In a recent Form 13G filed with the U.S. Securities and Exchange Commission on May 3rd, the “iconic” hedge fund firm led by Louis Bacon, Moore Capital Management, disclosed a major stake in the recently IPOed ancillary cannabis accessories distributor Greenlane Holdings, Inc. (NASDAQ:GNLN).
On a list of the best hedge fund managers of all time, Louis Bacon is ranked in the top 20, so it is a bullish signal that institutional investors and money managers like him are investing capital in the cannabis space.
According to Institutional Investor, “New York-based Moore Capital Management is one of the most iconic hedge fund firms in the industry,” having been founded in 1989 by now-billionaire Louis Bacon.
Described by Forbes as “one of Wall Street’s macro-trading legends,” Louis Bacon is undoubtedly a master of the markets, having turned a small inheritance and his profits from trading into a hedge fund firm with over $34 billion USD in discretionary assets under management as of its recent Form ADV.
As of the 13G filing, Moore Capital Management, LP beneficially owns a total of 882,353 shares of Greenlane Holdings Inc. Class A Common Stock, representing approximately 9.24% of the entire share class.
Based on a last traded price of $14.95 USD per share on the NASDAQ, Moore Capital Management’s stake in Greenlane is worth approximately $13,191,177.35.
Greenlane Holdings, which is expected to report financial results for its first quarter that ended March 31st, 2019 on Thursday, is a self-described “leading distributor of premium vaporization products and consumption accessories in the United States and has a growing presence in Canada.”
Yes, and no.
As a percentage of the $34+ billion USD in AUM, Moore Capital Management’s investments in cannabis-related companies amount to just a drop in the bucket. That being said, Moore Capital Management’s stakes in cannabis-related companies are worth millions of dollars.
Given its niche positioning as a distributor of accessories, Greenlane doesn’t actually touch cannabis and therefore does not break federal law in the same way that U.S.-focused cannabis companies like the recently debuted Columbia Care Inc. (NEO:CCHW) does.
This emphasis on federal legality is a major filter within Moore Capital Management’s marijuana investment strategy. As Greenlane isn’t the only cannabis-related holding in Moore Capital Management’s portfolio, we can see that federal legality is the only thing the holdings have in common.
Until Greenlane, the only cannabis-related company that has shown up in Moore Capital Management’s filings was GW Pharmaceuticals Plc (NASDAQ:GWPH), the pharmaceutical innovator behind EPIDIOLEX®, the first FDA-approved prescription pharmaceutical formulation of highly purified, plant-derived CBD.
Based on these two holdings, it becomes clear that Louis Bacon and Moore Capital Management are waiting on federal legalization to get involved in cultivators and other plant-focused cannabis companies.
In the meantime, Moore Capital Management’s exposure to the pharmaceutical and ancillary distribution sides of the space are more than sizeable enough to make an impact if they perform the way many cannabis stocks have over the recent years. Also, Moore Capital Management has a sizeable position in Ulta Beauty Inc. (NASDAQ:ULTA), which recently began selling CBD-based beauty brand Cannuka in over 1,000 stores nationwide as well as online.
As more and more hedge funds and institutional investors like Moore Capital Management and Signitionget into the cannabis space, we’ll continue to monitor 13F filings to see what they’re up to. In the meantime, be sure to subscribe to updates here so you never miss an important update.