This week, marijuana enthusiasts likely celebrated 4/20 in predictable fashion. Although most serious investors avoid the majority of marijuana stocks like the plague, GW Pharmaceuticals (GWPH), OrganiGram Holdings (OGRMF) and Canopy Growth Corp (TWMJF) all actually have institutional investors.
Until weed gains federal legalization in the U.S., most marijuana stocks will continue to be shunned by American investors. However, according to Morningstar, these three stocks have caught the eye of some high-profile names.
GW Pharmaceuticals (GWPH)
For any investor even remotely familiar with the marijuana market, GWPH is likely the least surprising weed-related stock to have institutional backing. GWPH does not grow and sell marijuana or marijuana paraphernalia. GWPH is a biotech company that is working on the development of cannabinoid prescription drugs.
In fact, GWPH is currently the only stock directly related to marijuana that trades on a major U.S. stock exchange.
The vast majority of marijuana stocks suffered massive declines in share price in the past year. But GWPH’s stock more than doubled in a single day back in March when the company reported positive Phase III drug data.
Given the legitimacy of GWPH’s business and the promising results it has gotten from its trials, it’s not surprising that the company has a number of prominent institutional investors. Its shareholders include Capital Research Global Ivestors (2.6 million shares held), M&G Investment Management (1.1 million shares held) and Fidelity SelectCo (1.5 million shares held).
OrganiGram Holdings (OGRMF)
OGRMF may not be listed on a major U.S. exchange, but the Canadian company’s stock does trade on the TSX Venture Exchange under the ticker OGI.
OGRMF produces organically-grown medical marijuana products. The company generated $1.4 million in revenue, $55,000 in net income and $25,000 in positive cash flow in Q1.
Recreational weed is currently illegal in Canada. Health Minister Jane Philpott expects that to change in early 2017.
“We will introduce legislation in spring 2017 that ensures we keep marijuana out of the hands of children and profits out of the hands of criminals,” Philpott told the UN General Assembly earlier this week.
“It’s federally legal [in Canada] on a medicinal basis, but in the next couple of years, it’s likely to be federally legal for anybody over 19,” says The 420 Investor’s Alan Brochstein.
Ark Fund Management likes what they see from OGRMF enough to take a 276,000-share flyer on the stock. While it’s a relatively modest investment, an institutional presence is a feather in the cap of any company.
Canopy Growth Corp (TWMJF)
Much like ORGMF, TWMJF has a bulky five-letter OTC ticker for U.S. trading. The Canadian company is listed on the TSX Venture Exchange under the ticker CGC.
TWMJF is also in the business of producing and selling medical marijuana. It also stands to benefit from the potential legalization of recreational marijuana in Canada in all the same ways as ORGMF.
In Q4, TWMJF reported $3.5 million in revenue, up 41% quarterly. In addition, the company reported 45% quarterly and 430% annual growth in number of grams sold.
It’s likely that this huge growth is what institutional investor Fidelity Institutional Asset Management likes most about TWMJF. The firm has a 1.6 million-share stake in the company.
Disclosure: As of this writing, Wayne Duggan had no positions in any of the stocks mentioned.
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