In this week’s Q&A, Greg answers questions about U.S. vs. Canadian exchanges, the right time to invest, and how to access “The Vault.”
Welcome to another edition of our member Q&A. We may have had a short week thanks to Presidents’ Day, but that hasn’t kept you from writing in with questions.
And we love that. The National Institute for Cannabis Investors is your service, and the more you participate, the better that service is for everyone.
So keep the questions coming!
In the meantime, here are the answers to some of your questions from the past week.
Paul W. asks: “If a stock originated in Canada and is also on the American exchange, is there an advantage to buy from one exchange over the other?”
No. And I really appreciate this question, Paul, because the answer was “yes” not all that long ago – at least for OTC-listed stocks. So I’m pleased to be able to bring our fellow members some new information.
If a stock is listed on an American exchange such as the NYSE or the Nasdaq you can count on good liquidity in the stock and all the rights of a home listing, including the right to vote on corporate matters and full participation in rights and warrant offerings. Holding a U.S.-listed foreign stock is just as good as holding the stock on its “home” exchange.
Now, there used to be a difference between a foreign-listed stock and its equivalent on the U.S. over-the-counter (non-exchange) market. The U.S. stock used to be less liquid, which means you’d generally have to pay more to buy the stock, and you’d get less when you sold. But even that is not true for cannabis stock any more – the foreign exchanges work closely with U.S. OTC market-makers to ensure that the OTC listing tracks the foreign listing as closely as possible.
So you can buy a cannabis stock in the U.S. or on its “home” exchange with confidence, but do note that for the purposes of our model portfolios, we will mostly be paying attention to the U.S. versions of the stock, so our buy and sell recommendations will primarily come from there.
In a related question, Charles K. asks: “Are you waiting until the Canadian cannabis stocks trading on the CSE and the TSX are also traded on the OTCBB before you send recommendations to buy? If so, what about the IPOs?”
This is a great question, and it’s of particular importance for members of The Cannabis IPO Insider. A lot of U.S. investors have difficulty buying stocks from the CSE and the TSXV, particularly when the stocks are newly issued, and particularly when the underlying company is based in the United States. So I generally wait until there is a U.S. version of the stock traded over the counter before recommending it if it is an American company.
The question here is whether I do the same thing for Canadian-based stocks. The answer is usually yes. What I’ve been finding is that because of the additional difficulties buying newly issued stocks from the CSE and TSXV, stocks have difficulty gaining traction until that U.S. version is available – it opens the stock up to a much larger pool of potential buyers. This is mostly true of Canadian companies as well as U.S. ones, so I usually wait.
There may be a case when I don’t wait – I’m constantly talking to investment bankers, brokers, market makers and even the exchanges themselves, so I get a pretty good idea of how demand is going to shake out. If I think a stock will rise drastically on its IPO before its U.S. symbol is available, you can be sure I’ll recommend it for those people who are able to purchase it.
Angelika J. and Wayne K. both want to know: “How can I access the ‘Vault’?”
When we talk about the “Vault,” we’re referring to the NICILytics database. I’m glad you asked about this, because I’d love to share a bit about why we felt this database was so important to build.
When the NICI team started to look for the best cannabis companies in the world to recommend to our subscribers, we were shocked at the poor state of information about the companies in the industry. Often, even very basic information like the company’s name, its lines of business, even its number of shares was just wrong on every platform we looked at. Not just the free ones like Yahoo! Finance or the information platform that comes with your online brokerage account, but sources like Bloomberg, which cost thousands of dollars per month!
And that’s why we created our own. NICILytics is easily the most comprehensive database of cannabis companies on the planet. It includes every publicly traded cannabis company, a number of companies planning on going public soon, and a lot of extremely promising new startups. All of these companies have undergone our comprehensive vetting process. They’ve all been rated on our simple 1-5 scale. If you want to see all the cannabis tech stocks, or the medical firms, or the up-and-coming brands – you can sort this database by market sector. Or, if you want to find just the best of the best, you can sort by rating.
So if you want, you can find every single company we’ve rated a 5 – a strong buy. Any one of these companies could be our next monthly recommendation, and by accessing the NICILytics database, you can discover them before the rest of our members.
Enjoy your weekend, and we’ll be back next week with much more about the cannabis markets.
Thanks for being an important part of the National Institute for Cannabis Investors,
Executive Director, National Institute for Cannabis Investors
14 responses to “Q&A: Which Exchange Is Right for You?”
February 23 2019