I’m not sure exactly where holders here plan to exit, but I don’t have an exit point planned. I continue to add to my holdings as my income and leveraging abilities allow.
You hear stories about people who retired from one successful investment, or an investment that set them up for financial flexibility/freedom. I believe ECS to be of this calibre. The ability to observe social and political trends and capitalise on them is the recurring theme in most cases. In this situation, the social trend of the therapeutic potential of Cannabis, the overall social acceptance as a low risk recreational substance as well as politically shift towards decriminalisation and regulation. For anyone to deny that this is not occurring is easily proven wrong.
Identification of the companies involved within this trend that are set to be major global players is where difficulty comes in. ECS is categorically the market leader in Australia. I recall my time working at Athlete’s Foot, a subsidiary of Accent Group. (AX1), and note the period of time that they shifted from being a shoe store to part of a corporate success story. Not only was the trend of running gaining momentum, but the launch of a vertical product range. The management team who are responsible for vertical expansion can be identified as those who took AX1 from a $200m MC to $1.4b. These are high level strategies which when successfully implemented result in rapid growth.
ECS faces local competition, although as we can see there is mounting pressures to repay debt and transition from substantial cash losses to a profit. Agreed that the raise may not have been necessary, I am bitter. But, if we see successful utilisation of the cash in a relatively short timeframe, I suspect long term it would be well worth it.
In my professional health work, I see first hand the trend in CBD/THC being adopted and accepted therapeutically. This is the trend that I am following. To be optimistic and say that Aus will have a recreational market within 2-4 years is probably realistic. The tax incentives for the government are substantial as well as it being something that as a democracy, people want the freedom to use.
Now we just have to wait for Australian institutional investors to pull their head out of the dirt and take a look at the world around them, something I assume is infrequently done from the CBD highrises they call home. Understand what the industry has to offer, use their power to influence public and political opinion. Something I seldom like accepting but in reality, money is power.
ECS Price at posting:
2.4¢ Sentiment: Buy Disclosure: Held
