With around $3 trillion worth of assets being handled in over two hundred funds, Vanguard is undoubtedly one of the world’s biggest investment companies. Apart from being known for its massive size, the company has also created a reputation as a low-cost funds provider. And just last June (2018) the firm announced its first-ever investment in the cannabis sector. Months before that, major financial advisors and mutual funds were completely ignoring the pot stocks.
The Vanguard Developed Markets Index Form revealed its investment into 3 of the biggest cannabis producers in Canada. The index fund offers investors diversified, affordable exposure to mid-, small, and large-capitalization businesses in non-US developed markets. It has an ETF and four mutual funds. Since the focus is on the stocks outside of the United States, it can become more volatile compared to a domestic fund.
For the period which ended on the 31st of March, 2018, the mutual fund company filed Form N-Q showing investments in Canopy Growth, Aurora Cannabis, and Aphria.
Toronto Stock Exchange (TSE): Weed
New York Stock Exchange (NYSE): CGC
For Canopy Growth, there are 879, 776 shares. The brand is known for offering curated varieties of cannabis and distinct brands in the form of oil, dry products, and soft gel capsule. They have already established a partnership with the forerunners in the sector including the breeding legends firm known as DNA Genetics, the cannabis icon under the name of Snoop Dogg, as well as the Green House Seeds to name a few. It has also gained $5 billion investment in CAD from the Constellation Brands and has acquired Hiku brands, hence furthering its brand portfolio. It has numerous different production facilities located in British Columbia, Alberta, Saskatchewan, New Brunswick, Ontario, Newfoundland, Quebec, and other provinces. It has acquired ten licenses to work or cultivate cannabis and 8 licenses for selling cannabis under ACMPR program and has an export agreement in Spain, Germany, Denmark, Czech Republic, Brazil, and Australia. It has supply agreements in the Nunavut, the Yukon, the Northwest Territory, the Prince Edward Island, New Brunswick, British Columbia, Manitoba, Newfoundland and Labrador, Quebec and Alberta.
Canopy Growth is operating in eleven countries, across 5 continents and caters services specifically in the healthcare sector. It has international partnerships and subsidiaries in Spain, Czech Republic, Brazil, Australia, Lesotho, Jamaica, Denmark, Columbia, Chile, and Germany. The company constantly works on furthering the cannabis knowledge and understanding of the public, educating healthcare professionals, and conducting clinical researches. Canopy Growth owns Canopy Health Innovations, a biopharmaceutical company that concentrates on developing quality and innovative cannabis-based products. Through which the company was able to invest into commercializable, cutting-edge research as well as IP development.
The company is also offering resources as well as investment opportunities to those who want to enter the market for the first time through its partly owned Canopy Rivers Corporation, an investment platform specifically structured to offer opportunities in the existing and gradually evolving cannabis sector. Canopy Growth was the first publicly traded LP which also become the first to attain listing on TSX in 2016 and NYSE in 2018.
Toronto Stock Exchange (TSE): ACB
New York Stock Exchange (NYSE): ACB
For Aurora Cannabis, there are 2, 450, 644 shares. The company implements a vertical integration strategy, which leads to the successful creation of an incredible, growing constellation of strategic partnerships and subsidiaries. It has provided them with a differentiation when it comes to product offering, production, execution, technology and geographic reach.
The company has acquired MedReleaf, which later brings the yearly production capacity of the company to more than 500, 000 kg. Through its two facilities in Europe and nine in Canada. Aurora Cannabis also acquired Anandia Laboratories, a cannabis biotechnology company, giving the company access to thriving, new streams of revenue including genetic testing, tissue-culture archiving, as well as predictive chemo-type profiling. The company also owns CanvasRx, the biggest Canada-based cannabis clinics operators. It has also acquired Agropro, a European hemp company and Borela, its sister company. It also has an agreement with Pharmasave, Shoppers Drug Mart, and Pharmachoice to sell and distribute medical cannabis and has a robust product portfolio with wellness brands including the Woodstock, San Rafael 71, and AltaVie.
Aurora Cannabis has state-of-the-art facilities located in different locations including Alberta, Saskatchewan, Quebec, and Ontario. Not only does the company operates locally, it is also active in the global cannabis sector specifically in 20 countries across 5 continents. It owns 22.9% of the Cann Group in Australia, 51% of Denmark’s Aurora Nordic, and the German distribution firm Pedanios. It has an approved cultivation facility of cannabis in Malta.
When it comes to investments, Aurora Cannabis offers big investment portfolio that includes Radient Technologies, TGOD, Alcanna (formerly known as Liquor Stores N.A), Hempco, and more.
For Aphria, there’s 759, 384 shares. Aphria, which is headquartered in Ontario, is a known licensed producer of cannabis-related medical products in Canada and also the first licensed producer of medical cannabis to report good cash flow from its operations as well as positive earnings in its consecutive quarters. So apart from providing quality patient care and delivering pharma-grade cannabis products to the market, the company balances patient economics as well as returns to the shareholders. Among the products that the company pursue to bring to the market includes softgel capsules, topical oil, disposable and cartridges vapes, distillates, oils and concentrates, edibles like candies, chocolates, and mints, and topical as well as medical delivery systems. The company brings breakthrough innovation to the cannabis market worldwide with the aid of it’s partners including its 100% fully owned subsidiary ARA Avanti Rx Analytics, Greentank Technologies, as well as the Clinical Research and University Partners including the TetraBio Pharma in Canada and MedLab in Australia, the Hospital Garrahan in Argentina, University of Alberta, of Saskatchewan, Western Ontario, Guelph, Windsor, McMaster University, and others.
Aphria is one of the leading revenue generating cannabis companies with a presence in over ten countries across five continents. It is generating sales of over C$13 million in the fiscal Q1 which ended in the 31st day of August 2018. Hence, representing a growth of 117 percent. However, Aphria also encountered some operational challenges and experienced a decline in the adjusted gross margins by 63.3 percent.
Just last October 30, 2018, the company announced that its common shares were approved for New York Stock Exchange (NYSE) listing. Last November 02, 2018 the market has been opened for trading. The shares of Aphria will trade under the “APHA” ticker symbol. Its company symbol on TSX or Toronto Stock Exchange will also be altered to “APHA” from “APH.” The company’s existing shares which were traded on OTCQB under “APHQF” symbol will also trade on NYSE. The NYSE listing has given Aphria access to the world’s biggest equity market as well as increased exposure to a wide array of United States retail and institutional investors.
Aphria has also acquired the CC Pharma, which strengthens its foothold in the German market of the medical cannabis. CC pharma, founded in 1999, is a leading pharmaceutical products distributor to over 13,000 pharmacies around Germany and has annual revenue of over 200 million. The pharmaceutical distributor is headquartered in Densborn where their production, repackaging, and labeling facilities are situated. At closing, Aphria company will pay CC Pharma with 24.5 million cash
In total, Vanguards has invested $47 million and provide the company a 0.4% equity stake in the three huge cannabis companies. And the fact that the company has disclosed the ownership in the first quarter of this year, it indicates something big. Generally, security laws need mutual funds to disclose the holdings four times in a year or every quarter. However, the fund companies are given sixty days or two months after the quarter to complete filing the reports. Meaning to say, Vanguard does not have to rush the disclosure of the pot stock investment, but they still did. The company was the only fund to disclose the ownership in the first quarter.
This should come to no surprise though. Vanguard company, founded by one of the renowned and one of the world’s most respected investor Jack Bogle, is a big player in the market with $962 billion in assets which are under management across its ETFs and mutual funds. Hence, it is likely watched closely by its competitors or other fund managers at Fidelity Investments which also has about $3 trillion in assets, American funds with $965 billion assets, and the Franklin Templeton with $377 billion in the assets. If Vanguard is already doing it, what does the rest should do?
The legal cannabis market is expected to grow to a hundred billion business. Hence, the biggest investors around the world may be jumping on board in the forthcoming months. Upon the investment of Vanguard to the three pot stocks, other huge players in the investment and mutual funds field may follow suit.
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