Jeff Vinik Is Not A Big Fan Of Cannabis Stocks.. Here’s Why

While the global investor community at large has been going gaga over the recent “pot stock craze”, well-known hedge fund manager Jeffrey Vinik has dismissed this hype as being “just another fad”. Not only that, Vinik also believes as we move into the future, the cannabis industry will most likely start to suffer from something known as “squeezed margins”.

In an interview with CNBC yesterday, Vinik gave his opinions on a variety of different topics. For example, when questioned about future of the crypto industry, he was quick to note that he “did not believe the hoopla surrounding this growing market” and that he currently holds “zero bitcoin” in his investment portfolio.

Vinik, who is also the owner of the Tampa Bay Lightning is making his comeback into the hedge market after 5 long years. According to him, a mass entry of the investment community into the cannabis domain will create a situation where the “demand is overserved, and margins start to become too small to be profitable”.

On the matter, he then went on to add:

“I won’t say zero, but my guess is that they’re overhyped. There’s going to be too much competition, margins are going to come down, [and] nobody’s going to make money.”

Even though Vinik’s hedge fund has returned an average of “17% p.a” from 1996 to 2013, his predictions seem to be in stark contrast to the monetary outlook of the pot industry that has been laid forth by other established analysts like Vivien Azer and Michael Lavery. In this regard, both analysts have picked Canopy Growth and Tilray to dominate the cannabis stock industry by the end of 2019.

However, Vinik is of the opinion that such unfounded optimism is a massive cause for concern since it can lead to an ‘entry rush’ that will over time cause this market sector to stagnate.

When questioned about the current state of the US stock market, Vinik stated that despite some of the ongoing turbulence that has gripped the market, he believes that this sector could very well embark on a “multi-year uptrend amidst good economic growth and low inflation”.

Closing out his interview, Vinik was quoted as saying:

“My belief is that we’re in a secular bull market. In retrospect — I didn’t know it at the time — it started in 2009 and if I had to guess, we’re halfway through it, driven by good economic growth and low inflation.”

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