Listen to this articleIt has been a busy 12 months for Toronto-based hedge fund, Anson Funds.
The firm has been making headlines for its contrarian bets, and for calling out certain business executives for their counterproductive decision-making.
SuperbCrew caught up with Anson Funds’ Chief Investment Officer, Moez Kassam, to get his thoughts on the investing landscape.
Q: Anson Funds made headlines for pivoting to long bets on weed stocks, even as other investors were exiting the trade. What changed for you?
Moez Kassam: Last year, many investors had a negative outlook for cannabis, primarily in reaction to the lack of movement toward legalization in the U.S. Congress. But we think that’s short-sighted. We have been looking at the cannabis industry for a while now, and ultimately feel the stocks are undervalued.
Q: In other words, Anson Funds believes that marijuana stocks in the U.S. market will make a comeback? Is that a fair statement?
Moez Kassam: People were hoping that the Secure and Fair Enforcement Act would pass the U.S. Congress last year, or at least make some headway. That didn’t happen. But it’s not breaking news to point out that things move slowly in politics. For Anson Funds, it’s the broader, slower trends that interest us. Particularly in areas subject to investor fatigue, a longer time horizon can be a huge advantage.
Q: Generally, Anson Funds’ returns have been uncorrelated to the market. How is Anson Funds handling this market?
Moez Kassam: There’s still a lot of economic uncertainty out there. Like many of our peers, we are sitting in more cash than we have in recent years. That isn’t to say we aren’t constantly looking for promising opportunities – we are just aware of the current market and focused on protecting our investor’s capital first and foremost.
Q: What do you see as the most important trends of the Canadian marijuana market in 2023?
Moez Kassam: Canadian cannabis has experienced rapid growth and expansion since recreational legalization happened in 2018. However, there are still some major challenges, including supply shortages and regulatory hurdles. This year, I think we’ll see some new players enter the market, increased competition, and a shift towards more specialized and higher-quality products. We remain interested primarily in the US market.
Q: Do you think it’s likely the marijuana industry will consolidate more quickly in the near future?
Moez Kassam: Yes – I think that’s likely. We’ve seen a trend toward acquisitions as more companies look for and expand their market share. It’s driven by the desire to reduce costs, expand into new markets, or to build stronger brands and distribution. Greater access to capital is another benefit. In general, we can expect to see further consolidation as companies seek to position themselves for long-term growth.
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