverage exposure to the North American MOC Marijuana Index, while HMJI will provide inverse exposure. “HMJU and HMJI will be the fourth and fifth ETFs we offer that provide exposure to Marijuana equities.” said Steve Hawkins, President and CEO at Horizons ETFs. “HMJU and HMJI are higher-risk ETFs that will give Canadian marijuana equity investors the opportunity to potentially generate returns in both positive and negative markets in the Marijuana sector.”

Canopy Growth

Canopy Growth Corp. (TSX: Weed) (NYSE: CGC) announced it has finalized its acquisition of This Works, a skincare and well-being company with a customer base in 35 countries, in an all-cash transaction for C$73.8 million. Post-acquisition, This Works CEO, Dr. Anna Persaud, will continue to run business operations for the company. “As a leading wellness brand and a pioneer in sleep beauty products, we are passionate about the opportunity CBD offers beauty consumers,” said Persaud. “Canopy Growth will provide the expertise, research, scientific rigour and quality assurance that will allow This Works to drive the agenda in wellness beauty’s ever-evolving market.”

MPX International

MPX International Corporation (CSE: MPXI) (OTC: MPXOF) announced that it has acquired all of the outstanding shares of the Swiss CBD brand HolyWorld SA for C$13.38 million. Under the agreement, MPXI issued HolyWorld shareholders   25,252,830 common shares of the company at a price of C$0.53 per share. Roughly 80% of the issued shares will be placed in voluntary escrow and will be released pending the fulfillment of certain conditions. If the terms are not met by June 30, 2021, the shares will be released to MPXI for cancelation.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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