Iron ore magnate Gina Rinehart’s company Hancock Prospecting is getting into pot stocks.Credit:Matt Krumins
Cannabis stocks have become particularly fashionable of late among the US Reddit crowd whose modus operandi is to engage in frenzied buying of particular shares - with scant reference to underlying valuation.
Meanwhile,it’s hard to avoid the irony that Rinehart’s investment in the emerging cannabis industry coincided with news that her Canadian coal mining ambitions had been dealt a blow,with the development of a project in Alberta scuttled by the government on environmental grounds.
Investing in cannabis stocks still feels a bit like placing bets on small prospective mining companies 40 years ago or gambling on technology startups in 2000. Coal may seem like a much safer bet but investors and lenders willing to provide funds for coal companies are disappearing as the focus on environmental concerns grows.
Indeed investing funds into new coal projects in Western countries has become a far more precarious play in recent years,with projects increasingly at risk of being stranded.
Most of the cannabis companies in Australia - at least those listed on the ASX - are still loss making and their survival rests on attracting investors that are willing to punt that they have picked a winner from the pack.
Thus it is an entrepreneur’s paradise.