Markets

Market Chatter on Cannabis Stocks: Horizons Marijuana ETF Adds Tilray

An exchange-traded fund that tracks the marijuana industry will add Tilray Inc. ( TLRY ) to its holdings on Friday, after it missed out on the action when the Nanaimo, B.C.-based pot company's stock took investors on a "wild ride" this week, Bloomberg is reporting Friday.

Mark Noble, senior vice president of ETF strategy at Horizons ETFs Management Inc., told BNN Bloomberg in an interview that Tilray will be included in the firm's Horizons Marijuana Life Sciences ETF, or HMMJ, holdings starting Friday. "I'm sure people look at that and say, 'What are you doing?" Noble said, when asked about Tilray's sky-high market valuation.

Noble added: "A lot of people are talking about valuations of marijuana stocks right now and clearly they're eye-popping...but what's important to understand is that there is a real business here," Noble added.

He went on to say: "The question is what stocks are going to be the winners? Are we buying Palm Pilot or Apple? Are we buying Pets.com or Amazon.com? Our view has always been to be as broad as possible."

According to the Bloomberg report, as Tilray took "one of the wildest rides in the nascent sector's history" on Wednesday, investors pulled the most cash since January from HMMJ. The Canadian-listed fund holds pot stocks that trade in the North American Marijuana Index -- which didn't include Tilray at the time.

Bloomberg noted investors "yanked" US$13.4 million from HMMJ and traded US$128 million worth of its shares Wednesday. It said this was the largest day by volume since January and more than five times the average daily turnover for the past year. There is now a two-week negative correlation between the daily change in Tilray and HMMJ, Bloomberg added.

Meanwhile, Bloomberg noted, the biggest U.S. listed marijuana-related ETF, the ETFMG Alternative Harvest ETF, or MJ, saw a surge in volume Wednesday, with trading of US$223 million. It said that's close to 14 times the average daily turnover for the past year. Tilray is MJ's third largest holding, making up over 9.2% of the fund's weighting. Bloomberg noted flow data for the ETF isn't available because the figures are delayed by one day. MJ rose more than 4% Thursday.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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