September 29, 2021

The Next Best Emerging Industry Investment Behind Cannabis & Psychedelics? | Subversive Capital

Midas Letter
Midas Letter
The Next Best Emerging Industry Investment Behind Cannabis & Psychedelics? | Subversive Capital
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Subversive Capital’s philosophy is aligned with Midas Letters core thesis: The company is dedicated to investing in radical companies whose core missions subvert the status quo. Where Midas Letter speaks directly to companies and CEO’s within emerging markets, Subversive Capital invests in them and helps take them public using Special Purpose Acquisition Company (SPAC) strategies. Subversive has already worked with 38 companies within the cannabis, psychedelic and tech industries; Including 5 IPOs, 4 SPACs, with a track record of $500 million + in follow-on investment. We talk with Founder Michael Auerbach to see where he thinks these industries are heading and what is the next best emerging industry he is betting on.

Cannabis

After the US presidential election in November 2020, cannabis boomed with hopes of a cannabis federal legalization. As time has elapsed, the hopes that that will happen this year is dwindling. After the election however, a mass of new investors entered into the cannabis industry (hedge funds, large institutions, family offices). As the patience of these new investors wore thin, a big selloff and consolidation has happened for the majority of this year. Stock prices might now be undervalued compares with company fundamentals which could present real opportunity for buyers.

“This is a longterm investment. I’ve always said form the get-go, even when I started investing in cannabis over ten years ago. The exit and liquidity event for cannabis is the end of prohibition and our ability to list these companies on US exchanges. If you’re for a return before that event, then cannabis investing is not for you.” – Subversive Capital Founder Michael Auerbach

Subversive Capital has worked with familiar names within the weed stocks industry such as Tilray, CannDoc, The Parent Company, and Leafly.

Psychedelics

For such a young industry, Subversive Capital has already worked with the most sophisticated companies in the space. The company were behind the IPOs of COMPASS Pathways, Atai Life Sciences, Cybin Inc, and Field Trip. The industry somewhat resembles the cannabis industry of five years ago, as drugs transition from illicit to licit. However, Subversive realize it is a long-term Pharma investment as drug development takes time. While we eagerly await results such as COMPASS Pathways psilocybin trials, it is understood that we won’t see psychedelic prescription drugs for the next few years.

“People are using psilocybin, but they are doing it with a professional. To be able to really understand what is happening with them, as they disaggregate their ego and then they need to rebuild it with a therapist, to have a really impactful state on your psyche, your mind and your mental health trajectory. This isn’t something thats going to be done in a coffee shop. There will be a decriminalization movement “ – Subversive Capital Founder Michael Auerbach

The Next Best Emerging Industry (The Metaverse)

As our world moves more and more online, the next evolution is taking everything into a virtual level. Facebook has made moves with Oculus. Peloton will eventually be an online platform where riders will be able to go and bike the Swiss Alps from their living rooms. It seems like something out of StarWars, but it is an industry to get excited for.

“I’m excited because I think it’s a great investment thesis. Everything that goes along with the real world in terms of laws, rules, and privacy, we’re going to have to create a whole new sense of a regulatory environment for human behaviours and nation-state behaviour as it relates to living in the next version of the internet – which is the metaverse,” “we’re spending a lot of time thinking about that, companies we are interested in and we’ll be making some investments in the space in the coming months.” – Subversive Capital Founder Michael Auerbach

Watch the full interview to understand Subversives history and investment philosophies, and where the company believes investor dollars will flow in the future.

Transcript

00:00 – Subversive Capital Founder Michael Auerbach

00:40 – Seed investing in COMPASS Pathways

01:18 – Subversive investing strategy

03:53 – Creating venture fund

04:51 – The Parent Company & cannabis industry

08:51 – Psychedelics industry

10:31 – Metaverse industry

13:27 – Recreational psychedelics

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Disclosure

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.