Institutions have been completely unwilling to invest in the evolving cannabis space — with the exception of Eminence Capital.
The investment firm focuses on finding solid, growing companies that have been mispriced by the market. This investing focus led Eminence to the cannabis sector, Ricky Sandler, founder and CEO of Eminence Capital, said Thursday at the Benzinga Cannabis Capital Conference in Miami Beach.
High On Opportunity: The cannabis industry is one of the greatest representations of the disconnect between companies and their stock prices, Sandler said.
"Right now there is a lack of capital supplying an industry that has an incredible opportunity and that mismatch means that capital that is deployed is deployed at an attractive price," he said.
Sandler is confident that other institutions will come into the space in the next few years and said he seeks opportunities that set the firm up for long-term success. Investing in cannabis now positions the firm ahead of the rest, he said.
"I want to buy what nobody is buying because eventually they're going to buy in and I can tell you that I may be the first institutional investor in this space, but I'm pretty comfortable," Sandler said. "Over the next three to five years, most of my peers and the big money is going to be in this space."
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Those who invest in public MSO companies are actually buying secondary shares of registered securities, he noted: "You're actually not even directly funding a business so you could be one step back from what you perceive to be a risk."
Sandler said he is currently invested in four publicly traded cannabis companies: Green Thumb Industries Inc (OTCQX:GTBIF), Verano Holdings Corp (OTXQX: VRNOF), TerrAscend Corp (OTCQX:TRSSF) and Cresco Labs Inc (OTCQX:CRLBF).
"I've been in the market in the last couple of days," Sandler said. "We buy more when they go down."
Watch Sandler's full presentation below: