Ananda Developments (ANA:AQSE) Into The Bargain Basement Zone?

It is clear that since the arrival of Covid-19 this year, investors have had to totally change they look at the financial markets, and perhaps more importantly, who the new winners and losers will be.

By Zak Mir 

It is not always an intuitive process, as perhaps the panic buying of toilet roll has shown us. This particular asset has certainly been deemed an “essential”, but there are others which when consumers are in lockdown have acquired an increasingly more important status.

An Outperforming Sector
Indeed, one of the key sector outperformers of the past week in the US has been cannabis, with the likes of Tilray (TLRY) and Aurora (ACB) the main beneficiaries. The Cannabis ETF (THCX) itself was up more than a quarter. Sales across the sector are reported to be at record levels, something which may be part “stress” and part stockpiling. Of course, cannabis is divided into two areas, the recreational and medicinal.

Part of the reason for the current renaissance in the space may be that both aspects are currently in the ascendant, over and above speculation that further legalization of cannabis could be a key source of revenue to offset Covid-19 bailouts.

Legal Cannabis Investor
Against such a new and improved background Ananda Developments (ANA:AQSE) may be a stock whose time has finally come. Its raison d’etre is to invest in legal cannabis companies, projects and products. In this way, its investments should become a greatest hits of all things cannabis.

Hone Office Application
For instance, in the autumn Ananda and via partner JEPCO, submitted an application to the Home Office for a medical cannabis growing license. Given the way that JEPCO has four years experience in this area, one would assume this will be a successful process.
Once approved, we could see Ananda with the capability of  initially growing 1,100 plants in UK conditions in poly tunnel structures, in exactly the same way JEPCO did under its previous growing licence. The 13 strains of cannabis of greater than 0.2 THC that will be stabilised by Ananda may be useful in the treatment of epilepsy, cancer and Parkinson’s. Of course, Ananda with its new license would have first mover advantage in terms of UK supply.

Liberty Herbal Technologies
The other major prong to the Ananda plan is the 15% holding it has in Liberty Herbal Technologies, the owner of hapac, a medicinal cannabis inhalation system. Sales of this pre Covid-19 were strong in Italy, with ongoing discussions for launch in North America. To address the issue of Covid-19, there is increased potential for a sachet style of dry herb vaping, which requires much less human contact than traditional hand made “doses.”

Asset Class Acceptance
The key to Ananda Developments for the rest of 2020 and in a post Covid-19 environment is how steep the curve of legalisation and acceptance of Cannabis as an asset class becomes. If current moves in the US are anything to go by this UK listed company as a canny investor and protagonist, could play catch up with its Stateside cousins.

Financial commentator, interviewer, technical analyst 


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