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A strategy where investments are made in companies that are providers of necessary equipment for an industry, rather than in the industry's end product. A pick-and-shovel play, in practice, could be within the oil industry; an investor would purchase stock in a company that manufactures seismic data equipment that exploration and production (E&P) companies need to find new oil and gas deposits, rather than on the E&P company itself.
“During the Gold Rush, most would-be miners lost money, but people who sold them picks, shovels, tents and blue-jeans (Levi Strauss) made a nice profit.”-Peter Lynch
This is a great investing principle that most people tend to overlook. When you identify a booming industry or stock, don’t forget to look at the companies supplementing that industry. For example, when Apple Inc. (AAPL) became successful with the iPhone, a lot of other companies supplying them with technology and raw materials also made huge money. With EnWave we can make money from all weed producers instead of competing against them.
Cost-Saving, Weed-Drying Machines
a "Pick & Shovels" Marijuana Play
Written by: Trent Blair
TSXV:ENW; OTC:NWVCF; FRA:E4U.F
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Alefia Health Inc. (CSE:ALEF; OTC:CAMDF)
Per Investing.com at time of Writing: STRONG BUY
ALEF is an LP with its HQ in Markham and its facility in Scugog Ontario. Through an M&A, it merged with Cannabo Medical Clinic (CMM).
- CEO is Julian Fantino and the CEO of CMM is John Philpott.
- Because this is a new listing and the stock of CMM was halted, there is not a lot of news other than the obvious – if you agreed CMM on its own was a value priced stock then what is CMM + an LP with prominent figures at the helm worth?
- See also the investment by Quinsam Capital later in this case study …
3 Evergreen ($175,000 in shares) - We participated in a seed round financing for this company which plans to offer cannabis-inclusive medical insurance coverage.
3 HarvestOne - ($343,000 in units) We participated in a unit transaction at $1.82 per unit. This issue has performed below expectation and the unit has a current value in the $1.35 area. We see the stock as being relatively undervalued at this time and we are happy with maintaining the position. [L. Kyron – yes this Harvest One – TSXV:HVT]
3 Hemp Hydrate International Holdings ($425,000 in units) - We participated in an early round financing for this company which has developed a CBD-infused water product. We have seen an number of beverage products in the sector and we think that this is the most interesting we have encountered.
3 High Hampton ($360,000 in units) - We participated in the current $0.60 unit deal. The company is developing a cannabis-zone property in Coachella area of California. The shares recently traded at $0.80. [L. Kyron – yes one of our two feature companies in our February issue]
3 Hydropothecary ($300,000 in units) - We participated in the recent $4 unit transaction. We disposed of our holding for an aggregate of over $340,000. [L. Kyron – TSXV:THCX]
3 Phytopharma ($400,000 in convertible debentures) - This Israel-based company has a technology which allows bees to naturally express THC and CBD in their honey. We think the technology is extremely interesting and could have global appeal.
3 Sproutly ($500,000 in convertible debentures) - This is a late stage ACMPR applicant which expects to commence cultivation in the immediate future. We expect a listing in the coming months.
3 Westleaf Cannabis ($500,000 in units) - Westleaf is developing two facilities in western Canada in conjunction with Delta 9 Cannabis and First Nation groups.
3 Quinsam Acquisition Target Announces LOI With Maryland Medical Cannabis Dispensary to Advance Secured Loan With Bonus 35% Equity Participation
3 Quinsam Announces Appointment of Terry Booth – CEO of Aurora Cannabis – to the Board of Directors