New Wall Street Marijuana Fund
One major development in 2019 is how Wall Street has taken notice of the marijuana industry. Banks, analysts, investors—the whole lot of them—have been continuing to wake up to the potential locked within the developing industry.
And that brings us to the latest Wall Street marijuana fund from Altitude Investment Management. The New York City-based firm is trying to raise over $100.0 million for its second cannabis fund. (Source: “A marijuana venture capital started by alums of $2.7 billion hedge fund Longacre is looking to raise a new fund,” Business Insider, February 17, 2019.)
A number of Wall Street veteran investors are involved with the fund, including Jon Trauben, a commercial real estate veteran who did stints at Barclays plc and Credit Suisse Group AG.
“The set of companies that will win the industry already exist,” said Trauben. “They’re not being dreamed up in garages anymore.”
Trauben also said there’s a need for capital at the startup stage in order to fuel competition so the little guy doesn’t get boxed out by the larger gatekeeper companies. (Source: Ibid.)
The new fund is looking to be worth more than triple the first fund, which closed at $30.0 million last year and was deployed across 16 cannabis companies.
So what does this mean for marijuana stocks moving forward?
While the fund is going to be focused on marijuana startups and not established companies, the direct results won’t be felt on the stock market for some time (or possibly ever, if none of the companies touched by the fund ever go public).
But indirectly, this speaks to a growing industry that is maturing each and every day.
Flooding the cannabis industry with capital is going to help drive competition and hopefully provide more options for investors. Not to mention that new companies going public often offer some of the best ways to see huge returns in a short period.
The vast sum of Altitude Investment Management’s new fund also speaks to the growing power and clout of the pot industry. Remember, the fund wants to raise $100.0 million for venture capital investments, meaning they’ll be getting in on the ground floor for many of these companies.
That the money is being deployed in the cannabis sector speaks to Wall Street’s growing respect for, and interest in, marijuana funds.
Which is all just a of saying that, once again, we’re seeing the marijuana industry develop before our very eyes.
The creation of a new Wall Street marijuana fund is yet another example of the marijuana industry’s maturation.
We talk about this kind of thing a lot on Profit Confidential, but that’s because it’s important. These milestones speak to upward momentum, wherein more money enters the market and more stocks become available on the public market.
Considering how well marijuana initial public offerings have done in recent years (and considering there will be a good load more of them in the next few years), the opportunities down the line that may grow as a result of Wall Street marijuana funds could make many investors happy.