The High Price of Cannabis Stock Acquisitions
The process of investing can be as complex or as simple as you want. While a Dividend Growth Investing (DGI) strategy is easily explained to your average Joe retail investor, more complex topics like Modern Portfolio Theory (MPT) aren’t so easy to explain. Basically, MPT is all about maximizing return and minimizing risk by owning assets that don’t behave in a similar way. In other words, you don’t want all your stock returns to be highly correlated. Stocks that fall within the same industry – like cannabis stocks – will tend to have more correlated returns. That’s why when there’s bad news for one cannabis stock, it affects all cannabis stocks.
A few weeks ago we penned a piece titled “MedMen Stock Slides Amid Rapid Expansion,” which talked about the dangers of becoming overextended in an era of cheap capital. That time is nigh according to an article by CNN yesterday which talked about how MedMen’s acquisition of PharmaCann fell through stating:
Public cannabis companies are facing a capital crunch as investors are recognizing that some firms were vastly overvalued and sweeping regulatory changes may come later than previously hoped. “You’re going to see a lot of public companies that are c
