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Some Canadian pension funds have bought into the volatile cannabis sector, for better or worse.

Two major Canadian pension funds – Public Sector Pension Investment Board (PSP) and British Columbia Investment Management Corp. (BCI) – invested in the stock of CannTrust Holdings Inc. in the first quarter of the year and may well have held the shares as the stock plummeted once investors learned the company ran afoul of Health Canada for unlicensed growing.

The small investments may have been less a show of faith than a desire to maintain exposure to the broad Canadian market – CannTrust, as it happens, was added to the S&P/TSX Composite Index at the end of March, meaning any investor invested in the Composite has experienced the CannTrust losses.

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Still, the patterns of ownership of some of Canada’s major pension funds show some picking and choosing is taking place. And they demonstrate an increasing comfort in cannabis stocks for at least some institutional investors.

Many pot-stock watchers had forecast that as cannabis became legal and the leading Canadian companies matured, their investor base would broaden from retail investors looking for a quick score to institutions with a more conservative, long-term focus. There has been recent tumult in the sector, however, with Canopy Growth Corp. and Aphria Inc., two of the biggest companies, removing their chief executives this year. The CannTrust problems have now cast a shadow over the entire sector.

For now, the damage from a decline in pot-stock prices is minimal, as is the benefit from gains.

PSP and BCI bought 211,900 and 145,611 CannTrust shares, respectively, in the first quarter, filings with U.S. regulators show. At the end of the quarter, the holdings were worth $2.2-million and $1.5-million. They’ve lost two-thirds of their value since.

The values of the holdings are teeny-tiny compared with the billions of dollars in assets each fund holds. PSP had $168-billion in assets as of March 31, while BCI had $145.6-billion, meaning CannTrust represented around 0.001 per cent of assets for the plans.

BCI spokeswoman Gwen-Ann Chittendan said the pension’s exposure to CannTrust is a passive interest, held within a fund that tracks the S&P/TSX, and “is aligned with the company’s weighting within the index.”

Maria Constantinescu, a spokeswoman for PSP, declined to comment for this story. Montreal-based PSP manages money for a federal-employee pension plan.

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The holdings information is contained in filings with the Securities and Exchange Commission that call on money managers to disclose ownership of securities listed on U.S. exchanges. All of the Canadian cannabis companies that are in the Composite – Canopy, Aphria, CannTrust, Aurora Cannabis Inc., Cronos Group Inc., and Hexo Corp. – list on U.S. exchanges.

The filings give no picture of institutional ownership of Canadian companies that haven’t achieved a cross-border listing. The filings list only positions held by institutional investors at quarter’s end, so they give no insight into when, exactly, the shares were bought and at what price.

While the other major cannabis stocks included in the disclosures have fared better than CannTrust, it’s been a lousy few months: Each of them has declined between 15 per cent and 35 per cent since the end of the first quarter.

The filings for March 31 show PSP and BCI owned some amount of all six of the S&P/TSX’s Canadian cannabis companies that list on major U.S. exchanges, with PSP’s holdings worth $87-million, in total, at quarter’s end. (The bulk of PSP holdings were in Canopy and Aurora, according to the filings.) Those stocks are now worth about $65-million, according to data from S&P Global Market Intelligence.

BCI’s positions in the six major cannabis stocks were worth a total of roughly $20-million at quarter-end. During the first quarter, BCI sold about two-thirds of its Canopy stake and established positions in the other five companies. The stocks are now worth about $15-million, according to data from S&P.

Other Canadian pensions, however, owned some, but not all, of the S&P/TSX-listed companies on March 31, suggesting something other than indexing is at play.

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Alberta Investment Management Corp. had stakes in Canopy and Cronos totalling about $18-million at the end of the first quarter. Aimco spokesman Dénes Németh declined to comment for this story.

Ontario Teachers’ Pension Plan Board had stakes in Aurora and Canopy adding up to about $1-million. (Teachers had $191-billion in assets at the end of 2018, making the investment in the two cannabis stocks represent 0.0005 per cent of the portfolio.)

“This is a new sector,” Teachers spokeswoman Lisa Papas said. “Many investors, businesses and employers are still working through their positions on cannabis. Like these companies, we are continuing to evaluate regulatory and market environments.”

Meanwhile, the Ontario Municipal Employees Retirement System (OMERS) and the Canada Pension Plan Investment Board (CPPIB) owned no U.S.- and TSX-listed cannabis stocks at March 31, according to the SEC filings.

CPPIB and OMERS said they have not made any direct investments in cannabis at this time. OMERS chief financial officer Jonathan Simmons reiterated Tuesday his previous comment on the matter: “We are quality investors.”

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