While a Reddit forum drives a rise in marijuana stocks, Ross Gerber, CEO of Gerber Kawasaki, tells Fred Katayama of Reuters why investors should avoid Canadian cannabis stocks and instead buy U.S. marijuana stocks .
Video transcription
FRED KATAYAMA: Wall Street indices are making baby moves on Wednesday, just like they did yesterday, but not with marijuana stocks. The perfect person to talk about cannabis stocks is Gerber Kawasaki’s Ross Gerber. He has been a big supporter of these actions, well before the election. Happy birthday, by the way. Ross.
ROSS GERBER: Thank you, Fred.
FRED KATAYAMA: It’s nice to have you on your big day. Now, like I said, you’re kind of, I shouldn’t say it out loud with these actions, but really optimistic about those actions. Now that they are being swept away by this Reddit trading frenzy that we previously saw whipsaw stocks like GameStop and AMC, how should investors who have already bought stocks that might have heard you play this? Should they make a profit, for example, at Tilray, which rose 40% today?
ROSS GERBER: Yes, and I think we should also be careful not to mix American companies that do business in America and Canadian companies that do business in Canada, because the irony is that everyone is negotiating with these Canadian companies because that’s all they can negotiate. But that’s not where the big game is. It is really here in America that all of these shares are traded in Canada. And many investors, it is difficult for them to buy shares, because they only list on the pink sheet here.
Therefore, we are seeing an increase in the type of wrong actions. Although Canopy is a good company, they are really the only stocks that institutional traders and individuals can buy. And then they are buying the wrong ones. But that said, in general, cannabis is a growing and exciting industry, and it is a much better position than buying shares in AMC and GameStop. So it’s good to see people moving to an area that I think has a lot more value.
FRED KATAYAMA: So, if you already have some of these cannabis stocks, just wait and wait for the ride? Or would you?
ROSS GERBER: Oh yes, this is just the beginning. I mean, you have to think long term. When you think about cannabis, I’ve said it in many interviews, it’s like the end of the ban in 1933, you could invest in alcohol and look at some of America’s wealthiest families, they are an alcohol family. So, here is this opportunity for investors in all sectors to participate in the start of a massive growth industry that will grow and evolve for a long time.
So, if anything, we are adding to our positions, because we are seeing confirmation that everything we are seeing is correct. Therefore, the ratings have increased. But this is an exciting business.
FRED KATAYAMA: Increasing positions, although we have seen a great appreciation of these shares. Tilray has been practically quintupled since December. It increased another 40% today. The stocks, the ETF cannabis stocks, which rose 12% today.
ROSS GERBER: Yes. And then, again, I would stay away from the Tilrays of the world. I don’t think there is any value in that. I am very optimistic about what we call MSO operators here in the United States. Companies like TerrAscend, Trulieve, True Leaf, Green Thumb, Planet 13. We have positions in all of them. And, of course, there is risk involved in these investments. But also great potential returns.
FRED KATAYAMA: Okay, but stay away from the Canadian shares listed on your website.
ROSS GERBER: Yes. I mean, Canada is like a small state in the United States. And so sales in Canada are going well. But when you look at the general market, it’s a peanut even compared to California. So the game is here in the United States. Legalization is coming and you want to be in those stocks.
FRED KATAYAMA: And let’s take a look at the general markets today. It seems that the market has lost momentum. Yesterday kind of ended. Today it feels like another break. What do you read about the trading action?
ROSS GERBER: Well, we have the impeachment process underway and some of those trends. But the gains were much better than expected. And year after year, so far, earnings have gone up. And if you exclude the oil companies, I mean, the profits look real, very good for many businesses. So, despite the pandemic, what we got was a much more efficient and more profitable America for businesses that were not directly affected by the pandemic, which focused primarily on what we call entertainment businesses, which are things we like to do.
But the things we need to do, these deals are going very well. So, we are optimistic, you know. I haven’t been an optimist for a long time. And I think there will be bumps along the way and valuations are high, but when you look at what’s going on with fiscal and monetary policy, how do markets lose out when everyone is trying to get the economy going? Therefore, we are very optimistic about the future. We are still very concerned about the coronavirus and its long-term effects, but we are positive.
FRED KATAYAMA: Everything is fine. Thanks. On that positive note, we will leave you. Thank you very much, Ross. And again, happy birthday.
ROSS GERBER: Thank you thank you.
FRED KATAYAMA: Our thanks to Ross Gerber of Gerber Kawasaki in Santa Monica, California. I’m Fred Katayama in New York. This is Reuters.