Rob Fagan is one of the few analysts anywhere who covers the stocks of U.S. cannabis chains like Green Thumb Industries or Curaleaf Holdings. The 39-year-old researcher at Canada’s GMP Securities believes that the U.S. operators have better growth prospects than their better-known counterparts in Canada, like Canopy Growth. But even after this year’s selloff of Canadian producers, U.S. weed operations sell for a fraction of the Canadians’ multiples. Fagan explains why he thinks the U.S. stocks will take investors higher. An edited version of our conversation follows.
Barron’s: How did a nice Canadian boy end up covering cannabis?
Fagan: I got a job at GMP Securities in 2011, working as a research associate for the consumer products analyst, Martin Landry. We were introduced to Canopy Growth (ticker: CGC) and led their public offering. They had a hard time just getting a meeting with other investment banks, but GMP goes after niches where they can have a good market share. Cannabis was one of them.
When we were marketing, Martin would say he didn’t want to be the pot guy. But I said, “I always wanted to be the pot guy!” I’m a big fan of cannabis. It’s something I’m passionate about. And I have a certain knowledge base that could give me a competitive edge.
Experience base…I don’t know how else you would like me to describe it. An eye for quality, perhaps?
You focus on the U.S. multistate operators, instead of Canadian producers like Canopy or Aurora Cannabis (ACB). Why?
To be super honest, it just was a greenfield opportunity, where there was less competition for an up-and-comer