Former hedge fund manager Whitney Tilson, the founder of Kase Learning, says pot stocks (CGC) (ACB) are a better short today after falling well off their highs.

“They’re a better short today than they were a couple of months ago because the momentum is broken, the pump-and-dump crowd has moved on, and now they have to trade on their fundamentals and the fundamentals don’t support $10 billion market caps,” Tilson said.

One of those high-flying cannabis stocks he’s bearish on is Tilray (TLRY), which touched a high of $300 per share in late September. During a Yahoo Finance appearance that same day, Tilson predicted that Tilray would fall by 90%. The stock has lost about two-thirds of its value since then.

“I’ve been around long enough to see silly, obvious, absurd bubbles,” Tilson said. “It’s easy to identify obvious bubbles like that. The problem is it can be very dangerous if you’re even week or two early. the best time to short obvious bubbles like this is on the backside when they’re already down by 50%, like the pot stocks today.”

Fundamentals are starting to matter

On Monday, Tilson will host the second Kase Learning Shorting Conference, where some of the top short-seller will present their bear cases for certain stocks. Yahoo Finance is the exclusive broadcast partner of the event.

“I think we’ve gone from an almost impossibly difficult environment [for shorting], just a complacent bull market, almost for the last ten years to now the fundamentals are starting to matter. Investors are discovering the risk side of the risk-reward equation. And it’s become, at least, a tolerable market for shorting.”

(Yahoo Finance)

That said, it’s not quite the “golden age” for short selling like the years leading up to the dot-com bubble burst and the 2008 financial crisis, two of the most epic times to short stocks in Tilson’s 20-year career running a hedge fund.

Tilson, 52, closed his hedge fund, Kase Capital, in September 2016 after nearly two-decades in the money management business, citing sustained underperformance in a market characterized by high prices and complacency.

Story continues

At the beginning of 2018, he set up Kase Learning as a way to help aspiring hedge fund manager avoid the mistakes he made. In addition to the short-only conference, Kase Learning offers a bootcamp called “Lessons from the Trenches: Value Investing, Entrepreneurship & Life” and a one-day seminar on how to launch and build a hedge fund.

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Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.