Two Letters for the Same Price as One!
The Mindset Value Fund Q1 Letter and the Mindset Value Wellness Q1 Letter
Disclaimer: The below post contains the Q1 Investor Letters that I sent last week to investors in the Mindset Value Fund and the Mindset Value Wellness Fund. This post is NOT a solicitation. I talk about stocks that I own and my view of the future. It is imperative that you do your own due diligence and not rely on anything written below. I’m posting this in order to show how my writing translates to actual performance. With that, I hope you enjoy and gain insights.
Mindset Value Fund Q1 2026 Investor Letter
The Mindset Value Fund lost 16.3% on a net basis in Q1.
Consorcio Ara is Proving that it is a Value Trap No More
Consorcio Ara (Mexico: ARA) jumped 30% in Q1 on the back of strong Q4 results, which were followed by great first quarter earnings that were reported in April.
We believe that the next generation leadership is driving substantial changes in the company. Revenue is now growing at more than 20% and cash flow by over 30%, yet the stock trades at 5 times trailing earnings and 32% of book value.
While we wait for this transformation to continue from a low return on equity business that was a value trap into a growth story and a big improvement in return on equity, we get paid a dividend. We continue to be very bullish on Ara, and it is now our second largest position in the fund.
Here is our long-form research report on the company if you want a deeper dive into the company: Consorcio Ara Research Report.
Trump Reschedules Medical Cannabis, Recreational Due Up on Deck
Last week, acting Attorney General Todd Blanche and the Department of Justice rescheduled medical cannabis to Schedule III and booked a final hearing on rescheduling adult-use cannabis, beginning June 29th and ending July 15th. While the path forward has created some confusion, this is the first major federal cannabis reform in history.
I could not be more excited about our investments in cannabis right now. To me, this rescheduling news is not the finish line where everyone suddenly gets rich, but the first pitch of the first game of the season.
What makes this news exciting is there is a profound absence of institutional players and private equity. There is simply little or no competition to invest in the best companies with durable long-term advantages. And for the first time, we finally have real regulatory change.
As fundamental analysts, there has never been a better time to do real research and invest in cannabis. We would ask anyone invested in cannabis or interested in investing to consider just some of the following questions:
1. What does it mean if there is a regulatory difference between medical cannabis and adult use?
2. What does it mean to register with the DEA?
3. Does registration allow the DEA to investigate how companies operate?
4. What if companies can now engage in interstate commerce for medicinal cannabis?
5. What happens to a cannabis company’s cash flow if there is interstate commerce?
These are just some of the questions to ask. But what about the one question that most existing cannabis investors ignore: what is a company’s cost to produce cannabis products? Few if any companies share such information. And I believe institutional investors will demand to understand how these businesses work.
It won’t happen overnight, but I believe institutional capital will enter this space. The cannabis industry is too attractive and its potential too great for professional investors, private equity, and institutional capital to ignore. And when those investors enter, things will change, especially when those investors conduct a dive deep into the real business fundamentals. They may be surprised by what they find. This is why we have been so selective in who and what we invest in.
While it may be fun to trade some volatile stocks, rescheduling won’t save faulty business models built on hype, limited licenses and handwaving. Rescheduling should lift a whole cohort of new companies who have worked on building durable competitive advantages for a national and international market. We believe we are investors in some of these companies.
In 2011, I stood on the courthouse steps in Atlanta, Georgia, bidding on foreclosed homes — stunned that there were no professional investors around. That all changed in the summer of 2012, when Colony and Blackstone showed up at the auctions. Valuations and dynamics shifted immediately.
The real game has finally begun, and we are ready.
Investing in LEEF and Pesticide Free Concentrates
One of the companies that we think is going to be a big winner in this new future is LEEF Brands (OTC: LEEEF).
LEEF Brands is California’s largest cannabis extract manufacturer, producing concentrates like distillate for vapes, live resin and rosin and over 100 different forms of concentrates for leading California brands like Kiva, Heavy Hitters (Mammoth), Wyld, Rove, and Jetty.
Research and due diligence have shown us that there is a pesticide problem in cannabis concentrates in California, and that investors are not aware of the severity of the problem.
In 2024, an LA Times investigation exposed a widespread contamination crisis in the world’s largest and most important cannabis market. Sixty percent of randomly sampled California cannabis products contained pesticides exceeding safety limits, including known carcinogens. Some vape cartridges tested positive for more than two dozen pesticide compounds. A follow-up investigation six months later found little had changed.
The root cause is structural. California is America’s agricultural heartland, and its conventional farms have applied heavy volumes of pesticides for decades. This leaves cannabis operations highly vulnerable to “pesticide drift”- winds carrying chemical residues from neighboring farms onto cannabis crops. The problem of pesticide drift is well-established in California and widely documented, including by official state agencies. As far back as 2019, the state officially confirmed that a cannabis harvest had been damaged by pesticide drift from a neighboring vineyard.
“There are certain times of the year I’m not going to get samples from certain regions, because those samples will be contaminated pesticides used in conventional agriculture. There’s no way to keep that out of the air. It’s not even a possibility.”- Jeff Gray, Owner at SC Labs, one the labs that partnered with the LA Times investigation.
Compounding the problem, cannabis is a powerful bio-accumulator that absorbs impurities and heavy metals from the soil. In fact, it is so effective at this that it was deployed to remediate the land around Chernobyl after the nuclear accident in Ukraine. In California, where now-banned pesticides were used extensively for decades, cannabis grown today may carry a legacy chemical burden from the soil itself, such as Chlordane - a pesticide that was banned in 1988 but has a long half-life.
Further, we believe that there may not be enough of a consistent supply of low-cost cannabis biomass and concentrates that is clean of pesticides and heavy metals for the eventual national US market, for medical cannabinoid products that may get medical reimbursement and for the very strict export market into Europe.
We think that the activation of LEEF’s Salisbury Canyon Ranch (SCR), a 1,900-acre property in remote northeastern Santa Barbara County in California is a key catalyst for LEEF. The immediate result is lowering LEEF’s own cost by up to 80% from purchasing biomass for $25 to $50 a pound and instead producing that biomass itself for $8 per pound. To show how much of a key catalyst this was, LEEF’s gross margins doubled upon turning on just 30% of SCR.
We project LEEF’s Adj EBITDA to grow from a small loss in 2025 to approximately $15M in 2027. On this alone and without interstate commerce or exports, we believe LEEF could be worth close to $0.40 per share, which could lead to our investment increasing by 200%+ in the next 12-18 months.
But an even more exciting future awaits as the company builds a platform that can produce any cannabinoid input at a cost, quality and scale that is unmatched in cannabis. The company at scale should one day be able to produce over 70 million grams of distillate. That’s enough to supply 60% of California’s vape market at a price no one else can match.
Consider that in California, LEEF is selling distillate for $1 a gram. That same gram sells for $4 in New York, $6 in Massachusetts and $8 in New Jersey.
Our analysis leads us to the believe that with the opportunity of interstate commerce or the ability to export, this microcap company has the chance to be worth more than $1 billion, versus its sub-$100 million enterprise value. In a scenario where the company could supply products to more lucrative national or overseas markets, it is possible that our investment has the potential to increase by more than ten times.
We are about to close a special purpose vehicle that is investing in the company’s equity that includes lucrative warrants. If you have interest, please let me know.
Grown Rogue Is Only Producing at 42% of Capacity
Grown Rogue (OTC: GRUSF) is licensed across five states - Oregon, Michigan, New Jersey, Illinois, and Minnesota - but today it is using only 42% of its total production capacity. Two of those five states haven’t produced a single pound of flower. A third state is at half its capacity. The company has been spending ahead of these opportunities and has yet to see the returns.
The business investors see today is a half-built machine. The question isn’t “what does Grown Rogue earn?” It’s “what does Grown Rogue earn when the lights are on in every room?”
Even at reasonably conservative prices, and an increase in current operating expenses, the company’s economics are very attractive and are the reason the company is now guiding to returns on incremental invested capital of 75%.
It has been painfully hard to be patient as Grown Rogue has retraced its big advance and has been under constant selling pressure from funds shutting down and few willing to do any work on the underlying unit level economics. All the while, Oregon and Michigan experienced a brutal price decline and New Jersey took longer than expected to fully activate.
But the wait is almost over. The final phase of the New Jersey facility is under construction, and the facility will soon be at full capacity. Illinois and Minnesota are in active development, with first harvests expected to start contributing to 2026 and ramp through 2027.
The company is turning the lights on a lot more cultivation capacity, and come this time next year, Grown Rogue should be a substantially larger and much more profitable company.
At today’s valuation, the market is pricing in what Grown Rogue earns at 42% utilization. It is not pricing in what the company earns when every cultivation room is running. That gap between $5M in EBITDA and $50M in EBITDA is the opportunity.
If you would like to play around with the assumptions made in this post, click on the link below and you can play around with cost and sales assumptions yourself. As always please do your own due diligence and rely on your research.
Grown Rogue Capacity Analysis Link
And one final note on Grown Rogue is that if there is ever interstate commerce, Grown Rogue should be one of the big beneficiaries. They are selling cannabis in Oregon for $600 a pound and in Michigan for $800, which would command much greater prices in other states. Also, they can grow a lot more outdoor cannabis in the Rogue Valley in Oregon, where conditions are perfect for growing outdoor cannabis. Not only is the full earnings power of Grown Rogue not being priced in, but the potential for interstate commerce is also not being priced in either.
Summary
We are set up for a very exciting back half of the year. Our portfolio companies are seeing accelerating growth and there is very positive federal reform that should pay big dividends to our cannabis investments as the year unfolds. Our performance has already been bouncing back in April, and we think there is much more to come. Thank you so much for your support and trust.
As always, please reach out with any questions or comments.
Sincerely,
Aaron M. Edelheit
******************************************
Mindset Value Wellness Fund Q1 2026 Investor Letter
The Mindset Value Wellness Fund lost 21.7% on a net basis during Q1.
Trump Reschedules Medical Cannabis, Recreational Due Up on Deck
Last week, acting Attorney General Todd Blanche and the Department of Justice rescheduled medical cannabis to Schedule III and booked a final hearing on rescheduling adult-use cannabis, beginning June 29th and ending July 15th. While the path forward has created some confusion, this is the first major federal cannabis reform in history.
I could not be more excited about our investments in cannabis right now. To me, this rescheduling news is not the finish line where everyone suddenly gets rich, but the first pitch of the first game of the season.
What makes this news exciting is there is a profound absence of institutional players and private equity. There is simply little or no competition to invest in the best companies with durable long-term advantages. And for the first time, we finally have real regulatory change.
As fundamental analysts, there has never been a better time to do real research and invest in cannabis. We would ask anyone invested in cannabis or interested in investing to consider just some of the following questions:
1. What does it mean if there is a regulatory difference between medical cannabis and adult use?
2. What does it mean to register with the DEA?
3. Does registration allow the DEA to investigate how companies operate?
4. What if companies can now engage in interstate commerce for medicinal cannabis?
5. What happens to a cannabis company’s cash flow if there is interstate commerce?
These are just some of the questions to ask. But what about the one question that most existing cannabis investors ignore: what is a company’s cost to produce cannabis products? Few if any companies share such information. And I believe institutional investors will demand to understand how these businesses work.
It won’t happen overnight, but I believe institutional capital will enter this space. The cannabis industry is too attractive and its potential too great for professional investors, private equity, and institutional capital to ignore. And when those investors enter, things will change, especially when those investors conduct a dive deep into the real business fundamentals. They may be surprised by what they find. This is why we have been so selective in who and what we invest in.
While it may be fun to trade some volatile stocks, rescheduling won’t save faulty business models built on hype, limited licenses and handwaving. Rescheduling should lift a whole cohort of new companies who have worked on building durable competitive advantages for a national and international market. We believe we are investors in some of these companies.
In 2011, I stood on the courthouse steps in Atlanta, Georgia, bidding on foreclosed homes — stunned that there were no professional investors around. That all changed in the summer of 2012, when Colony and Blackstone showed up at the auctions. Valuations and dynamics shifted immediately.
The real game has finally begun, and we are ready.
Investing in LEEF and Pesticide Free Concentrates
One of the companies that we think is going to be a big winner in this new future is LEEF Brands (OTC: LEEEF).
LEEF Brands is California’s largest cannabis extract manufacturer, producing concentrates like distillate for vapes, live resin and rosin and over 100 different forms of concentrates for leading California brands like Kiva, Heavy Hitters (Mammoth), Wyld, Rove, and Jetty.
Research and due diligence have shown us that there is a pesticide problem in cannabis concentrates in California, and that investors are not aware of the severity of the problem.
In 2024, an LA Times investigation exposed a widespread contamination crisis in the world’s largest and most important cannabis market. Sixty percent of randomly sampled California cannabis products contained pesticides exceeding safety limits, including known carcinogens. Some vape cartridges tested positive for more than two dozen pesticide compounds. A follow-up investigation six months later found little had changed.
The root cause is structural. California is America’s agricultural heartland, and its conventional farms have applied heavy volumes of pesticides for decades. This leaves cannabis operations highly vulnerable to “pesticide drift”- winds carrying chemical residues from neighboring farms onto cannabis crops. The problem of pesticide drift is well-established in California and widely documented, including by official state agencies. As far back as 2019, the state officially confirmed that a cannabis harvest had been damaged by pesticide drift from a neighboring vineyard.
“There are certain times of the year I’m not going to get samples from certain regions, because those samples will be contaminated pesticides used in conventional agriculture. There’s no way to keep that out of the air. It’s not even a possibility.”- Jeff Gray, Owner at SC Labs, one the labs that partnered with the LA Times investigation.
Compounding the problem, cannabis is a powerful bio-accumulator that absorbs impurities and heavy metals from the soil. In fact, it is so effective at this that it was deployed to remediate the land around Chernobyl after the nuclear accident in Ukraine. In California, where now-banned pesticides were used extensively for decades, cannabis grown today may carry a legacy chemical burden from the soil itself, such as Chlordane - a pesticide that was banned in 1988 but has a long half-life.
Further, we believe that there may not be enough of a consistent supply of low-cost cannabis biomass and concentrates that is clean of pesticides and heavy metals for the eventual national US market, for medical cannabinoid products that may get medical reimbursement and for the very strict export market into Europe.
We think that the activation of LEEF’s Salisbury Canyon Ranch (SCR), a 1,900-acre property in remote northeastern Santa Barbara County in California is a key catalyst for LEEF. The immediate result is lowering LEEF’s own cost by up to 80% from purchasing biomass for $25 to $50 a pound and instead producing that biomass itself for $8 per pound. To show how much of a key catalyst this was, LEEF’s gross margins doubled upon turning on just 30% of SCR.
We project LEEF’s Adj EBITDA to grow from a small loss in 2025 to approximately $15M in 2027. On this alone and without interstate commerce or exports, we believe LEEF could be worth close to $0.40 per share, which could lead to our investment increasing by 200%+ in the next 12-18 months.
But an even more exciting future awaits as the company builds a platform that can produce any cannabinoid input at a cost, quality and scale that is unmatched in cannabis. The company at scale should one day be able to produce over 70 million grams of distillate. That’s enough to supply 60% of California’s vape market at a price no one else can match.
Consider that in California, LEEF is selling distillate for $1 a gram. That same gram sells for $4 in New York, $6 in Massachusetts and $8 in New Jersey.
Our analysis leads us to the believe that with the opportunity of interstate commerce or the ability to export, this microcap company has the chance to be worth more than $1 billion, versus its sub-$100 million enterprise value. In a scenario where the company could supply products to more lucrative national or overseas markets, it is possible that our investment has the potential to increase by more than ten times.
We are about to close a special purpose vehicle that is investing in the company’s equity that includes lucrative warrants. If you have interest, please let me know.
Grown Rogue Is Only Producing at 42% of Capacity
Grown Rogue (OTC: GRUSF) is licensed across five states - Oregon, Michigan, New Jersey, Illinois, and Minnesota - but today it is using only 42% of its total production capacity. Two of those five states haven’t produced a single pound of flower. A third state is at half its capacity. The company has been spending ahead of these opportunities and has yet to see the returns.
The business investors see today is a half-built machine. The question isn’t “what does Grown Rogue earn?” It’s “what does Grown Rogue earn when the lights are on in every room?”
Even at reasonably conservative prices, and an increase in current operating expenses, the company’s economics are very attractive and are the reason the company is now guiding to returns on incremental invested capital of 75%.
It has been painfully hard to be patient as Grown Rogue has retraced its big advance and has been under constant selling pressure from funds shutting down and few willing to do any work on the underlying unit level economics. All the while, Oregon and Michigan experienced a brutal price decline and New Jersey took longer than expected to fully activate.
But the wait is almost over. The final phase of the New Jersey facility is under construction, and the facility will soon be at full capacity. Illinois and Minnesota are in active development, with first harvests expected to start contributing to 2026 and ramp through 2027.
The company is turning the lights on a lot more cultivation capacity, and come this time next year, Grown Rogue should be a substantially larger and much more profitable company.
At today’s valuation, the market is pricing in what Grown Rogue earns at 42% utilization. It is not pricing in what the company earns when every cultivation room is running. That gap between $5M in EBITDA and $50M in EBITDA is the opportunity.
If you would like to play around with the assumptions made in this post, click on the link below and you can play around with cost and sales assumptions yourself. As always please do your own due diligence and rely on your research.
Grown Rogue Capacity Analysis Link
And one final note on Grown Rogue is that if there is ever interstate commerce, Grown Rogue should be one of the big beneficiaries. They are selling cannabis in Oregon for $600 a pound and in Michigan for $800, which would command much greater prices in other states. Also, they can grow a lot more outdoor cannabis in the Rogue Valley in Oregon, where conditions are perfect for growing outdoor cannabis. Not only is the full earnings power of Grown Rogue not being priced in, but the potential for interstate commerce is also not being priced in either.
Summary
Reform is the beginning of the game, not the end. We see a long runway of growth for our portfolio companies and think they are fundamentally mis-priced. Our companies are seeing accelerating growth, and the back half of this year should be very exciting.
With meaningful catalysts, strong expected growth, and improving earnings across our portfolio, we remain optimistic about both the near-term and long-term future.
As always, please reach out with any questions or comments.
Sincerely,
Aaron M. Edelheit