Hygrovest Ltd (ASX:HGV) continues to outperform the Canadian cannabis market, with the investment holding group producing a loss of 25% for the financial year to 30 April 2022 compared to the 70% loss in the listed Canadian cannabis index.
75% of Hygrovest’s investment portfolio remains held in cannabis companies.
The group is well-positioned to create value from its existing portfolio with a liquid balance sheet and cashflows from its investments.
Hygrovest has total assets of A$32 million, with immaterial current liabilities, comprising cash of A$2.4 million and a portfolio of listed equities (C$3 million), listed convertible loans (C$2 million) and unlisted loan securities.
New investment strategy
In terms of Hygrovest’s existing portfolio, it continues to focus on generating exits from some of its cannabis names and recommitting that capital to higher growth opportunities across diversified sectors in Australia and North America.
In addition to diversification across sectors, the company is also exploring opportunities to diversify its capital across strategies as well.
Hygrovest’s existing strategy has been to invest in private companies with an expectation for a liquidity event within 18-24 months.
The company is now seeking to allocate capital to a second strategy that focuses exclusively on isolating warrants and options that are frequently bundled with many secondary private placements on listed public equities.
High growth exposure with a higher margin of safety
Over time Hygrovest aims to build a book of warrants and options giving it significant upside in the next stage of market growth.
While the company will continue diversifying across sectors and strategies, it remains committed to providing shareholders with exposure to high growth opportunities.
Hygrovest’s aim is to simply provide that high growth exposure with a higher margin of safety.