Home Markets Greenhaven Road Capital: Cannabis Basket

Greenhaven Road Capital: Cannabis Basket

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The following segment was excerpted from this fund letter.


NEW INVESTMENT – CANNABIS BASKET

Given the volatility in the markets, I spent a lot of time looking at potential new investments over the past several months. The primary companies that are “working” have been resource companies from oil and gas to mining. This is largely driven by macro forces – rising commodity prices lift all resource-related shares. However, these tend to be capital intensive businesses where earnings are driven by commodity price, which is out of the operators’ control, and high prices generally create additional supply leading to a boom/bust cycle. Fortunes have and will be made, but in general these resource companies are not good businesses, and we have not invested in one yet.

This quarter, our largest new investment is in a basket of cannabis stocks, or more accurately, companies that happen to sell cannabis. The…

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