Tim Seymour, CIO of Seymour Asset Management and CNBC personality, hosted a panel Wednesday at the Benzinga Cannabis Capital Conference in Toronto on how to make better, more informed investment decisions in the cannabis space.
Matt Hawkins: Value In Early Stage Companies
Matt Hawkins, managing principal of Cresco Capital, said he would be "scared to death" if tasked with picking compelling investments among public companies. Instead, he said young and private companies looking for Series A financing are the most attractive.
Investors could be making a mistake in valuing a private company using public comps, Hawkins said: it just "doesn't work" because it isn't a fair apples-to-apples comparison, he said.
Narbe Alexandrian: ‘Founders Know Founders'
Canopy Rivers Inc (OTC: CNPOF) President Narbe Alexandrian said he considers investments in companies who would "cold call" him.
A lot of value exists in the form of "hidden talent" at private companies, and this is among the most important factors in determining the suitability of an investment, he said.
Alexandrian went on to say successful entrepreneurs tend to associate with other successful people, and this may represent an easier path to finding investment opportunities.
"Founders know founders," he said.
Trauben: Take A Bet On Management
Investing in any company is taking a bet on the people behind a product or service, said Jon Trauben, partner at Altitude Investment Management. It is easy to value a product or calculate a total addressable market, but it is much more difficult to associate value to a management team, he said.
Skilled and knowledgeable managers have been a key driver of growth and innovation in the cannabis industry, Trauben said.
Some of the leading cannabis executives come from outside industries, so they bring a unique skill set to the table to duplicate their prior success, he said.
Rehmatullah: Cannabis Experience More Useful
Taking a different approach to Trauben's thesis on management, Hypur Ventures Managing Director Tahira Rehmatullah said managers with outside experience might be lacking one critical skill.
The cannabis sector — especially in Canada, where legalization is months old — remains "vague at best" on what is legal, she said. Managers with a Wall Street background have "no blueprint to follow" and may find it more difficult to "handle turmoil," Rehmatullah said.
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Tim Seymour of Seymour Asset Management and CNBC moderates a panel on cannabis investments Wednesday at the Benzinga Cannabis Capital Conference in Toronto. Photo by Juil Yoon.
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