Arguably the most anticipated day of 2021 occurred last week — and if you weren’t paying close attention, you might have missed it. Tuesday, Feb. 16, marked the deadline for…
money managers with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission (SEC). A 13F provides a snapshot of what securities institutional investment funds and hedge funds were holding at the end of the most recent quarter. In this instance, we’re talking about an under-the-hood look at what the brightest minds on Wall Street were up to during the fourth quarter.
If there was one takeaway from the mountain of 13Fs filed with the SEC for Q4, it was that marijuana stocks got a lot of love. ownership by 13F filers in the following five pot stocks increased by 28% to as much as 61% from the sequential third quarter.
Aphria & Tilray: Aggregate share ownership by 13F filers up 61% and 51%, respectively
I’m discussing Aphria (NASDAQ:APHA) and Tilray (NASDAQ:TLRY) together because of their pending merger. Since the announcement came during Q4, it almost certainly influenced money managers’ decision to buy into both companies hand over fist.
The reverse merger, which will keep the Tilray name despite Aphria’s shareholders owning a larger percentage of the combined company, will create the largest cannabis company by annual sales, broaden the duo’s product offerings, and cement the combination as a force in European markets. Additionally, the scale offered by Aphria and Tilray should result in cost synergies and low production costs. Money managers appear to be viewing this combination favorably, which is why ownership rocketed higher in both names in Q4.
However, Tilray has been anything but successful since its share price moonshot to $300 in September 2018. Management has struggled to expand beyond Canada, and the company has been burning through cash at a worrisome rate. In other words, Tilray needed this deal far more than Aphria did. Fixing Tilray’s deficiencies won’t be easy, which should give investors reason to pause following the recent run-up in both companies.
OrganiGram Holdings: Up 36%
Money managers also piled into New Brunswick-based OrganiGram Holdings (NASDAQ:OGI). The 34.1 million aggregate shares figure owned by 13F filers is over 9 million (36%) more than they held in the sequential third quarter.
The likeliest reason behind this shift in sentiment is the changing of the guard in Washington. Joe Biden winning the presidency in November opened the door to a new era of hope for cannabis reform on Capitol Hill. Democrats winning back the Senate by the slimmest majority possible in early January was simply the icing on the cake. Legalizing marijuana at the federal level in the U.S. would allow OrganiGram and its peers to enter the far more lucrative U.S. weed market.
Successful money managers might also be drawn to…
Continue reading at THE MOTLEY FOOL
