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Are Sovereign Wealth Funds Open to Cannabis Investing?

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Many sovereign funds have investment restrictions on what types of stocks they can or cannot hold. In 2017, the New Zealand Superannuation Fund clarified its policy statement on marijuana stocks, adding to more SWFs avoiding the smoke. Recreational marijuana is illegal in many countries that have sovereign wealth funds. With Canada leading the charge, more of these pot stocks are becoming a mainstay of North American equity markets. Not all public asset owners are shying away from cannabis stocks. PSP Investments and Swiss National Bank are large shareholders of Canopy Growth Corporation, a medical marijuana company based in Smiths Falls, Ontario. PSP Investments oversees the pension plans for the Canadian Armed Forces, the Royal Canadian Mounted Police, and the Reserve Force. Speculation is buzzing that cannabis companies could be the next crypto currency companies, which endured drastic plunges this year. The carnage came after Bitcoin, Ethereum, Ripple, and Litecoin suffered steep losses on the heels of an SEC delay in its decision about whether to allow a Bitcoin ETF to roll out. One of the high flyers in the cannabis space has been Tilray, Inc. Tilray’s initial public offering was priced at US$ 17 a share in July 2018, but reached a high of over US$ 214 per share in September. Tilray has outpaced crypto currency companies, demonstrating an ability to rally 1,000 percent in two months. Also in September, Tilray Chief Executive Officer Brendan Kennedy suggested that the company be worth US$ 100 million, spiking the equity price by 50 %. The U.S. Drug Enforcement Administration (DEA) provided another boost to shares by approving the import of Tilray’s cannabis into the United States for medical research. Tilray generated US$ 9.7 million in the second quarter of 2018.

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BlackRock Experiences Outflows Among Institutional Investors

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Is BlackRock at peak earnings? BlackRock disclosed its third quarter 2018 results showing a growth of assets under management at US$ 6.4441 trillion at the end of September 2018 versus US$ 5.976892 trillion at September 2017. However, a large portion of the AUM growth has been in the ETF business, iShares, which tends to be very low in fees. The iShares business saw an inflow of US$ 33.7 billion for the quarter.

For the third quarter, BlackRock experienced US$ 24.8 billion in institutional investor outflows, with US$ 23.6 billion being on the index side, while US$ 1.2 billion being on the active side. Institutional investors such as pensions, insurers, and hedge funds withdrew from passive equity strategies. BlackRock saw US$ 4.745 billion in outflows in active equity on the institutional side, but seeing inflows of US$ 2.471 billion in multi-asset institutional and inflows of US$ 1.468 billion in alternatives institutional.

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GIC Buys Large Stake in Nordic Aviation Capital

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Singapore’s GIC Private Limited, a yield-hungry sovereign investor, invested in Denmark-based Nordic Aviation Capital A/S, becoming a significant minority shareholder. Other shareholders in Nordic Aviation Capital include EQT VI Limited fund, KIRKBI Invest (wealth origins tied to Legos), and Martin Møller, the founder of Nordic Aviation Capital. EQT VI will remain the largest shareholder of Nordic Aviation Capital. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Trump Wants Pharma Companies to Disclose Drug Prices in Advertisements

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U.S. President Trump is progressing on plans to mandate pharmaceutical companies to reveal their prices in drug advertisements. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” Health and Human Services Secretary Alex Azar said in a statement. “So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further.”

The U.S. Health and Human Services Department would require pharmaceutical companies to include drugs’ sticker prices in their video advertisements. This would be similar to how drug companies disclose the laundry list of side effects.

Increasingly, sovereign funds like Temasek Holdings have backed mid-stage pharmaceutical companies and other therapies, while market investors like Norway’s GPFG have large holdings in listed pharmaceutical companies.

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