Weedmaps define Hemp as “A dioecious plant, which means it can be separated into male and female plants. These plants have served a wide variety of purposes for more than 10,000 years: for fiber (from the plant's stems), protein (from seeds), and oils and smokable portions (from the leaves and flowers). Hemp fibers can be used to make items including paper, clothing, furnishing fabric, rope, and building materials.”. Some people may confuse hemp with marijuana. Although both contain tetrahydrocannabinol (THC) and are classified as cannabis, the variety cultivated for hemp has only small amounts compared to the marijuana. And it does not have the same effect.
In 2014, the federal law under the Agricultural Act 2014 (farm bill) allowed the use of hemp on an experimental basis. The commodity proved its significance not only for the health sector but for the economy as a whole with over 25,000 recorded uses. In 2018, the United States farm bill federally legalized hemp production and since then the industry has been thriving. According to MarketsAndMarkets “The industrial hemp market is projected to grow at a CAGR of 34% from USD 4.6 billion in 2019 to USD 26.6 billion by 2025”
The COVID-19 affected many industries when enforced lockdown and social distancing was in place. However, the hemp industry was one of those industries that managed to stay afloat despite the economic recession. Many medical researchers looked into medical cannabis as an option to help stop the spread of the virus. In a study by a partnership between cannabis research companies Pathway RX, Swysh Inc., and the University of Lethbridge it was shown that certain Cannabis Sativa extracts could be used in treatments to prevent infection with SARS-CoV-2, the virus that causes COVID-19. The researchers commented:
“While our most effective extracts require further large-scale validation, our study is crucial for the future analysis of the effects of medical cannabis on COVID-19,” the researchers said in an early pre-publication version of their study. “The extracts of our most successful and novel high CBD [cannabidiol] C. sativa lines, pending further investigation, may become a useful and safe addition to the treatment of COVID-19 as an adjunct therapy. The extracts could potentially be used in a mouthwash or “throat gargle”
Cannabis stocks rallied after Biden's victory raised expectations for cannabis reform. The hemp industry is optimistic that plans for high-THC cannabis will open more opportunities for the sector. Chairman of the National Hemp Association, Geoff Whaling commented saying that “2021 can be the year of the hemp”. While in a separate note, Texas cannabis attorney Lisa Pittman told Hemp Industry Daily:
The ability to harness hemp’s power to sequester carbon from the atmosphere and remediate toxins from the soil could finally become a functioning reality instead of a theoretical possibility,”
In order to identify the 13 Best Hemp Stocks to Buy Now, we started with the 33 holdings in the ETFMG Alternative Harvest ETF (MJ) as of February 4, 2021, and we were able to narrow down our list to 13 stocks by using the hedge fund sentiment data.
Our in-house research showed that by using the hedge fund sentiment data, we can identify a small group of stocks that can outperform the S&P 500 index on average by double digits annually. For instance, the portfolio for stock picks for our monthly newsletter has beaten the market by over 88 percentage points since March 2017 Some of the portfolio choices for our monthly newsletter were also publicly shared on our website. In October, we posted this real estate stock and since then it’s been up more than 50 percent.
Based on our hedge fund sentiment data, we present to you the 14 best hemp stocks to buy now among 800+ hedge funds tracked by Insider Monkey:
13. Aurora Cannabis (NYSE:ACB)
No of HFs: 10
Total Value of HF Holdings: $9.22 Million
ACB is the 13th best hemp stock to buy now. The stock was mentioned as one of the 25 Biggest Marijuana Companies in the World. The company is known for the production, distribution, and marketing of cannabis products. They recently announced a five-year supply agreement with MedReleaf Australia. Miguel Martin, CEO of Aurora said,
"We are pleased to have established a long-term strategic relationship with MedReleaf to exclusively distribute the Aurora, CanniMed and MedReleaf brands in Australia. The team at MedReleaf have created an asset-light, sustainable growth platform in Australia to assist physicians, pharmacists and patients across the country in accessing the high-quality range of Aurora cannabis medicines."
12. GrowGeneration Corp (NASDAQ:GRWG)
No of HFs: 10
Total Value of HF Holdings: $56.4 Million
The top hedge fund holder of this stock is Richard Driehaus’ Driehaus Capital which had $23 million invested in the stock at the end of September. An insider recently purchased 25,000 shares at around $3 in December 2019. The stock is up 1332% since then. GRGW is known for its retail of hydroponic and organic specialty gardening products. They recently acquired Maine-based Grow Depot., GrowGeneration’s CEO, Darren Lampert said:
“It’s a very exciting time in Maine’s adult-use market, and we’re pleased to expand our footprint in the state through our acquisition of Grow Depot, which has proudly served the Central Maine area for nearly a decade. With our expanded footprint, the Maine market is expected to generate 2021 annual revenues of over $20 million for GrowGen.”
11. Cronos Group Inc (NASDAQ:CRON)
No of HFs: 10
Total Value of HF Holdings: $59.9 Million
At the end of September, a total of 10 hedge funds tracked by Insider Monkey were long this stock. An insider recently purchased 15,000 shares at around $5 in August 2020. The stock is up 140% since then. CRON advances cannabis research, technology, and product development. During the third quarter of 2020, the company reported net revenue of $1.6 million.
10. Schweitzer-Mauduit International, Inc. (NYSE:SWM)
No of HFs: 11
Total Value of HF Holdings: $16.4 Million
SWM is the 10th best hemp stock to buy now. The top hedge fund holder of this stock is Jim Simons’ Renaissance Technologies which had over $5 million invested in the stock at the end of September. An insider recently purchased 1,000 shares at around $30 in May 2020. The stock is up 26% since then. SWM is known for developing papers for the tobacco industry. They recently announced their agreement with the Board of Scapa Group, Plc. To acquire the entire share capital of Scapa. SWM CEO Dr. Jeffrey Kramer commented that they are enthusiastic about adding Scapa’s best-in-class global healthcare solutions platform to SWM
“We are enthusiastic about adding Scapa’s best-in-class global healthcare solutions platform to our already substantial presence, giving SWM immediate critical mass in the growing medical materials space. Together with Scapa, we will offer a comprehensive suite of products focused on skin-friendly specialty applications like advanced woundcare, wellness, and medical device fixation, in addition to our existing portfolio of medical products. Scapa also brings a robust and profitable set of industrial tapes used in construction, transportation, consumer, and industrial end-markets, complementing our existing business. Like SWM, Scapa has significant capabilities and scale in key specialty applications and a well-recognized brand portfolio. With Scapa’s industrial business as part of SWM’s diversified AMS segment, we see potential to leverage our combined sales and distribution reach.”
9. Universal Corp (NYSE:UVV)
No of HFs: 12
Total Value of HF Holdings: $74.8 Million
UVV was mentioned in the Top 5 Dividend Kings of 2021 as the company announced its 50th consecutive annual dividend hike in May 2020. They are one of the leading tobacco merchants worldwide. Universal primarily sells flue-cured and burley tobacco. In 2020, the company acquired Silva International. The acquisition will enable UVV to offer a single source for vegetable and fruit solutions.
8. Vector Group LTD (NYSE:VGR)
No of HFs: 17
Total Value of HF Holdings: $131 Million
VGR is the 8th best hemp stock to buy now. The top hedge fund holder of this stock is Jim Simons’ Renaissance Technologies which had over $95 million invested in the stock at the end of September. An insider purchased 15,000 shares at around $12.10 in January 2021. The stock is up 2% since then. Recently, the company made changes in their Board of Directors, where they appointed Richard J. Lampen as the new Chief Operating Officer and Member of the Board of Directors. Howard M. Lorber, President and Chief Executive Officer of Vector Group commented:
“On behalf of the Board and Management team, we are pleased to announce Dick’s new roles at Vector Group. With his broad executive experience and deep operational understanding of the company, having served in a variety of senior leadership roles for Vector Group and its affiliates for more than 25 years, Dick is a valuable addition to our Board and a natural fit to be COO."
7. GW Pharmaceuticals PLC (NASDAQ:GWPH)
No of HFs: 17
Total Value of HF Holdings: $201 Million
The top hedge fund holder of this stock is Steve Cohen’s Point72 Asset Management which had $52 million invested in the stock at the end of September. An insider recently purchased 7,200 shares at around $6 in March 2020. The stock is up 3450% since then. Alger Spectra Fund mentioned the stock in its Q3 2020 investor letter:
“GW Pharmaceuticals is producing cannabinoid-based pharmaceuticals without tetrahydrocannabinol, or THC, which is a mood-altering component in marijuana. These cannabinoids enable the identification of unique chemotypes that have positive effects on different diseases, including epilepsy, inflammatory disorders and psychosis. GW’s near-term focus is developing Epidiolex for use with treatment resistant epilepsy. with up to 40 Vo of epileptic patients continuing to have seizures after using three or more different drugs. The sales growth of Epidiolex has been disappointing because the virtual nature of diagnosis and prescribing drugs during the Covid-19 pandemic is challenging the adoption of this newer type of therapy; shares of GW Pharmaceuticals thus underperformed during the third quarter.”
It is now too late to buy GWPH as Jazz Pharmaceuticals recently announced that it is acquiring GWPH.
6. Cara Therapeutics, Inc. (NASDAQ:CARA)
No of HFs: 19
Total Value of HF Holdings: $75.6 Million
At the end of September, a total of 19 hedge funds tracked by Insider Monkey held long positions in the stock. CARA is known for developing products for pruritus and pain management. In 2020, the company released a new drug application to US FDA for KORSUVA injection in Hemodialysis patients with moderate-to-severe pruritus. Derek Chalmers, Ph.D., D.Sc., President and Chief Executive Officer of Cara Therapeutics said:
“The NDA submission for KORSUVA Injection marks a significant milestone for Cara and for hemodialysis patients who suffer from intractable pruritu. I’d like to thank the entire Cara team for working tirelessly to bring this first-in-class therapeutic from in-house discovery, through development to the completion of NDA submission, as well as the patients, investigators and site personnel who participated in the clinical trials. We look forward to working with the FDA through the review process and, along with our commercial partner, Vifor Pharma, remain focused on preparation for the U.S. launch of KORSUVA Injection, if approved.”
5. Turning Point Brands, Inc. (NYSE:TPB)
No of HFs: 24
Total Value of HF Holdings: $98.0 Million
TPB is the 5th best hemp stock to buy now. The top hedge fund holder of this stock is Ken Griffin’s Citadel Investment Group which had over $20 million invested in the stock at the end of September. An insider recently purchased 1,500 shares at around $22 in May 2020. The stock is up 140% since then. Maran Capital Management LLC mentioned the stock in its 4Q 2020 investor letter:
“Turning Point Brands, a branded consumer products company executing a buy and build strategy, has been a holding of the partnership on and off for the past four years. TPB is focused on “active ingredients,” such as nicotine (including tobacco-based and non-tobacco variants, but not cigarettes), caffeine, CBD, and more. Their Zig Zag brand dates back over 150 years and is the top-selling rolling paper brand globally. I don’t believe we are paying anything for the option, but if cannabis is legalized at the federal level in the US, Zig Zag could see a step-change in its growth. I love these types of situations. I’ve underwritten TPB based on its “boring” legacy businesses, but there is a lot of upside in its “new gen” segment (vaping, CBD, other active ingredients), as well as the potential for a real acceleration in Zig Zag’s growth under various scenarios.
A few months ago, I had the pleasure of interviewing Larry Wexler and Bobby Lavan, the CEO and CFO of Turning Point Brands, respectively, at the Casulo Buyside Fireside, hosted by Shai Dardashti. We discussed why they are so excited about the opportunities ahead at TPB, the significant optionality embedded in the company, the fact that the company was one of the few to increase its share buyback authorization last March (and act on it), how management targets a 17.5%+ ROIC on all capital allocation decisions, and the growth prospects across all three of the company’s major portfolio segments.”
4. Scott Miracle (NYSE:SMG)
No of HFs: 31
Total Value of HF Holdings: $292 Million
SMG was mentioned in the 25 Biggest Marijuana Companies in the World. The company is known for its branded consumer lawn and gardening products. Recently, the company announced the realignment of Finance, Supply Chain, and Corporate Affairs Teams. Dave Swihart had expanded the role of leading global technology and operations. Mike Lukemire, president and chief operating officer commented:
“Under Dave’s leadership, we have dramatically improved our innovation processes and have benefitted from a series of the most successful product launches in our history. As we continue to advance our supply chain to meet the rapidly evolving needs of the market, including the expansion of our direct-to-consumer efforts, he is the right person to also oversee this effort. Dave’s expanded role provides me more flexibility to work with Jim and our Board of Directors on key strategic initiatives that we believe will drive growth and value for years to come.”
3. Arena Pharmaceuticals, Inc (NASDAQ:ARNA)
No of HFs: 43
Total Value of HF Holdings: $989 Million
ARNA is the 3rd best hemp stock to buy now. The top hedge fund holder of this stock is Kurt Von Emster’s VenBio Select Advisor which had $231 invested in the stock at the end of September. An insider recently purchased 5 shares at around $69 in December 2020. The stock is up 15% since then. ARNA is known for its novel medicines with pharmacology and pharmacokinetics. On February 2, 2021, EVP, Chief Commercial Officer of ARNA sold 17,500 shares of ARNA at an average price of $78.87 per share. The total sale was $1.4 million.
2. Altria Group, Inc. (NYSE:MO)
No of HFs: 47
Total Value of HF Holdings: $1.12 Billion
At the end of September, a total of 47 hedge funds tracked by Insider Monkey held long positions for this stock. An insider recently purchased 1,352 shares at around $52 in February 2019. The stock is down 19% since then. MO was mentioned as one of the Top 10 Sin Stocks to Buy Now. Artko Capital mentioned MO in its Q2 2020 investor letter:
“Altria Group (MO) – We made an 9% Core Portfolio investment in Altria group at sub $40.00 in 2019 with the view that it was a good place to park cash at an 8%+ dividend yield with liquidity and a 15- 25% annual IRR upside. When the stock reached $50+ in early 2020 we took half of our position off the table and took the rest off back at $40 in the spring 2020 as we are positioning our portfolio to have significantly higher upside in the nanocap space as the economy and the small cap markets recover over the next few years. We may come back to MO in the future as it is a solid dividend yielding investment, but as we mentioned earlier, our strategy does involve off-the-beaten-path companies with an opportunity to get repriced on growth of revenues and earnings and Altria Group’s low growth was not going to get us the returns we seek given the repricing of the value segment of the small cap markets.”
1. Philip Morris, Inc. (NYSE:PM)
No of HFs: 50
Total Value of HF Holdings: $2.63 Billion
The top hemp stock to buy now is PM. The top hedge fund holder of this stock is Donald Yacktman’s Yacktman Asset Management which had over $1 million invested in the stock at the end of September. An insider recently purchased 500 shares at around $78 in May 2019. The stock is up 6% since then. PM was mentioned in an article we published about the 15 Best Tasting E-juice E-liquid Flavors For Beginners. First Eagle Investment Management mentioned the stock in its Q2 2020 investor letter:
“Philip Morris was able to recover some of the ground lost during the first quarter selloff but remains well below its early-year highs. Tobacco industry volumes were hurt by Covid-19, as lockdowns and other social-distancing restrictions in certain key markets hurt demand. Duty-free sales also suffered given the lack of global travel during the period. Given its pricing power, cost discipline and robust balance sheet, we believe Philip Morris appears well positioned to navigate the ongoing transition from traditional combustible tobacco products to “heat not burn” alternatives.”