A highly regulated Cannabis sector is gradually being opened-up, starting in Canada. The market there is not only is a source of capital for Canadian companies, but provides a home for the public listing of US companies as well. In our view, recent developments mark a new era for the sector and bring the potential for a revolution in the scope and scale of the global industry. European markets are already established, with the formal reimbursement of medical cannabis in Germany helping to legitimise large-scale investment. 


Separating the weed from the chaff
Published: Jul 05 2018

The global political and public climate recently took a major step forward in relaxing attitudes to cannabis laws with Canada the first G7 nation to legalise recreational cannabis use, serving as a catalyst for further worldwide liberalisation. 
In parallel, the tide of opinion in Europe is turning in favour of medical cannabis, with new horizons in the UK as its Government works towards a full legislative review. Forecasts point to a total value of the Canadian cannabis market approaching C$6bn in 2017 to at least C$9bn by 2025. With cannabis now fully legalised, that means its market value could match the size of the wine sector in Canada.
Following the path set by some larger companies seeking to gain exposure to the fast-growing European medical cannabis market (estimates of a core market size as high as €20bn in a fully legalised scenario), a first wave of smaller medical cannabis companies is moving onto the NEX London market to gain an early foothold and to attract new capital. There could be unprecedented investment opportunity arising in this ‘new’ UK sector.
In the UK, paradoxically the largest exporter of the drug (contributing over 95 tonnes or 75% to world exports in 2016), cannabis cannot be legally used in medical therapy, apart from the licensed MS medicine Sativex. However, the recent high-profile case of childhood epilepsy sufferer Billy Caldwell, granted access to cannabis medicine by UK Government because of his acute therapeutic need, highlights the value of medical cannabis and has helped to expedite the Legislative review.
Shares in dominant Canadian-listed Licensed Producers have already seen enormous increases, reflecting optimism ahead of legalisation of recreational cannabis. At the same time, a diversified group of smaller companies is emerging across a myriad of subsectors. As these new companies and investment vehicles emerge on public markets, they provide an opportunity for investors to gain exposure to a range of cannabis industry companies in both mature and newer markets. 


Foreign buyers gorging on UK stocks

Document can be downloaded here: UK plc ‘going for a song’

Being a shareholder in a company that receives a juicy takeover offer is a marvellous feeling. Something that many fortunate investors have experienced over the past 3 years. Thanks to a spate of M&A bids by deep pocketed overseas buyers – partly triggered by the June 2016 Brexit result, which sent the £ tumbling and adversely affected the FTSE.

Consequently today, given this trend is unlikely to end anytime soon, we’ve highlighted 30 possible acquisition ideas in the attached research paper. Spilt equally between large and smallcap stocks – covering a broad selection of industries.

What’s more we believe most of these businesses are underpinned by strong fundamentals and substantial upside in the event of predatory interest.

According to Factset Mergerstat/BVR, the average bid premium paid for such deals between 2004-14 was 30% – with the figure trending upwards since the global financial crisis.

Happy investing. Published 27th August 2019