Executive Director Greg Miller answers more of his fellow members’ questions. Take a look to see if he answered one of yours.
Welcome to another edition of our weekly Q&A. We got a lot of wonderful comments this week, so let’s jump right in.
Remember, I can’t offer any personalized investing advice, but your participation is what takes the National Institute for Cannabis Investors to the next level, so please keep the questions coming.
I want to start this week with a message we got from Don C. It’s not a question, but it’s important nonetheless, as it provides me the chance to direct some well-deserved credit to the members of the NICI team.
Don writes: “You may have Danny Brody, but you have given all of us at NICI a ‘top-of-the-line’ Customer Service Department. Not once but every time I have called for help, Emma, Cody, Michael, Chris, just to name a few, have given myself the utmost of attention, help and have answered ALL my questions with pleasure.”
I’m thrilled to hear that, Don. What you read day to day comes from me and, increasingly, from a large and growing editorial staff. But it takes a lot more than us to include you in the National Institute for Cannabis Investors. The Institute is blessed with outstanding people putting together our website, producing our videos, designing our logos and reports, keeping up the NICILytics Database and IPO Hotlist, and more. And you’re exactly right that among our biggest blessings is the outstanding customer service team which helps our fellow members with whatever they need. They proved themselves literally on day one – the response to our American Cannabis Summit event exceeded our wildest expectations, and the customer service team put in a lot of overtime to make sure that everyone who wanted to become a founding member of the Institute was taken care of as soon as possible. That dedication continues every day, and I’m happy to take this opportunity to say the same thing you do – thank you!
Here’s a question about recent movement in stock prices:
Kendall B. asks: “What role did short squeeze buying and momentum money flows play in the recent stock price movements up and now moving lower? I’m wondering why you have not addressed those implications, or perhaps if you think there are any, in your analysis.”
Kendall, excellent question. A lot of market commentators like to talk about short squeezes and momentum flows. And I generally don’t.
So what gives?
I believe that the effects of short squeezes and momentum plays are minor factors in cannabis stock pricing. The fact is that it is very difficult to short many cannabis stocks, and even the most liquid ones like Canopy Growth (NYSE: CGC, TSX: WEED) show very small short positions relative to other high-volatility sectors like technology stocks. And looking at technical charts, I just don’t see a relationship between changes in short positions and the stock’s price. I don’t see any persuasive evidence of momentum players moving these stocks, either.
And that makes sense. The cannabis sector right now is very much driven by news, and both shorts and momentum players rightfully fear news – they tend to make their money from trading patterns which are interrupted by news.
As the cannabis market matures – as institutional players get more involved, as news becomes easier to anticipate, as options open up on more cannabis stocks – we can expect shorts and momentum players to become more important to short-term price moves (though not to the longer-term story), but I think that time is probably more than a year away.
Ron F. wants to know: “How often does the NICILytics list change?”
Ron, NICILytics is the basis of all of the research we do at the National Institute for Cannabis Investors, and we want our elite members to have the latest, most accurate information available on all of the companies in the database. That’s the entire reason we decided to release our raw research to the investing public.
So it changes as often as it has to! We upload changes at least once a week, and more often if events warrant. We add a few new stocks every week, for example. But we also update the names already on the list whenever there’s a change in the company which requires us to say something about it. So every time a company announces a new stock issuance, we update the share count. We also update the share count, along with revenue, adjusted EBITDA, and cash position every quarter when it announces results. As a company answers the questions in our “What to Look For” section, we update the report and add new questions.
We will also update the database when we’ve done new research on the company. For example, this week I did some additional work on a company we had rated a 4. I did not like what I saw, so I had our analysts rewrite the NICILytics report entirely and downgrade the company to a 2.
I will say that the higher-ranked companies get a fresh look more often than the lower-ranked companies. Once we’ve determined that a company isn’t very good, it takes a lot for us to reevaluate it. A couple of press releases won’t do it, but an earnings blockbuster will. For the better companies, we’re constantly looking at them for possible inclusion in the Cannabis Investor’s Report model portfolio, so we notice small changes more than we do with a company we’re not watching as closely.
I’ll be back next week with more answers to your cannabis investing questions. Until then, keep the comments and inquiries coming, and enjoy the long weekend.
Executive Director, National Institute for Cannabis Investors
48 responses to “More Answers to Your Outstanding Questions”
February 16 2019