Overview: The ETFMG Alternative Harvest ETF (NYSE: MJ) tracks a market-cap-weighted index of global firms engaged in the legal cultivation, production, marketing or distribution of cannabis, cannabinoids or tobacco products.
- MJ is the first pot-focused ETF to trade in the U.S. The fund tracks an index of stocks across the globe that are engaged in the legal cultivation, production, marketing or distribution of cannabis products for either medical or nonmedical purposes.
- MJ also holds stocks of companies that trade or produce tobacco or tobacco products, or fertilizers, plant foods, pesticides or growing equipment for cannabis or tobacco. Besides, the fund can hold pharmaceutical companies that produce, market or distribute drug products that use cannabinoids.
- MJ can only hold companies that are engaged in legal activities and possess all necessary permits. At the time of launch, the fund did not include companies growing or distributing marijuana in the U.S. due to its continuing prohibition at the federal level.
- The index provider uses publicly available sources to identify companies that derive more than half their revenue from cannabis-related activities. MJ includes roughly 30 stocks, reconstituted and rebalanced quarterly.
- The expense ratio is on the high side for an index-based equity ETF. Before Feb. 9, 2018, the fund traded under the ticker MJX. Before Dec. 26, 2017, the fund was called the Tierra XP Latin America Real Estate ETF and tracked an index focused on Latin America, real estate companies. The ticker symbol was LARE.
Key and unique differentiating factor:
- First and only U.S. ETF to target the cannabis/marijuana industry
- Many other significant applications for cannabis and THC based medicines and treatments ranging from epilepsy to cancer treatment to non-opioid pain management
- Legal marijuana is approximately a $7B a year business in the US and rapidly growing as legalization spreads
Sectoral and geographical diversification:
Dividend history: ETFMG Alternative Harvest ETF declared a quarterly dividend on Wednesday, September 26th. Investors of record on Wednesday, September 26th will be given a dividend of $0.05 per share on Thursday, September 27th. This represents a $0.20 dividend on an annualized basis and a dividend yield of 0.59%.
Recent developments and price drivers:
- There is a plethora of evidence that the emerging cannabis industry is growing steadily and gaining legitimacy. Per research firm Euromonitor, the American market for legal marijuana products will reach $20 billion by 2020, up from $5.4 billion in 2015.
- MJ is the first and only pure-play US-listed ETF targeting the cannabis industry–holds 37 companies that are involved in legal cultivation, production, marketing or distribution of cannabis or related products.
- As per Delloite, the total cannabis market in Canada, including medical, illegal, and legal recreational products, is expected to generate up to $7.17 billion in sales in 2019—up to $4.34 billion of which will come from the legal recreational market. Medical cannabis is anticipated to generate an additional $0.77 billion to $1.79 billion in sales, with the illegal market bringing in a further $0.51 billion to $1.04 billion. Overall consumption through legal channels is expected to rise by up to 35 percent, as likely new consumers offset the proportion of current ones who elect not to transition to legal channels. What the cannabis spends overall is also expected to rise by up to 58 percent, owing primarily to the fact that prices for legal products will be higher.
Source: Deloitte analysis
The drivers as mentioned above are partially mitigated by:
- The possession and use of marijuana, even for medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value of the Fund’s investments. Use of marijuana is regulated by both the federal government and state governments, and state and federal laws regarding marijuana often conflict. Even in those states in which the use of marijuana has been legalized, its possession and use remain a violation of federal law.
- Companies involved in the marijuana industry are at the nascent stage, face intense competition, may have limited access to the services of banks, may have substantial burdens on company resources due to litigation, complaints or enforcement actions, and are heavily dependent on receiving necessary permits and authorizations to engage in medical marijuana research or to otherwise cultivate, possess or distribute marijuana.
- Passive Investment Risk: The Fund is not actively managed and therefore would not sell an equity security due to current or projected underperformance of a security, industry or sector unless that security is removed from the Index.
On Tuesday, October 23, 2018, MJ was at $31.73 on volume of 1.0 million shares exchanging hands. Market capitalization is $678.89 million. The current RSI is 34.06
In the past 52 weeks, shares of MJ have traded as low as $0.74 and as high as $45.40
At $31.73, shares of MJ are trading below its 50-day moving average (MA) at $35.97 and below its 200-day MA at $31.84.
The present support and resistance levels for the stock are at $30.42 & $39.40 respectively.
Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.
Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.
We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.
When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.
TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.
Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.