Billionaire Hedge Fund Manager Jim Simons Has Entered the Cannabis Sector in a Big Way
Does Simons’ Large Investments Align With Leading Analysts Expectations?
Since the beginning of 2019, renowned hedge fund manager and math genius Jim Simons has made his affinity for marijuana stocks know. Over the past 2 quarters, Simons has established large positions in Aurora Cannabis (TSX: ACB) (NYSE: ACB) and Aphria (TSX: APHA) (NYSE: APHA).
According to 13F regulatory filings, Simons’ Long Island-based hedge fund, Renaissance Technologies purchased 788,595 shares of Aurora Cannabis in Q1 2019 for approximately $6.3 million. In Q2 2019, Simons added another 905,305 shares of Aurora which totalled roughly $7.1 million.
Also in the second quarter, Simons opened a position in Aphria and picked up 241,500 shares for $1.7 million. His sizeable bets on two of Canada’s leading licensed producers should serve as another strong vote of confidence for the booming cannabis industry.
Jim Simons is well known throughout the industry for his achievements in further mathematics and military cryptography. Simons founded his hedge fund Renaissance Technologies in 1982. His firm was an early pioneer in the application of higher mathematics to the financial markets, otherwise known as quantitative trading.
Renaissance Technologies has garnered a reputation as one of the top-performing hedge funds in the business. Simons officially retired in 2009 from his active role with the company, but he continues to serve the firm in an advisory role as non-executive chairman.
What Do The Top Analysts Think of ACB & APHA?
The combined $9 million bets by Simons on Aurora and Aphria stock should not be overlooked. Someone with the credentials of Simons has ultimately done his homework on these two cannabis stocks.
But, do the industry’s leading analysts see things the same way?
Let’s take a look.
Aurora Cannabis (TSX: ACB) (NYSE: ACB)
Analyst: Vivien Azer of Cowen & Co. (⭐️⭐️⭐️⭐️⭐️)
- Recommendation: Buy
- Rating: Outperform
- Price Target: CDN $15 | USD $11.38
- Implied ROI: 92.8%
- Notes: Azer made Aurora her top cannabis stock pick.
“While a number of peers have communicated a longer pathway to profitability, ACB has the opportunity to be among the few Canadian LPs to reach positive EBITDA as soon as 4Q19 (ending June 30), which is a particular standout as category leader WEED posted an expanded EBITDA loss in calendar 1Q19 (at -C$98 mm).” – Vivien Azer of Cowen & Co.
Analyst: Matt Bottomley of Canaccord Genuity (⭐️⭐️⭐️⭐️)
- Rating: Speculative Buy
- Price Target: CDN $13.50 | USD $10.13
- Implied ROI: 73.52%
- Notes: The market potential in Germany could translate to the long-term upside.
“We believe Aurora’s receipt of this license (Germany) adds incremental legitimacy to the overall international optionality secured by the company as of late.” – Matt Bottomley of Canaccord Genuity
Recent Aurora Cannabis News: ‘It’s Time’ – UFC and Aurora Cannabis Officially Join Forces to Advance CBD Science on Athletes
Learn more about Aurora Cannabis: Chart | Website | IR Website | Investor Deck
Aphria (TSX: APHA) (NYSE: APHA)
Analyst: Jason Zandberg of PI Financial (⭐️⭐️⭐️⭐️⭐️)
- Recommendation: Buy
- Rating: Speculative Risk
- Price Target: CDN $26 | USD $19.57
- Implied ROI: 198.51%
- Notes: Aphria’s 25% investment in Schoneberg Hospital in Berlin will open the door to the company establishing a network of clinics and doctors in Germany.
“The $26.00 target price represents an EV/EBITDA multiple of 31x based on his FY20 estimates.” – Jason Zandberg of PI Financial
Recent Aphria News: Aphria Reports Profitable Q4 Earnings, Net Revenue Skyrockets 969%
Learn more about Aphria: Chart | Website | IR Website | Investor Deck
There you have it. The recommendations and ratings from the cannabis industry’s top analysts seem to support the very large investments into Aurora Cannabis and Aphria by Jim Simons’ hedge fund Renaissance Technologies.
With the cannabis market currently at the tail end of a cyclical bear market, it could be the perfect time to consider making an investment into these stocks and/or their industry peers. If history is any indication, the cannabis sector should see a strong rebound this autumn.
If Aurora or Aphria doesn’t float your boat then have a look at the list of comparable stocks below. Do your due diligence and find out which stock is currently offering the most bang for your buck.
If you have any questions about the stocks mentioned here or in any of our other articles, please don’t hesitate to email me at Ryan@Circadian-Group.com.
Canopy Growth (TSX: WEED) (NYSE: CGC)
Cronos Group (TSX: CRON) (NASDAQ: CRON)
Organigram Holdings (TSXV: OGI) (NASDAQ: OGI)
Aleafia Health (TSX: ALEF) (OTCQX: ALEAF)
HEXO Corp. (TSX: HEXO) (NYSE-A: HEXO)
Green Organic Dutchman (TSX: TGOD) (OTCQX: TGODF)
Supreme Cannabis (TSX: FIRE) (OTCQX: SPRWF)
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