Whitney Tilson Names Cannabis ETF ‘Favorite Pick For 2022’ But Clock Is Ticking To Change US Regulations
It was another brutal year for cannabis stock investors in 2021 as the U.S. made very little regulatory progress on cannabis reform measures. Fortunately for cannabis stock investors, former hedge fund manager Whitney Tilson says he has high hopes for cannabis stocks in 2022.
Tilson’s Take: Last week, Tilson named the AdvisorShares Pure US Cannabis ETF (NYSE:MSOS) his “favorite pick for 2022” for investors.
Related Link: Cannabis Execs Talk ‘Silly’ Canadian Regulations, US, Expansion, The Value Of Good Partners
Tilson said he shares the bullish cannabis sentiment of Seabreeze Partners Management president Doug Kass.
“It reminds me of a little more than a year ago, when we were both pounding the table on bank stocks – and, sure enough, they quickly doubled!” Tilson wrote in his newsletter.
Kass’ Case: In December, Kass said cannabis market fundamentals were strong and U.S. legislation would likely progress significantly in 2022.
“I see 2022 as a year of legislative breakthroughs, NYSE up-listings, M&A activity, and pent-up institutional demand for cannabis stocks,” Kass said.
Cannabis stocks took a hit when the SAFE Act was not included in the National Defense Authorization Act legislation, but Kass said the SAFE Act may become law sooner than the market realizes, and it could reset the valuations of U.S. multi-state operators by 50%.
“The rising probability of inclusion in ETFs, NYSE up-listings, merger and acquisition activity, and pent-up demand for cannabis shares – as custodian issues are resolved – could combine to lead to sizeable share price gains over both the near and intermediate term,” Kass said.
In addition to the MSOS ETF, Tilson said his other top long idea for 2022 is the SPDR S&P Biotech ETF (NYSE:XBI). Meanwhile, his top two stocks to avoid this year are AMC Entertainment Holdings Inc (NYSE:AMC) and Digital World Acquisition Corp (NASDAQ:DWAC).
Benzinga’s Take: Investors are certainly disappointed with the lack of progress the U.S. has made on cannabis reform efforts, especially with Democrats in control of both houses of Congress and the White House.
The window to make meaningful legislative changes may be quickly closing, given the PredictIt market suggests Republicans currently have a 69% chance of gaining control of both houses of Congress in November.
Also See: Which Countries Will Likely Legalize Cannabis In 2022 And Why Isn’t The US Among Them?