World’s Top-Performing investments Hedge Fund Gained 145% Last Year…on Marijuana
While hedge funds around the world have struggled to break even in many cases, some select funds found ways to not only beat the markets, but to bring in outlandish returns in 2016. Funds in the quantitative and AI-based strategy realms, for example, occasionally found ways to bring in tidy returns thanks to computer-driven investment protocols. Other funds, such as Australia’s Tribeca Global Natural Resources, simply managed to bring in great returns thanks to some key investments done in a traditional manner. For Tribeca, one of the most important elements of its success in the past year was a major investment in North American producers of marijuana.
145% Gains in 2016
The Australian fund managed to bring in gains of 145% in 2016. A good portion of these gains were due to stock or credit investments in producers of North American marijuana. That portion of the fund’s portfolio contributed about 22% of the 145% in gains. The fund operates on about $200 million in assets under management, according to Tribeca’s Ben Cleary and Craig Evans and reported by Bloomberg. The trend seems to be continuing in the new year as well; Tribeca has already gained about 4% in 2017.
Data aggregator Preqin charts about 10,000 financial firms according to overall performance each year, and the 145% gains of Tribeca in 2016 launched that firm to the very top of the list. The investments in marijuana in North America came just after eight U.S. states as well as the District of Columbia voted to legalize recreational cannabis use for adults. A majority of the United States have also allowed medical marijuana usage. In spite of potential signs from the Trump administration that federal prosecution of cannabis possession and use might increase, Cleary and his time feel that the laws governing this drug are state-based. He indicated that the industry has plenty of room for investment, saying that “financing to this sector is still incredibly hard to find and the cottage-like mum-and-dad industry is prime for consolidation in the U.S.”
$6.7 Billion in Revenue
According to reports, the legalized marijuana industry in the United States reached revenues of $6.7 billion in 2016. Cleary believes it will only continue to grow and that the revenue levels should reach $20 billion in the next five years. Cowen & Co., a focused cannabis research group, expects that the industry will grow to $50 billion per year by 2026. Medical marijuana producers have also seen major gains, with stock prices of Canopy Growth Corp. and Aurora Canabis Inc. climbing by 30% and 12% so far this year and tripling during 2016. Tribeca’s success last year was also due to investments in salmon, cobalt, and lithium.