New cannabis hedge fund aims to go long on U.S. stocks, short Canada

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Canadian LPs ‘have one hand tied behind their back’ because of the country’s stringent marketing restrictions, fund partner says

A pot-focused asset manager run by the chairman of Curaleaf Holdings Inc. is launching a new hedge fund with an eye to going long on U.S. cannabis companies and shorting Canadian producers.

The New York-based firm was founded by Boris Jordan, best known for his role in privatizing Russian state assets after the fall of communism in the 1990s. He’s the chairman and largest shareholder of Curaleaf, the biggest U.S. cannabis company by market value, and chief investment officer of Measure 8’s existing venture fund.

Six-fold GainMeasure 8 plans to close its existing venture fund soon, as it turns its attention to the hedge fund and the new venture fund, which it aims to launch before the end of 2019, said marketing director Kevin Gahwyler. The existing fund returned 514 per cent in the 12 months to April and had a net asset value of US$241 million before the Cura Partners deal, according to the firm’s marketing material.

Short ChallengeIt’s not easy to short cannabis stocks, as many have a small public float and aren’t readily available to borrow. This results in average borrowing fees of about 15 per cent compared with typical rates closer to 1 per cent, according to Bloomberg Intelligence.

 

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