Renowned hedge fund manager Jeffrey Vinik has dismissed the pot stock craze, describing cannabis investment as overrated and likely to suffer from squeezed margins. Speaking on CNBC’s Squawk Box on January 10, Vinik also revealed that bitcoin currently accounts for “zero percent” of his investment portfolio.
Returning to the hedge fund scene after a five-year hiatus, the Tampa Bay Lightning owner, who also holds minority stakes in the Boston Red Sox and Liverpool Football Club, believes that an entry rush into cannabis investments will create a situation where market demand is overserved, and margins become too small to be profitable.
In his words:
I won’t say zero, but my guess is that they’re overhyped. There’s going to be too much competition, margins are going to come down, [and] nobody’s going to make money.
Rosy Cannabis Stock Predictions Versus Vinik’s Bearish Outlook
Tilray, the poster child of the pot stock bubble, has a price chart that looks more like it belongs to a cryptocurrency than a publicly-traded company.
If anyone has worthwhile experience in predicting stock performance, it would be Vinik whose hedge fund Vinik Asset Management returned an average of 17 percent per annum from 1996 to 2013. His prediction, however, is in stark contrast to the cannabis industry outlook put forward by Vivien Azer and Michael Lavery of Cowen and Piper Jaffray, respectively.
Both analysts have picked Canopy Growth and Tilray to lead the space in 2019 amidst a projected market surge that will see the sector achieve a valuation in the hundreds of billions of dollars over the coming decade.
Vinik, on the other hand,