Insiders at two of our Cabot Cannabis Plus Insider Portfolio names just made large purchases of their company’s stocks. Besides cannabis, I have followed insider activity overall for a few decades. These are significant buy signals, in my experience.
The insider buys are a reminder to consider getting exposure to these two names which are down because of the current cannabis sector weakness and the overall market weakness.
On March 17 insiders at our cannabis sector lender AFC Gamma (AFCG) told us in filings that they had purchased $860,000 worth of stock at $6.17 to $6.52 over the past several trading days. This is a nice “size signal.” Buyers included the CEO, the president and chief investment officer, and a director. C-suite participation in buying enhances the insider signal, according to the way I analyze insider buying.
AFC Gamma pays a 14.6% dividend yield. That seems suspiciously high. Dividends that high often suggest trouble at a company. But the dividend was recently confirmed by the company. AFC Gamma can offer a high yield because it lends to cannabis companies at high interest rates. The yield is also high because this is a real estate investment trust (REIT). REITs often offer relatively high yields because they get favorable tax treatment, and they have to pass through most of their income to shareholders.
In this wait-and-see environment, I continue to like the income-producing names in our Cabot Cannabis Plus Insider Portfolio. This portfolio has outperformed nicely since inception. We will also see capital appreciation in AFC Gamma shares if cannabis sector catalysts hit – but not as much appreciation as in the main, plant-touching portfolio. This is why it makes sense to own a sampling of both.
Next, the executive chair at our Sunrise Realty Trust (SUNS) bought $1 million worth of stock at around $11 per share. Sunrise Realty Trust is not a cannabis lender. But it spun off from our AFC Gamma, and I have kept it in the Cabot Cannabis Plus Insider Portfolio because of the insider buying and the 10.9% yield.
What to Do Now
Consider purchasing AFC Gamma for the 14.6% yield and capital appreciation if we see progress on cannabis reform at the state and federal level. Consider owning Sunrise Realty Trust for the 10.9% yield. Both stocks should get a lift if overall market sentiment improves, which I believe will be the case. Sentiment is extremely weak right now, which is a buy signal in the contrarian sense. (Typically, the best time to buy is when the crowd, or investors overall, are very negative.) The Investors Intelligence Bull-Bear ratio was at 0.8 last week. Operating on a scale of zero to five, this indicator sends a buy signal when readings below 1 indicate extreme negativity among investors.
Copyright © 2025. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.
