Index Performance for the Week Ended March 17, 2017
The Viridian Cannabis Stock Index fell 0.2% in the eleventh week of 2017 ended March 17th, continuing its decline following Sean Spicer’s comments on February 23. The Index remains up 13.6% year-to-date.
For the week, five of the twelve Index sectors showed positive gains.
The top performing sectors were Physical Security (up 19.6%), Real Estate (up 5.0%), and Biotech/Pharma (up 2.1%).
The worst performing sectors were Agriculture Technology (down 9.0%), Consumption Devices (down 6.7%), and Hemp (down 5.3%).
Weekly Snapshot: Index Median Price-to-Sales (P/S) Multiples
NOTE: 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.
Extended valuations are a concern as the median price-to-sales (P/S) multiple for the Index was 42.9x as of March 17th, a slight increase from 40.1x as of March 10, 42.2x as of March 3, and 39.5x as of February 24.
White House Press Secretary Sean Spicer’s comments have added some uncertainty to market forecasts, further illuminating the high P/S multiple for the Index.
Some of the variation in the P/S multiples is due to new financial information that has been filed and released over these past few weeks.
Index Performance Year-to-Date (YTD)
The Index was up 13.6% YTD as of March 17 after declining over the past several weeks following White House Press Secretary Sean Spicer’s comments regarding potential “greater enforcement” by the Federal government on state-legal recreational (adult-use) cannabis markets on the afternoon of February 23.
The Ancillary Products & Services segment continues to outperform the “Touching the Plant” segment, up 18.1% and 9.9% YTD, respectively. The outperformance of the Ancillary Products & Services segment is likely due to the fact that ancillary providers are perceived as “lower risk” than those companies that “Touch the Plant” and are more directly subject to State and Federal oversight. High valuations and some market uncertainty may cause movement of investors towards lower risk segments of the market.
Dollar volume in the Index through the month of January mostly ranged between $75 million and $150 million per day. This dipped slightly in the last week of January and the first few days of February before increasing through mid February. Dollar volume in the Index remained at these elevated levels until the third week of February. Since then, the Index dollar volume has exhibited a downward trend. Dollar volume in the eleventh week of 2017 ended March 17 ($513.1 million) was the second lowest we have seen year-to-date, with only the dollar volume in the first week of the year ($505.4 million) being lower.
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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The information contained herein is for informational purposes and is not intended as a research report. It should not be construed as Viridian recommending investment in cannabis companies or as a solicitation to buy or sell any security or engage in a particular investment strategy. Investment in cannabis companies entails substantial risk. Before acting on any information, you should consider whether it is suitable for your particular circumstances and consult all available material, and, if necessary, seek professional advice.
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, through broker-dealer services provided by Pickwick Capital Partners, LLC (Member FINRA/SIPC), may act, or may have acted in the past, as a financial advisor for certain of the companies mentioned herein and may receive, and 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.
Our Index is NOT a tradable or investable instrument and is not intended to be deemed or treated as such. All data and information contained in the Index is for reference and/or informational purposes only.
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 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, LLC (Member FINRA/SIPC), 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.