A Canadian Pot ETF Is Missing the Biggest Company Out There
(Bloomberg) -- The biggest pot company in Canada isn’t included in an exchange-traded fund that tracks the nation’s weed industry. Investors took note.
As Tilray Inc. took one of the wildest rides in the nascent sector’s history Wednesday, investors pulled the most cash since January from Horizons Marijuana Life Sciences ETF, or HMMJ. The Canadian-listed fund holds pot stocks that trade in the North American Marijuana Index -- which doesn’t include Nanaimo, British Columbia-based Tilray.
“We do a quarterly re-balance based on timing and Tilray obviously jumped the shark there and so we’re quickly trying to get it into that index,” said Jordan Gerber, chief financial officer of MJIC Solutions Inc., which runs the index.
Investors yanked $13.4 million from HMMJ and traded $128 million worth of its shares Wednesday, the largest day by volume since January and more than five times the average daily turnover for the past year. There is now a two-week negative correlation between the daily change in Tilray and HMMJ.
The biggest U.S. listed marijuana-related ETF, the ETFMG Alternative Harvest ETF, or MJ, saw a surge in volume Wednesday, with trading of $223 million. That’s close to 14 times the average daily turnover for the past year. Tilray is MJ’s third largest holding, making up over 9.2 percent of the fund’s weighting. Flow data for the ETF isn’t available because the figures are delayed by one day. MJ rose more than 4 percent Thursday.
Even without Tilray, the allure of these funds is clear. Pot-stock mania has been a boon for the companies in HMMJ, with 13 of the 49 up at least 70 percent this year. Canada’s premier cannabis ETF had taken in $295 million in inflows since the start of 2018 as its price soared 32 percent.
Namaste Technologies Inc. announced its inclusion in HMMJ’s holdings Thursday, calling it a “significant milestone” as it tries to establish itself as a leader in cannabis-focused e-commerce technology, according to a press release.
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