32 BARRON’S October 12, 2020
Jason Wild trained as a pharmacist, but
grew interested in the stock market
after reading Peter Lynch’s books on
Photograph byDANIEL DORSA
Q&A
An Interview With Jason Wild
Founder and President, JW Asset Management
AnRxfor
Investment
Success
F
rom his start as a pharmacist and part-time
investor, Jason Wild, now 48, grew JW Asset
Management over 21 years into a firm oversee-
ing $1 billion. His flagship JW Partners fund
has returned an average annualized 24.9%, net
of fees, in that time, owing to a mix of savvy
investments in pharmaceuticals and cannabis
producers, and the boss’ entrepreneurial streak.
Wild was one of the first U.S. institutional investors
in legal cannabis companies, and he also assembled a
specialty pharmaceutical business that the fund sold for
a huge profit. Now, he’s building the Canada-listed can-
nabis company TerrAscend (ticker: TER.Canada).
Wild also invests in health-care companies, as he
explains in this edited and condensed interview.
Barron’s : How did you go from the pharmacy
counter to Wall Street?
Jason Wild: I am originally a pharmacist. My father’s a
pharmacist, as well. I grew up in his drugstores in the
Bronx and Manhattan. Around my last year in phar-
macy school, I read my roommate’s copies of [ Fidelity
investment star] Peter Lynch’s books, OneUponWall
Street and Beating the Street. Lynch’s approach was “buy
what you know.” I took that approach to heart and
started following pharmaceutical companies.
After I got my pharmacy degree in 1997, I was mak-
ing $65,000 a year, and I needed only about half of that.
I put every other paycheck into my brokerage account
and bought on margin because I didn’t know better. At
the end of a year, I had made more than $500,000 from
a start of about $30,000 in my investment portfolio.
Then I saw a classified ad in Barron’s that said, “Want to
start a...hedge fund? Mutual fund? Offshore fund?” It
was placed by a fund administrator called International
Fund Management. They gave me a quick tutorial on
By BILL ALPERT
October 12, 2020 BARRON’S 33
investing. In his first year working, Wild
made $65,000 as a pharmacist and
about $500,000 as an investor. After
what it would take to open up a fund.
They could do the accounting for me.
Another satisfied reader.
For the first couple of years, I moon-
lighted as a pharmacist at the Shop-
Rite supermarket in Paramus, N.J.
But we put up some pretty good num-
bers. From 1998 to 2010, the fund was
up 22% annualized, net of fees. We
grew assets from $89,000 to $25.5
million. Our wheelhouse was the spe-
cialty pharmaceutical sector. From my
pharmacy experience, I knew almost
all the products on the market. When
a company did a deal, I could quickly
figure out whether it was good.
How did you decide to build a
pharmaceutical company?
Around ’07 or ’08, I arranged a deal
between two public companies in
which I was an investor. One bought
product rights from the other for about
$10 million. In the next eight years,
they made over $100 million on that
asset. What did I get? A pat on the
back. I wanted to refer those deals in-
house, and not lose the next home run.
A consultant introduced us to Ar-
bor Pharmaceuticals. It was about
three years old, doing about $2 million
in sales, and not making money. We
bought it for $2.5 million in cash and
put another $3 million on the balance
sheet. Arbor did three deals in that
first year, 2010. By the next year, it had
$127 million in sales and $55 million in
Ebitda [earnings before interest, taxes,
depreciation, and amortization].
The fund ended up selling a third
of the company in 2014 to KKR
[KKR] at a $1.12 billion valuation,
about 155 times our initial investment.
It ballooned the size of our fund,
which owned about half of Arbor.
What did you do with the money?
We got involved in the cannabis sector.
I got a call from a Canadian banker
raising money for a medical cannabis
company in Ontario. I concluded this
was going to be a huge opportunity. We
invested in about five companies, all
private at that point. All but one went
public. We became a top 10 share-
holder in Canopy Growth [CGC],
Cronos Group [CRON], and others.
We continued to invest through 2017.
Then I thought, “We can do Arbor 2.0
in the cannabis space.”
My fund was around $700 million.
TerrAscend (TER.Canada) was a
Canadian company that I had invested
$250,000 in. They had a market cap
of 40-something million Canadian
dollars. InNovember 2017, I con-
vinced them to take a C$52.5 million
private placement from me and Can-
opy Growth. We did 60% of the deal;
Canopy Growth did 20%; and its ven-
ture arm, Canopy Rivers , did 20%. I
became chairman.
How did TerrAscend come into the
U.S.?
Canopy couldn’t invest in a company
operating in the U.S., where cannabis is
federally illegal. It trades on the NYSE
and Toronto Stock exchanges, which
don’t allow listed cannabis companies
to operate in the U.S. They swapped
their regular shares for exchangeable
shares monetizable only in the event of
U.S. federal legalization or a change in
exchange listing rules.
Our first big U.S. deal was in Febru-
ary 2019, for a San Francisco dispen-
sary chain called the Apothecarium.
Our next big acquisition was Ilera
Healthcare, the No. 1 cultivator and
manufacturer of cannabis products in
Pennsylvania. The Pennsylvania canna-
bis market is over a billion dollars at
retail, or $500 million at wholesale. We
believe TerrAscend’s Ilera owns around
25% of the wholesale market there.
Where do you want to be in the
U.S.?
We want to be in limited-license states.
They’re less competitive. On the West
Coast, you can get a cannabis license
like you can get a driver’s license.
In 2018, New Jersey had only six
licensees and announced it was going
to award another six. TerrAscend
applied, and they awarded us the
northern region, which has more than
a third of the population. We’ll be
opening in Jersey next month. We will
have the largest facility in the state.
And adult-use, or “rec,” [legalization]
is going to be on New Jersey ballots in
November.Chances are that it will be
approved.
We’re excited in New Jersey for our
retail operations. New Jersey has more
than nine million people. I’ve got to
believe it’s at least a $1 billion market.
At the moment, there are only 11 dis-
pensaries in Jersey, with licenses for
another 25. If you divide $1 billion by
36, we’re talking about stores that
could do somewhere around $30 mil-
lion each, on average. A great dispen-
sary in the U.S. is a $15 million-a-year
dispensary.
What kind ofresultscan weexpect
for TerrAscend?
The company has given guidance of at
least C$192 million [US$144.5 million]
in 2020 revenue and at least C$45
million in Ebitda. We have minimal
numbers in there for Jersey. That re-
ally kicks in for next year. Because of
the bear market in the cannabis sector,
our stock is priced lower than two
years ago, when we weren’t even cash
flow-positive.
Has the meltdownin Canadian
cannabis stocks hurt you?
It wasn’t much fun. Canada ended up
not developing to the extent that peo-
ple thought it would. In the first half
of 2019, these Canadian stocks went
down almost every day. We sold most
of the Canadian names by the end of
the first half of last year. My mistaken
view back then was that the U.S.
stocks would decouple from Canada.
But the market put a higher multiple
on the Canadian companies because
they were listed in the U.S., so the
U.S. stocks were led down by the Ca-
nadian ones.
How does the cannabis business
look now?
Six or so months into the Covid crisis,
U.S. demand is up pretty significantly
across the country. Cannabis taxes are
going to be a vital tool for states that
have huge holes in their budgets. It’s
becoming a little more of a bull market
for cannabis. The capital freeze in this
space shook out the weaker compa-
nies. Of the larger American multi-
state operators that have reported
earnings over the past couple of
months, practically all are putting up
strong numbers. You can’t find this
kind of growth anywhere else at these
multiples.
American cannabis operators must
list their stocks in Canada. Which
do you like, besides TerrAscend?
On the public side, I like the bigger
ones. The four top ones in terms of
market cap are Curaleaf Holdings
[CURA.Canada], Green Thumb
Industries [GTII.Canada], Trulieve
Cannabis [TRUL.Canada], and
Cresco Labs [CS.Canada]. They are
all built to last and should all do well.
Do you still like any pharma
stocks?
We have held Horizon Therapeutics
[HZNP] since 2013. They were ahead
of the curve in realizing that things
were going to get tougher in the space.
So they pivoted toward orphan dis-
eases that affect fewer than 100,000
patients. They get seven years’ exclu-
sivity and there’s less pushback on the
pricing of these lifesaving medicines.
Any other health-care names?
Establishment Labs Holdings
[ESTA] is a big position. It was one of
the first Costa Rican companies to go
public in the U.S. It makes the best-in-
class, safest breast implants. Costa Rica
has a tax-free zone where manufactur-
ers like Medtronic [MDT] operate.
The No. 1 market share in implants is
the Allergan unit of AbbVie [ABBV],
and they make their implants in Costa
Rica, too.
We bought 25% of Establishment
in 2015, and they did $10 million in
sales that year. In 2019, they did $90
million. They’re everywhere in the
world with their products, other than
the U.S. They did their 2018 IPO to
raise money for their U.S. trials.
Establishment’s product has a much
lower “reoperation rate” [than compet-
itors’]. That is the medical term for
when a breast implant needs to be
removed and replaced. In clinical trials
for Allergan and Mentor (owned by
Johnson & Johnson [JNJ]), the five-
year reoperation rates were over 20%.
Establishment Brands’ historic reoper-
ation rate has been less than 1%.
Thanks, Jason. B
launching his asset-management
firm, he moonlighted as a pharmacist
at a New Jersey supermarket.
“Cannabis taxes are going to be a vital tool for states
that have huge holes in their budgets.”Jason Wild
Growth
Potential
Jason Wild was
one of the first
U.S. institutional
investors in
legal cannabis
companies. His
early bets have
paid off and he
sees more
opportunities
ahead.
24.9%
The JW Partners
fund’s average
annualized return
over the past 21
years
$1 Billion
Wild’s estimate of
the New Jersey
cannabis market
5
The number of
Wild’s Canada-
listed cannabis
picks. They are:
TerrAscend,
Curaleaf Holdings,
Green Thumb In-
dustries, Trulieve
Cannabis, and
Cresco Labs.