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By targeting these high-risk, high-reward assets, HRP is able to exploit opportunities that others haven't noticed yet. In short, HRP attempts to target stocks that it believes are undervalued or have been oversold.

This tactic has paid off, and HRP has performed well with net increases of 12.81% versus the S&P 500 at 8.16%. It has also been able to avoid seeing major losses during market downturns thanks to its portfolio focus on undervalued assets.

Small cap stocks like PotNetwork Holding, Inc. (OTCMKTS: POTN) offer huge potential for the investors with the capital and nerve to take advantage of them. Hedge funds like Hawk Ridge Partners offer a way for more nervous investors to still enjoy the benefits of small cap investing while mitigating much of the risk.

Cannabis legalization provides oppoortunities

With California's legalization of recreational marijuana in January 2017 the legal cannabis market has been thrust into the limelight and is expected to build a market that could be worth $21.5 billion by 2021. While recreational weed set the investment community buzzing another weed derivative has quietly been carving a niche of its own.

The hemp derivative cannabidiol, or CBD, is now one of the fastest-growing markets in the world. CBD is prized thanks to its abilities to treat pain without giving the patient the same high that Marijuana would. One of the leaders in this rapidly growing industry is PotNetwork Holding, Inc.

CBD is slowly proving its potential as a painkiller and the market is reacting

There has long been a wealth of anecdotal evidence that CBD could be an effective cure for pain and other ailments. The chemical has also gained the endorsement of a number of sports stars like MMA Athlete Nick Diaz and NFL hall of famer Leonard Marshal. Despite this anecdotal evidence, medical research into CBDs and their effects are still limited but promising.

For example, the Journal of Experimental Medicine found that CBD was an effective treatment for chronic pain and inflammation. The study also noted that the body was unlikely to build up a resistance to CBD, meaning that the dose would not need to be increased, which gives CBD a key utility compared to potentially addictive opioid based painkillers.

There have also been studies that have shown CBD can reduce the swelling and pain associated with osteoarthritis and rheumatoid arthritis in rats. This gives the chemical very real applications for treating the symptoms of arthritis and other degenerative joint or muscle diseases.

While the THC marijuana can occasionally amplify anxiety, CBD seems to have the opposite effect. For example a case study in 2016 demonstrated that cannabidiol helped to reduce the anxiety of a child who had been affected by trauma to the point where she was once again able to sleep. An earlier analysis of multiple studies also concluded that CBD had applications in the treatment of anxiety and posttraumatic stress disorder.

The mounting scientific evidence has caused manufacturers to look more seriously at CBD and regulations surrounding the promising chemical have been loosening. This has led to an incredibly hot market as producers attempt to pile in. Today, it is possible to buy CBD infused oils, soaps, creams, even gummy bears. The pharmaceutical industry has even started to get involved and GW Pharmaceuticals are developing a CBD based anti-seizure medication that is currently going through FDA approval.

This booming market has led to a number of CBD focused companies and few have done it better than PotNetwork Holding, Inc. (OTCMKTS: POTN). The extensive range of products offered by Diamond CBD and an aggressive advertising campaign have allowed them to improve their profits quarter on quarter. They have even set a target price of $1.25 per share in SeeThruEquity's January update.

The problem for many investors is that investing in small successful companies like PotNetwork Holding, Inc. represents an unacceptably high level of risk. Small cap stocks tend to be highly volatile, and while it possible to make a lot of money, that uncertainty unnerves some investors.