The Viridian Cannabis Stock Index continued rising in the fourth week of 2017, marking the seventh consecutive week of positive gains as the Index continues to outperform major market indices.
Index Performance for the Week Ended January 27, 2017
The Viridian Cannabis Stock Index 7.3% in the fourth week of 2017, continuing its upward trend from the end of 2016 and through the first three weeks of 2017.
For the week, seven of the twelve Index sectors showed positive gains. Returns were largely mixed with positive and negative returns realized by sectors in both the “Touching the Plant” and Ancillary Products & Services segments. Returns in the Ancillary Products & Services segment were more varied than those in the “Touching the Plant” segment, likely due to the sectors in the former segment containing fewer companies on average.
Each of the four major market indices listed increased over the week. The Index as a whole and the Ancillary Products & Services segment both outperformed these market indices, while the “Touching the Plant” segment slightly underperformed.
The top performing sectors this week were Miscellaneous Ancillary, up 49.0%, and Software/Media, up 9.4%, while the worse performing sector was Consumption Devices, down 10.2%.
Weekly Snapshot – Index Median Price-to-Sales (P/S) Multiples
The multiples are calculated by dividing the market capitalization of each security in the Index at close of market on final trading day of the week by their respective trailing-twelve-month (TTM) revenue figures (pulled from the four most recent quarters). These multiples are then categorized based on the companies’ segment/sector in the Index, and the median multiples from these groups are pulled for the snapshot.
Overall, the median Price/Sales multiple for the Index was 42.3x. Sectors in the “Touching the Plant” segment trade at a premium to those in the Ancillary Products & Services segment, driven primarily by the Biotech/Pharma sector.
The most highly valued sector continues to be Real Estate. However, this multiple is slightly skewed as one of the companies in this sector has materially low revenues, leading to the calculation of a higher multiple. However, the Real Estate sector continues to attract interest, reflecting the need for legally-zoned cultivation and retail (dispensing) facilities in new and existing legal states that are awarding additional licenses and/or adding adult use to medicinal use.
Index Performance Year-to-Date (YTD)
The Viridian Cannabis Stock Index has started 2017 strong, realizing year-to-date gains of 21.9% as of January 27 after rising the first four weeks of the year.
Volume in the Index started strong in 2017 but declined through the first week of trading, adding further evidence to the January Effect as investors completed much of their repurchases in the first calendar day of trading. Through the second week of the year, trading volume in the Index remained at similar levels as were seen in the first week, with exception of the first trading day of the year.
For the third week of 2017, volume in the Index was low on January 16 due to Martin Luther King, Jr. Day in the United States but increased strongly on January 17, likely due to pent up demand. Later in the week, the trading volume in the Index normalized to between about 75 and 100 million shares per day as the Index continued appreciating.
At the beginning of this past week, volume in the Index began rising through mid-week but subsequently dropped to levels below the average year-to-date as a handful of the more highly traded stocks in our Index saw reduced trading volume on these days.
The performance of the Viridian Cannabis Stock Index, as a whole and by sector, as well as in comparison to several major market indices, is detailed in the table below:
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* Viridian Capital Advisors and its affiliates, as well as their respective partners, directors, shareholders, and employees may have a position in the securities mentioned herein and may make purchases and/or sales from time to time. Viridian Capital Advisors, may act, or may have acted in the past, as a financial advisor, fiscal agent, or underwriter for certain of the companies mentioned herein and may receive, or may have received, a remuneration for their services from those companies.
About the Viridian CANNABIS STOCK INDEX
The Viridian Cannabis Stock Index tracks the performance of approximately 50 publicly traded cannabis companies that meet three of the following four filter criteria:
- Market capitalization ? 10,000,000 USD
- Average daily trading volume ? 20,000 USD
- Float ? 25% of shares outstanding
- Financials filed on time in last 6 months
Stock performance is categorized into 12 different product/technology sectors that comprise the core business segments within the legal cannabis industry. These sectors are further differentiated into two segments, those that “touch the plant” and those that are providers of ancillary products and services.
The above information, whether in part or in its entirety, neither constitutes an offer nor makes any recommendation to buy or sell any securities.
About Viridian Capital Advisors, LLC
Viridian Capital Advisors is a financial and strategic advisory firm dedicated to the cannabis market. We are a data- and market intelligence-driven firm that provides investment banking, M&A, corporate development, and investor relations services to emerging growth companies and qualified investors in the cannabis sector. Our banking practice, through broker-dealer Pickwick Capital Partners, provides capital and M&A to fund the growth of our clients, while our advisory practice helps to position and build their businesses. Our team’s decades of high level operating and transactional experience on Wall Street in a variety of emerging sectors, allows Viridian to provide comprehensive strategic and financial solutions that assist cannabis enterprises in realizing their full potential.