Caught off-guard this week, Horizon’s Marijuana ETF (HMMJ), an exchange-traded fund tracking the cannabis industry announced the addition of Tilray Inc. (NASDAQ:TLRY) to its holdings on Friday. After missing out on Wednesday’s headline-generating day for the pot stock, a day that saw trading halted five times, and wild swings in price, Horizon’s management team told Bloomberg news that Tilray would be added to their holdings immediately.
According to the report from Bloomberg, investors pulled more cash from the fund on Wednesday than they had since January. Horizon’s ETF tracks the North American Marijuana Index, of which Tilray is not a part.
It’s been a wild ride for some in the #Marijuana sector this past week. Horizons ETFs' @swordless joined @BNNBloomberg this morning to speak about valuations, how our index works and the future of #cannabis. Watch now: https://t.co/0hc9Y3JyRE
— Horizons ETFs Management (Canada) Inc. (@HorizonsETFs) September 21, 2018
"I'm sure people look at that and say, 'What are you doing," Mark Noble, senior vice president of ETF strategy at Horizons ETFs Management Inc., told BNN Bloomberg in an interview when asked about Tilray. "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."
According to Bloomberg investors pulled more than $13 million from the Horizon’s fund on Wednesday, while trading $128 million worth of its shares. By comparison the ETFMG Alternative Harvest ETF (MJ) the only U.S. marijuana ETF saw volume skyrocket on Wednesday, with trading of $223 million. Tilray is the Alternative Harvest’s third largest holding.
"The question is what stocks are going to be the winners?” Noble told Bloomberg. “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."
Also on the horizon
Canadian medical marijuana company Aleafia Health Inc. (ALEAF) was added to the fund as well on Friday, according to management. According to some reports, Aleafia expects to reach a growing capacity of 38,000 kg of cannabis flower in 2019. The company also has 50,000 medical marijuana patients and a partnership with Cronos Group (NASDAQ:CRON).