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Again, this is just noise!

Again, this is just noise!

William McNarland
July 10, 2024

GM Everyone,

The US MSO Cannabis market sold off yesterday with some news out of Washington. Was the sell-off warranted? We have reached out to our network of experts' legal and regulatory opinions and will share them on our Trade To Black Livestream on Friday at 11 am EST this week!

We have repeatedly learned when investing in US Cannabis MSOs that a lot of information causes knee-jerk reactions in prices. Some concerns are valid, and some are not; we believe the best path is to make informed decisions based on expert analysis, and we seek this out for our followers.

Regarding Analysis, check out also our daily analysis of the US Cannabis MSO market; today, we look at the Equity Dilution ranking and explanation of the US Cannabis MSO market. Remember also to join us live today at 4 pm EST for the Trade To Black Livestream!

Today’s letter can be read in 7 minutes and 08 seconds.

What's Driving the Market Today?

Stock futures are up and still holding to to record highs:

S&P 500 and Nasdaq hit record highs, led by Nvidia gains.
U.S. Treasury's Yellen predicts continued inflation easing.
Fed mulls rule changes to save big banks billions.
Middlemen influence U.S. drug prices, says FTC.
U.S. bank profits pressured by lower interest, higher credit losses.

💸 High Impact

Dilution Ranking of US Cannabis MSOs

The What— We ranked all the US MSOs to compare their outstanding share count this week to one year ago. We also wrote an article to explain why this is important and how it compares to what is happening in the broad market as measured by the S&P 500.

The Why - Simply stated, if you buy 1% of a company this year, you will not own 1% of the company in the future. Likely, the company is either going to increase or shrink the share count of the company. At some point in the future, you might own 0.8% or 1.2%, depending on whether the share count is shrinking or increasing. Typically, owning more than less of the company is always better. Tracking the ownership trend and comparing it to other MSOs is important.

The Results - The S&P 500 companies are estimated to have share buybacks of about 2%. For the MSOs, only one company had a share buyback, and one was flat. The other MSOs have small dilutions, and four companies have major dilutions of over 40%. When looked at as a whole, the dilution across the US MSO averaged 14.4% or a median of 2.7%.

My Take - Some MSOs are becoming cash flow positive and likely to not have to dilute shareholders any longer, while some MSOs are still struggling with cash flow and have had to dilute significantly.

Want to see the details, read the full report on the TDR Website.

📈 Dog Walkers

Crypto Miner TeraWulf is expanding and eliminated all debt this month!

The price of Bitcoin has dropped significantly, but Crypto Mining stocks like TeraWulf have been going in the opposite direction. TeraWulf is up over 60% this month. TeraWulf is expanding and paying down debt. Read all about TeraWulf’s financial progress on the TDR Website!

Analyzing Small Cap Stocks: Ames National Corporation (NASDAQ: ATLO)

Ames National Corporation (NASDAQ: ATLO) is a community bank headquartered in Ames, Iowa, which was highlighted in our recent Small Cap Sunday Episode. A key risk factor is the potential for bad investments, which can lead to a loss of confidence and a run on deposits.

This scenario was famously depicted in the classic film “A Wonderful Life,” where a bank’s poor investment decisions triggered a panic among depositors. More recently, we’ve seen similar issues with Silicon Valley Bank, where concerns about investments led to a significant withdrawal of funds. With a dividend over 5% per year and conservative lending, we thought Ames National was an interesting pic!