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Innovative Industrial Properties Inc. (NYSE: IIPR) is one of my original cannabis recommendations. It's one of my favorites, too – and not just because it's given folks a chance at more than 200% in peak gains, either.
I like Innovative because of its increasing yield and its totally unique position in the cannabis sector. It doesn't touch the plant, which frees it from the heaviest regulatory baggage, but as a real estate investment trust (REIT), it provides the real estate needed for cannabis companies to do business.
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In fact, Innovative buys the cannabis facilities from the companies that build them and leases those facilities back at a handsome premium. Innovative collects rents in excess of market rates, and the companies get the cash they need to grow their cannabis business.
But since last we spoke about it, IIPR shares are down by about 35%. And while folks who were following along closely already sold half their position when Innovative doubled (the first time), and thus own IIPR for "free," it's still important for me to tell you why I'm not too worried here…
Here's What the Market Thinks of Innovative
Some of the reasons for Innovative's decline make good sense. The truth is, Innovative began a monster run higher starting in May, and some folks are selling their shares; a bullish run is a natural opportunity for prudent investors to take profits off the table.
Simple profit-taking will knock shares down a peg, but the effect is usually only temporary.
But in this case, the market has some concerns – and it's making some fundamental misjudgments, too.
About the Author
Greg Miller started working on Wall Street in September, 1987, just a month before the “Black Monday” stock market crash.
During his career there, he became an expert in just about every kind of publicly traded security - from blue-chip and small-cap stocks to municipals, junk bonds, and derivatives. As a portfolio manager, Greg was responsible for over $500 million of assets in mutual funds and insurance company accounts.
After leaving the Street, he designed a successful options trading strategy and made lucrative tech investments for a financial publication. He has also helped develop new products and worked with other editors to hone their strategies. He’s always been dedicated to deep, fundamental research - and he always will be - because he believes buying the very best companies at the right price is the best way to amass wealth in the stock market.