Cannabis Stocks Attracting Attention from Insider Investors

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In a recent edition of the New Cannabis Ventures weekly newsletter, it was highlighted that insiders are showing interest in buying cannabis stocks despite the overall bearish trend in the market. While cannabis stocks have been down this year, there is evidence that insiders see the valuations as low and are taking advantage of that by buying shares. This includes companies like Green Thumb Industries and SHF Holdings, as well as individuals like Jason Wild, the Executive Chairman of TerrAscend. Although this buying activity is encouraging, it remains to be seen whether it will be enough to change the cautious view on cannabis stocks.

Insiders Are Buying Cannabis Stocks

Introduction

Hey there! Have you been wondering what’s been going on with cannabis stocks lately? Well, let me fill you in on some interesting news. Despite the recent bull market for stocks, cannabis stocks have been underperforming. In fact, they are down 13.9% this year, as measured by the NCV Global Cannabis Stock Index. But here’s the twist – insiders are starting to buy these stocks, indicating that they see low valuations as a buying opportunity. In this article, we’ll explore why cannabis stocks are underperforming, why insiders are buying, and what this means for the market.

Cannabis Stocks Are Underperforming in Bull Market

You might expect that cannabis stocks would be thriving in a bull market, but the reality is quite the opposite. While other stocks are experiencing growth and gains, cannabis stocks have been struggling to keep up. This year, they have seen a decline of 13.9% according to the NCV Global Cannabis Stock Index. This underperformance has left many investors scratching their heads and wondering what’s going on. It’s clear that something is amiss, but what could it be?

Insiders Are Buying Cannabis Stocks
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Low Trading Volumes Indicate Lack of Interest

One of the telling signs that something is off with cannabis stocks is the low trading volumes. Despite the recent rally in the stock market, there hasn’t been much interest in trading cannabis stocks. This lack of interest could be attributed to a variety of factors, such as regulatory uncertainties and investor skepticism. Whatever the reason may be, it’s clear that the market has been relatively quiet when it comes to cannabis stocks.

Insiders See Low Valuations as Buying Opportunity

While many investors may be hesitant to buy cannabis stocks, insiders are taking a different approach. They see the current low valuations as a buying opportunity. Insiders, such as executives and directors, have been buying up cannabis stocks, indicating that they believe in the long-term potential of the industry. This buying activity is a positive sign and could signal a turning point for the market.

Examples of Companies Buying Their Own Stock

It’s not every day that you see companies buying their own stock, especially in the cannabis sector. However, there have been some notable examples recently. Green Thumb Industries, a leading cannabis company, announced a potential 10 million share repurchase and followed through by buying 2.5 million shares at $9.96. This demonstrates their confidence in the industry and their belief that the stock is undervalued.

British American Tobacco’s Attempted Purchase of Organigram

British American Tobacco, a major tobacco company, recently attempted to purchase Organigram, a cannabis company. While the deal didn’t go through, it’s worth noting as it highlights the interest that large corporations have in the cannabis industry. British American Tobacco planned to invest C$125 million in three tranches at C$3.22, a much lower price than its initial investment but higher than the current price. This failed acquisition attempt still showcases the potential that insiders see in the market.

Buying Activity in SHF Holdings

Insiders Are Buying Cannabis Stocks

SHF Holdings, the parent company of Safe Harbor Financial, has seen significant buying activity by several different executives and directors. This buying frenzy has driven the stock price up, indicating that insiders believe in the potential of the company. However, investors should be cautious as the stock may not be the bargain it once was, given its current valuation.

Insiders Buying TerrAscend

TerrAscend, a cannabis company, has seen a 38% rally in its stock price this year. What’s interesting is that insiders have been buying shares throughout this period. Most recently, JW Asset Management added 10K shares to its holdings. This buying activity suggests that insiders are confident in the future prospects of the company.

Uncertainty Surrounding 280E

One of the reasons why investors may be wary of cannabis stocks is the uncertainty surrounding 280E. This tax code provision prevents cannabis businesses from deducting ordinary business expenses, resulting in higher tax burdens. The potential removal of 280E would have significant benefits for the industry, but the timing and likelihood of such a change remain unclear. This uncertainty could be contributing to the cautious outlook on cannabis stocks.

Insiders Are Buying Cannabis Stocks

Cautious Outlook Despite Insider Buying

While the insider buying activity is encouraging, it’s important to approach the market with caution. There are still many unknowns, such as the fate of 280E and the overall regulatory environment. These uncertainties could impact the future performance of cannabis stocks. So, while insiders may see value in buying at current prices, it’s essential to consider these factors before making investment decisions.

In conclusion, cannabis stocks may be underperforming in the current bull market, but insiders are starting to take notice. Their buying activity suggests that they see low valuations as an opportunity for long-term growth. However, it’s crucial to approach the market with caution, considering the uncertainties surrounding regulations and taxes. Overall, the insider buying is a positive sign for the industry, but it’s important to weigh all the factors before making investment decisions.

Thanks for reading, and happy investing!

HIGH!USA

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