Model constructing will be the central theme in hashish for 2022, portfolio supervisor Tim Seymour says.
After a disappointing 2021 on the legislative entrance, bigger gamers will use this 12 months to bolster their presence in present hashish markets and adjoining industries, Seymour instructed CNBC’s “ETF Edge” this week.
“As we sit up for 2022, one of many massive themes for hashish traders ought to be the emergence of the manufacturers,” mentioned Seymour, who runs the Amplify Seymour Hashish ETF (CNBS).
Tilray CEO Irwin Simon instructed CNBC this week that his firm would take a two-pronged method to enterprise whereas laws hangs within the steadiness: specializing in international locations the place the substance is federally authorized and growing manufacturers in cannabis-adjacent markets.
“What do you do within the U.S. when you watch for legalization? You construct out manufacturers and classes with adjacency to the hashish trade just like the spirits enterprise, just like the beer enterprise, just like the meals and hemp enterprise,” Simon mentioned on “Closing Bell.”
“Finally, someday, you will note a beer on the market with THC. You will note a bourbon on the market with THC. You will note edibles. And we now have the manufacturers … that buyers will concentrate on.”
This focused method ought to assist “insulate” publicly traded hashish corporations in opposition to margin pressures after a troublesome 2021 during which hashish ETFs declined between 20 and 40%, mentioned Seymour, who can also be founder and chief funding officer of Seymour Asset Administration and a CNBC contributor.
“If you consider valuations for the sector, we come into 2022 cheaper than we went into 2021,” Seymour mentioned. “It is a sector that gives increased development than many different sectors outdoors of hashish at a lot decrease valuations.”
It is no shock that Seymour’s favourite approach to spend money on the quickly evolving house is through his actively managed exchange-traded fund, which he says presents mandatory diversification and agility.
“For traders that need to be uncovered to this trade that is altering by the day, in an energetic ETF technique, you have got the power to shortly adapt,” he mentioned.
CNBS was the second-best performing hashish ETF in 2021, second solely to Cambria’s Hashish ETF (TOKE), which is roughly one-third of its dimension.
Seymour credited his fund’s resilience to proudly owning a world portfolio and to an explosion within the hashish debt markets that allowed corporations reminiscent of Inexperienced Thumb Industries to difficulty new varieties of debt devices that may assist guard in opposition to draw back during times of volatility.