MJ (ETF) owns some TLRY – not sure at what price but I bet it's not priced into them yet.
The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Alternative Harvest Index. The fund will invest at least 80% of its total assets, exclusive of collateral held from securities lending, in the component securities of the index and in ADRs and GDRs based on the component securities in the index. The index is concentrated in the Pharmaceuticals and Tobacco industries and tracks the performance of the exchange-listed common stock (or corresponding ADRs or GDRs) of companies across the globe. The fund is non-diversified.
Top 10 Holdings (57.46% of Total Assets)
Name Symbol % Assets Canopy Growth Corp 10.72% Cronos Group Inc 8.94% Aurora Cannabis Inc 8.32% GW Pharmaceuticals PLC ADR 5.91% CannTrust Holdings Inc 4.97% Emerald Health Therapeutics Inc 3.97% The Green Organic Dutchman Holdings Ltd Ordinary Shares 3.88% OrganiGram Holdings Inc 3.83% HEXO Corp 3.71% Tilray Inc 3.21%
TLRY is now $19Bn and MJ at $43 is valued at $450M but if they own 3.2% of TLRY, that's $608M right there. Not apples to apples, of course but they do have options so let's see if we can make some money in the STP, where we could use an offsetting long and, if it doesn't work out, I still don't mind moving it to an LTP play.
- Buy 20 MJ 2021 $35 calls for $12 ($24,000)
- Sell 15 MJ 2021 $50 calls for $7 ($10,500)
- Sell 10 MJ 2021 $30 puts for $6 ($6,000)
That's net $7,500 on the $30,000 spread and we have room to risklessly sell 5 short calls whenever we wish and, for example, the Jan $45s are $3 so there's a potential $1,500 using 4 months of our 27-month trade. We're going to wait though. If TLRY sells high – I expect MJ to get a nice repricing but if TLRY fails to hold $180, then we sell those MJ Jan $3s!
Worst case is we end up owning 1,000 shares of MJ in the LTP at net $37.50 less whatever we sell along the way!
This is an STP play, not an LTP play!
Oregon/Ati – Thanks but we're not into cold-calling yet as we are generally booked solid with top-level discussions around the country. I'm sitting down with Ken (New Age CEO) to discuss time and project-management issues this week as our biggest headache is that there are too many great opportunities to pursue and we have to allocate our resources mindfully.
