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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Mindset Value Fund returned 51% in 2023 by concentrating in undervalued cannabis companies trading at 1-2x EBITDA where institutional investors are absent. The fund owned the year's top-performing cannabis stocks and discovered a new opportunity in hemp-based beverages that could generate $50+ billion annually."
The Mindset Value Fund delivered exceptional performance in 2023, returning 51% by concentrating in undervalued cannabis companies where few institutional investors operate. The fund's top four positions were the best-performing cannabis stocks of the year, including Grown Rogue (up 200%) and Glass House. Manager Aaron Edelheit has pivoted this general value fund toward cannabis, citing it as a target-rich environment with companies trading at 1-2x 2025 EBITDA estimates. The fund also discovered a new opportunity in hemp-based THC beverages, which represent 10% of Minnesota liquor store sales and could generate $50+ billion annually. Federal rescheduling momentum and regulatory confusion in beverages create a 12-month window for attractive investments. The portfolio was refined by selling underperforming positions like HireQuest and MariMed while adding AYR Wellness distressed bonds at 70 cents yielding 20%+. The manager emphasizes following curiosity to find overlooked opportunities where fundamental research creates significant advantages.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Very high conviction demonstrated through concentrated portfolio with named, sized positions. Manager owns 9.9% of Grown Rogue, provides specific cash flow targets, and has pivoted entire fund strategy toward cannabis. Clear position sizing and willingness to hold through volatility evident.
Growth Outlook
Manager expresses strong optimism about cannabis sector opportunities, describing it as 'target rich' with 'so many fish to catch.' Federal rescheduling progress and beverage market discovery reinforce positive outlook on the investment environment.
Risk Appetite
Fund is aggressively positioned with concentrated cannabis exposure and actively deploying into new beverage investments. Manager pivoted entire general value fund toward cannabis and plans 7-10% allocation to private beverages, demonstrating high risk appetite.
Capital Deployment
Active deployment evident through selling HQI and MRMD to fund cannabis positions, buying AYR distressed bonds, and making three private beverage investments with two more planned by January. Portfolio rotation and new investment activity indicate moderate to strong deployment.
Forward Guidance
Manager plans to continue cannabis concentration, make additional beverage investments by January end, and launch dedicated beverage venture fund. Clear deployment bias with specific growth targets for Grown Rogue and expansion plans.
Language Signal
Language is predominantly bullish with terms like 'compelling,' 'attractive valuations,' 'incredible opportunity,' and 'investor's dream.' Some risk acknowledgment around beverage investments being earlier stage, but overall positive framing dominates.
Perceived Risk
Manager acknowledges some risks around beverage investments being earlier stage and MSO business model challenges, but overall risk discussion is limited. Focus is primarily on opportunities rather than detailed risk analysis.
Opportunity Density
Manager describes cannabis as having 'so many fish to catch and so few fishermen' and beverage opportunity as potentially creating $250+ billion in market value. Multiple specific investment opportunities identified across cannabis and beverages with attractive entry points.
Time Horizon
Manager provides specific 2024-2025 targets for Grown Rogue cash flows and discusses multi-year thesis development. Some catalyst dependency around federal rescheduling and beverage market development, but overall medium-term 2-3 year investment horizon.
