Tim Seymour’s cannabis picks

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 31, 2021
  • Seymour is confident that the cannabis industry will secure federal legislation.
  • Hyrdrofarm, GrowGeneration, and Green Thumb closed last week in the green.
  • Tim Seymour says these cannabis companies will be sophisticated CPGs.

Cannabis sales are on the rise. A list of relevant stocks, including Hydrofarm Holdings Group (NASDAQ: HYFM), GrowGeneration Corp (NASDAQ: GRWG), and Green Thumb Industries (CNSX: GTII), closed last week in the green. According to Timothy Seymour, founder of Seymour Asset Management (SAM), several factors are at play here. For example, more and more states are legalising cannabis, and federal legislation is also in the offing.   

Seymour is a strong supporter of the cannabis industry, as reflected by his long positions on multiple stocks in this sector. Other credentials to his name include his role as an advisor for a number of cannabis firms. He is also a portfolio manager of a cannabis ETF.

Tim Seymour’s comments on CNBC’s Fast Money

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On CNBC’s “Fast Money”, Seymour said on Friday:

“Right now, a lot of the biggest investors can’t really invest here. So, as an investor, if you buy an ETF or if you buy any of those names, those three names (Hydrofarm, GrowGeneration, and Green Thumb) are in my ETF – those are all names that big institutions can largely own because they don’t touch the plant, with the exception of Green Thumb. Overall, once institutions were allowed to buy this sector, it’s going to lift the boat of all these valuations.”

The trader further expressed confidence that cannabis was a hyper-growth industry that will ultimately secure federal legislation that will pave the way for this sector to start receiving massive amounts of institutional money.

Seymour says these cannabis companies will be sophisticated CPGs

Seymour also highlighted that the aforementioned companies have noted an annualised growth of up to 60% in their revenue and have also turned profitable last year. Commenting on the risk side, the chief investment officer of SAM added on CNBC’s “Fast Money”:

“I think the biggest risk is company by company – do they have the right business model. For example, playing for interstate commerce or playing for not touching the plant. So, you have to find the right companies. They’re younger companies, so you have to look for great management teams. This is happening, it’s not about ‘when’, it’s about ‘how much’ and ‘how big’ and this is going to be sophisticated CPG just like spirits, tobacco, or pharma.”

On the weekly chart, Hydrofarm and GrowGeneration closed more than 10% up each on Friday. Green Thumb opened more than 1% down on Monday but recovered almost the entire loss in the next hour.

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