Navy Capital’s one-room office in midtown Manhattan could probably fit in the coat cupboards of many of its competitors. But the hedge fund’s digs belie the firm’s success in betting on something few of its peers will touch: cannabis. Since the Navy Capital Green Fund launched in May 2017 the company says it has increased assets under management to almost $100m from $10m and returned more than 100% net of fees in 2017. As for 2018, "we’re having a good year so far", Sean Stiefel, Navy Capital’s 30-year-old founder, said. As Canada moves towards the legalisation of recreational marijuana on October 17 and the US shows signs of growing leniency, hedge funds such as Navy are leading the advance of institutional money into a sector that’s so far been dominated by retail investors. Institutions account for only a fraction of shares held in many cannabis companies: big firms hold 6.5% of Aphria and just 5.2% of Aurora Cannabis, both members of Canada’s S&P/TSX composite index. By comparis...

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