Former hedge fund manager Whitney Tilson joined Benzinga’s PreMarket Prep morning show on Monday and discussed the difference between speculating in cryptocurrencies and speculating in cannabis stocks.
Wait For The Bust
Tilson said cannabis legalization is a real long-term trend that’s happening around the world, and hot cannabis stocks will make for potentially smart long-term investments. Unfortunately, he said their current valuations make them uninvestable at the moment.
“Do the work in the cannabis sector, but wait for the bust because a bust will be coming,” he said.
Tilson told Yahoo last year on the day Tilray Inc (NASDAQ: TLRY) hit $300 that the stock would eventually drop 90 percent from its highs. Within about six months, Tilray had traded back below $40.
Tilson believes Colombian cannabis producers will ultimately have a stranglehold in the global market due to their low production costs relative to Canadian producers like like Canopy Growth Corp (NYSE: CGC), Aurora Cannabis Inc (NYSE: ACB). He is particularly bullish on Northern Swan, which he anticipates will go public in the near future.
“I was very impressed with what I saw from Northern Swan and its CEO Kyle Detwiler,” Tilson said.
Bitcoin Vs. Cannabis
Tilson also emailed his subscribers back in December 2017 on the day bitcoin peaked at around $20,000 calling the top in the market. After a major crash in 2018, the Grayscale Bitcoin Trust (OTC: GBTC) is up 152 percent year to date in 2019.
“Bitcoin is a pure speculative investment. There is no intrinsic value or fundamental value. My personal opinion echoes Warren Buffett that it is ‘rat poison squared,’” he said Monday.
Tilson said traders looking to speculate on high-risk plays should look in the cannabis space instead of looking at cryptocurrencies because at least is potential for real long-term revenue and earnings growth.