Baubles, Labels: Right Down Santa Claus Lane

Well, it’s that time of year: feverish shopping and fevered worrying about retail sales (will they?  won’t they?).  So we thought we’d look at some stocking stuffers — that is, companies that might be in your cross-hairs anyway as you ponder how to be Santa’s helper.  Clearly it’s been a challenging retail season, but we found several that may be low on the radar, and doing pretty well.

It turns out that the worries that this might be what Elvis called a “Blue Christmas” might already be slacking off: retail sales were up 1.3% in November, compared to economists’ expectations of 0.6%.  Look at this report filed on Friday by CNNMoney’s Aaron Smith: http://money.cnn.com/2009/12/11/news/economy/retail_sales/index.htm  Interestingly, according to Smith’s report, the gain owes little to auto sales, which had led the numbers earlier in the fall based on government incentive programs.  It seems that the Great American Shopper is putting his/her toe back in the water.  We suspect that may offer some opportunities for the Great American Stockbuyer as well.

Please note that we do not recommend stocks; we only write on companies that we find interesting.  Do your own diligence.

We all know that a part of Christmas is handmade.  For me that is usually just a matter of baking, but there are many folks handier than I who make all kinds of clever things.  One company that might interest the Martha wannabes is Berlin NJ-based AC Moore Arts & Crafts (Nasdaq: ACMR; http://www.acmoore.com/).  They sell all the things you need for those things you wish you could make: scrapbooks, quilts, sweaters, cookies, wreaths, potpourri, sculptures, macrame and lots more.  They sell in their own branded stores and online.  ACMR sales are not up year-over-year, and they are making losses this year, but their current ratio is about 2:1 and they seem to have a cash warchest.  In addition they have been aggressively marketing this fall, which may stand them in good stead.  ACMR shares closed Friday at $2.60,  less than half their 52-week high of $5.63, on average daily volume of about 90,000 shares.  Market cap is about $65 million, which is a small fraction of yearly sales.

G-III's chic leather outergarments with Calvin Klein labels

But if you’re not the loving-hands-at-home type, you are probably looking for gifts to buy that can just be wrapped and given, and you may already be looking at merchandise that’s made by companies most of us have never heard of.  One is NYC-based G-III Apparel Group Inc (Nasdaq: GIII; http://www.g-iii.com/), which busily stitches leather outerwear garments under a dizzying number of labels, some their own (Andrew Marc, Jessica Howard, et al), but more held under license from Calvin Klein, Sean John, Kenneth Cole, Cole-Haan, Guess, Tommy Hilfiger, Levi Strauss or Ellen Tracy.  Analysts seem unanimous in recommending this stock, and GIII closed Friday at $21.11, near its year-high of $22.25 with average volume of 185,000 shares.  Last week GIII raised its profit guidance for 2010 a hefty amount, and announced that its Q3 sales were up 3.4% when the government was cheering an overall rise of a lot less than that.  Market cap is about $355 million, which looks to be about 25% of 2009 sales — and the company is growing at a pretty good clip.

You may not know Iconix, but you probably have seen this little smiley guy

Likewise NYC-based Iconix Brand Group (Nasdaq: ICON; http://www.iconixbrand.com/), whose merchandise is available in a store near you under brands like Joe Boxer, Mossimo, OP, London Fog, Bongo and Artful Dodger.  Overall a fairly hip image, but a very solid record of performance, with sales up 8% in the difficult third quarter, very healthy EBITDA, and strong  earnings.  ICON closed Friday at $11.78, down a good bit from its year-high of $18.30 on average volume of over 1.3 million shares, and a market cap of about $840 million.

Birks & Mayors watches in 67 stores in Canada & US

But good things come in little boxes, or so I hear.  If you subscribe to that theory, have a look at Montreal-based Birks & Mayors (NYSE Amex: BMJ; http://www.birks.com/), which operates jewelry stores in Canada and the southeastern US under the two monikers of Birks (Canada) and Mayors (US).  Sales are down year-to-year, and losses are up, but BMJ shares closed Friday at $1.26, vs a year-high of $1.80, and a market cap of about $14 million (sales for the 6 months ended September were over $100 million with Xmas season ahead).  Average volume on the stock is low.

Or have a look at Bermuda-based Signet Jewelers (NYSE: SIG: http://www.signetjewelers.com/), which says it is the “world’s largest specialty retail jeweler.”  In the US Signet brands are the highly promoted Kay Jewelers and a relative newcomer: Jared (the man on TV whose GPS threatens to hold him hostage if he doesn’t show her the necklace he bought).  Marketing is where it’s at, and Signet seems to have that down to a tee.  They are also working on the basics, lowering debt, increasing store efficiency, in order to reduce losses and return to growth.  Worth a look.  SIG closed Friday at $25.41, about 20% off its year high of $29.07, with a market cap of $217 million and good volume over 280,000 shares.  Like other jewelers, a huge discount to sales.

Zale Corp is partnered with DeBeers on projects like Shared Heart

But I’d be kidding you if I didn’t say that in some weird way, Zale Corp is also interesting, in spite of widespread doubts about survivability, like this comment on Motley Fool: http://www.fool.com/investing/general/2009/12/11/5-deathbed-stocks.aspx.   Irving TX-based Zale (NYSE: ZLC; http://www.zalecorp.com/ operates nearly 2,000 stores and shows nearly $1.8 billion in sales with gynormous losses.  Their current market cap of $104 million reflects the sentiment, and the shares closed Friday at $3.25, vs a year-high of $8.51 — good volume though.  They sold Bailey Banks & Biddle, and have linked arms with DeBeers on some new “Big Ideas,” including the “Shared Heart” collection.

And if none of these works for you — there’s always eggnogg and fruitcake.

WiFi for America’s Heartland — Roll-ups Roll Out Their Plans

The centerpiece on the federal government’s holiday table may be the surprisingly fast pace of repayment of bailout funds by the big money-center banks.  There are also claims for job creation from spending the stimulus money, especially considering the initial jobs report for November showed only 11,000 jobs were eliminated in the month.  But inevitably (this is Washington DC after all) there are also charges of money slipping through the cracks and — uh-oh — disappearing.  And more than one boffin has noticed a cart-before-the-horse pattern to some stimulus programs.

The Rural Broadband stimulus package, for instance, is being administered by the RUS and the NTIA (Rural Utilities Service and National Telecommunications and Information Administration), neither of which has much experience with awarding big grants — and it may that neither of them has a MAP of which areas are underserved by current broadband suppliers.  If you can stand the boredom, there is a report by the Government Accountability Office (GAO) with the revealing title: “Agencies are Addressing Broadband Program Challenges, but Actions are Needed to Improve Implementation.”  (http://www.gao.gov/products/GAO-10-80).  Here is a take on the situation from The Industry Standard: http://www.thestandard.com/news/2009/12/02/groups-urge-changes-broadband-stimulus-programs?page=0%2C0

But however you look at it, there are some pretty interesting little companies in the  broadband services market, and some of them stand to find a bonanza in the RUS/NTIA sweepstakes.  It’s a fairly safe bet than any company in this sector has applied for some of the stimulus money, since there were reportedly $28 billion in requests for the $7.2 billion that was set aside by Congress.  I have read, but cannot say for sure, that there are 2,000 or more wireless broadband service providers in the US as I write this, which is why there are business plans popping up that want to “roll up” these small suppliers into a larger powerhouse company. 

Consider Rushville IN-based Omnicity Corp (OTCBB: OMCY; http://www.omnicity.net/), which is seeking to provide broadband services to rural users in the Midwest using wireless technologies.  OMCY announced last week that they have agreed to buy the assets of AAA Wireless, which will give them 39 wireless towers with “a footprint of 80,000 homes.”  OMCY says it has more than doubled its subscriber base in the last six months (they became public in February this year), and is on track to double again in the next six months.  It must be largely undiscovered if that is true, because the shares are trading at $0.30 vs a high of $0.95 on average volume of less than 40,000 shares a day.  But when you think about it, part of the problem of rural communities is that people seldom pay much attention to them, so it’s not a surprise that OMCY has a small audience, at least for now.

Or consider Reno NV-based Yonder Media* (http://www.yondermedia.com)  , which is currently private, but has signed an intent to merge with Salt Lake City-based Bayhill Capital Corp (OTCBB: BYHL) in what is commonly called a reverse merger (http://finance.yahoo.com/news/Yonder-Media-Architects-Merge-iw-3536792173.html?x=0&.v=1) .  What would happen is that Bayhill would be renamed Yonder Media, and the management of Yonder Media would take over the reins, including the current “affiliate marketing” operations of Bayhill’s Commission River subsidiary (http://commissionriver.com/) .  Together they have a run rate of about $3.5 million to $4.0 million.  BYHL shares are selling for $0.30, and it’s hard to say what the market cap is realistically, since in these reverse mergers, there is almost always a substantial “adjustment” to the ownership.  Yonder has a similar goal to Omnicity — but aims to cover more ground, serving 500-750 rural communities inside a few years from their current base in Nevada and California.  Management at Yonder are Silicon Valley vets with successes under their belts; the funding to date has come from the insiders, which is never a bad sign.  Of course the Yonder-Bayhill deal is contingent on several things, and there’s many a slip twixt the cup and the lip, so do your diligence, as you should on anything you buy, sell or trade.

The great city of Houston is home to Internet America Inc (OTCBB: GEEK; http://www.internetamerica.com/), which claims to have about 8,100 wireless subscribers, and has applied for ARRA stimulus funds to serve Southeast Texas.  They are making losses at present, at least partly because their older dial-up services are getting ditched as people move to better solutions, but they seem to be running at a revenue rate of close to $4.5 million annually, which does represent a year-over-year slight gain (http://finance.yahoo.com/news/Internet-America-Reports-bw-2418740372.html?x=0&.v=1) .  GEEK shares are changing hands at $0.32 today, vs a 52-week high of $0.52, for a market cap of a little over $5 million and almost negligible daily trading.  Their toll-free telephone is 1-800-BE-A-GEEK.  You gotta love that. 

Omaha NB-based KeyOn Communications Holdings (OTCBB: KEYO;  http://www.keyon.com/)  is probably the slickest of these rural broadband roll-up companies, which is not surprising since they are being packaged by a very slick and aggressively promotional PR firm.  KeyOn’s CEO announced this week the acquisition of a north-central Texas wireless broadband shop, SkyWi, which, according to the release dated December 7, will contribute $300,000 in annual revenues and $150,000 in EBITDA (http://finance.yahoo.com/news/KeyOn-Closes-First-bw-660239622.html?x=0&.v=1) .  If you can make 50% EBITDA margins, you probably will get asked to the Prom this spring, but one is tempted to say “Show Me.”  KEYO is trading today at $1.89, down from a 52-week high of $2.60, and in spite of all efforts to the contrary, average volume is still only about 30,000 shares per day, for a market cap of about $39 million, which by a rough count is about 5 times revenue.  KEYO has applied for $150 million in stimulus funding, by the way.

We do not recommend investments; please do your own diligence.

*Client of Allen & Caron, publisher of this blog.

‘Tis the Season to be Shipping, Tra-la-la-la

Not surprisingly, delivery services and freight forwarders have been an “industry on the move” recently.  And, as if on cue, FedEx announced before  the bell this morning that it expects to report a profit that is considerably higher than their previous guidance.  FedEx is wayyy out of our field of interest, but there are, in fact, lots of delivery services and freight forwarders in the small-cap world, even if they don’t advertise on the SuperBowl broadcast.

Look at Purchase NY-based Atlas Air Worldwide (Nasdaq: AAWW; http://www.atlasair.com/), for instance.  They may not be cashing in on the Christmas season, but they are delivering big items for big customers.  They just announced this morning, for instance, that they are delivering 55 mine-resistant vehicles to US troops in Afghanistan.  But they do a lot more than just deliver things — they also operate a charter service whose large-client list also includes the US military.  The company sports a market cap of about $725 million, and completed just before Halloween a follow-on stock offering run by Morgan Stanley & Goldman Sachs, raising about $112 million for the general fund.  The shares are trading at $35.07, within kissing distance of  the 52-week high at $37.97, and on good average volume of over 500,000 shares. 

Atlas Air offers a wide variety of aircraft, freight, passenger and logistics services

Then there’s Greeneville TN-based Forward Air Corp (Nasdaq: FWRD; http://www.forwardair.com/), which serves the deferred air freight market — things that need to be moved on aircraft, but not in a mad scramble to get there first.  With a market cap of just under $700 million it is right in our crosshairs, and the stock at $24.02 is not far off its year-high of $26.29, on volume of nearly 700,000 shares a day.

Please do your own diligence before trading or owning any stock — we do not recommend stocks; we just write on interesting companies.

Downers Grove IL-based Hub Group Inc (Nasdaq: HUBG; http://www.hubgroup.com/)   is another case in point.  With a market cap of  just about $1 billion it still qualifies as small cap, and its shares at $26.61 are not far off the year-high of $28.47 on average volume of about 390,000 shares per day.  HUBG is an “asset-light” freight mover that basically contracts its services out in a variety of transport modes, most commonly rail and trucking.  HUBG seems mainly to carry consumer goods and durable goods (your new washer-dryer combo, for instance) in container-size quantities.

Fort Smith AR-based Arkansas Best Corp (Nasdaq: ABFS; http://www.arkbest.com/)  is a less-than-truckload (LTL) specialist, and going on 90 years in the business.  They carry commercial and industrial loads and operate nationwide.  They lost money in their most recent quarter due to the general downturn in the economy, but the way I read their balance sheet, they have around $190 million cash and short-term securities, an almost negligible amount of long-term debt, and a current ratio of a bit better than 1.7:1.  At $27.43, the stock is down from its 52-week high of $34.56 for a current market cap of about $685 million and average daily volume of about 500,000 shares.  Might be worth a gander, since longterm viability does not seem to be a problem.

Finally if special situations appeal to you, have a look at Overland Park KS-based YRC Worldwide Inc (Nasdaq: YRCW, http://www.yrcw.com/) , which is just being dropped from the Dow Jones Transport Index, and is facing a deadline for an exchange offer of equity for debt today (Tuesday the 8th).  The stock has plunged to $1.02 vs a year-high of $6.18.  Today’s market cap is about $60 million, and daily volume on the stock is in the millions of shares as people jockey to get in or out of a company that seems to be accelerating down.  It remains one of the largest transportation service providers in the world, and there are 11 analysts following them who see losses diminishing compared to last year. 

None of these looks like a lump of coal in the Christmas stocking, at least not to us, although YRCW has all the earmarks of a lottery ticket as opposed to a longterm investment.

The LA Auto Show, Hybrids, and a Bit on Micro & Mild Hybrids

What makes this year different from all others at the LA Auto Show, which runs December 4-13?  Well, for starters, there are 49(!) hybrids and alternative-energy models being shown (http://www.laautoshow.com/AlternativeFuelVehicles.aspx).  The Auto Show’s website lists the following automakers as showing such vehicles: Audi, BMW, Cadillac, Chevrolet, Fisker, Ford, GMC, Honda, Lexus, Lincoln, Mercedes-Benz, Mercury, Mitsubishi, Porsche, Subaru, Toyota and Volkswagen.   For once US carmakers were getting a lot of the buzz; people are talking about the Ford Fiesta and the Chevy Volt of course.

Fisker Karma -- being shown at LA Auto Show

And then there is the keynote address, delivered by GM’s Bob Lutz, who said, in part, “At GM, we deeply believe that, in an energy-constrained world marked by dramatic growth in developing markets, it is critical that the global automotive industry – as a business necessity and as an obligation to society – develop alternative sources of propulsion based on diverse sources of energy. … Going forward, the automobile industry simply can no longer rely on oil to supply 98 percent of the world’s automotive energy requirements.” (quoted in AutoBlogGreen’s coverage by Sebastian Blanco: http://green.autoblog.com/2009/12/03/la-2009-bob-lutz-keynote-the-automobile-industry-simply-can-n/).

Bob Lutz -- Keynote Speaker at LA Auto Show

At the same time, GreenCarCongress reports that Pike Research has predicted 10-fold growth in lithium-ion batteries by 2015, up from $878 million to $8 billion annually in that period.  That is in spite of the novelty and relatively untried technology involved.  They quote John Gartner, the senior Pike analyst as saying: “Just as Li-ion batteries are relatively untested in real-world transportation applications, plug-in hybrid and all-electric vehicles are an unknown as a mass consumer offering. ” (http://www.greencarcongress.com/2009/12/pike-liion-20091203.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29)

That constitutes quite a leap of faith, especially when at the same LA Auto Show, the “Green Car of the Year” (as named by a panel of experts and Green Car Journal) is not a hybrid but a diesel: the Audi A3 TDI.  According to Wired Autopia, “The A3 diesel is powered by a 2.0-liter direct-injection turbocharged engine that puts down 140 horsepower. It delivers 30 mpg in the city and 42 on the highway.”  (http://www.wired.com/autopia/2009/12/audi_a3_tdi_green_car_of_the_year/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wired%2Findex+%28Wired%3A+Index+3+%28Top+Stories+2%29%29)

Green Car of the Year -- Audi A3 TDI

 At the same time, there may be a growing consensus, at least in Europe, that the bridge from oil-powered to electric vehicles (BEV, PEV, EV, whatever you call them) may well be what are called “micro” or “mild” hybrids, rather than what the public knows as Prius-type HEVs.  That would not sit well with the lithium-ion crowd, because it’s unlikely that micro and mild hybrids will be made using li-ion batteries, which do seem to be the current candidate for pure EVs, although as we reported recently, the Nissan Leaf, set for introduction in 2015, will use a more exotic battery with a new-fangled cathode: lithium nickel manganese cobalt oxide, referred to as a Nissan Super Battery.

In fact, most micro and mild hybrids today are using a variation of the traditional lead-acid battery, variously called a VRLA or AGM battery — much less expensive than a comparable NiMH or Li-ion version.  Interestingly the micro and mild hybrids can achieve pretty good improvements on mileage and on carbon emissions, which is the key to the technology.  The EU has carbon limits it will impose, backed by draconian fines on automakers, on 2012 fleets.  Those limits can be reached with full hybrids like those being shown in LA, or with EVs like the US-based privately held Fisker and Tesla vehicles, or the Norwegian Th!nk Electric mini-cars, and a variety of other fairly uncommon passenger vehicles.  The EVs have no carbon emissions at all, so they are a bull’s-eye for carmakers looking to comply with the 2012 bogey.  And, as we reported recently, there are several candidates for no-emission winners among commercial vehicles.

According to some estimates,  10-13 million vehicles will be outfitted as micro hybrids within a couple of years, affording improvements in carbon emission or mpg of up to 15%.  A micro hybrid assembly assists the gas-driven engine only (there is no electric drive train, and they never power the car solo), and some use the friction of regenerative braking to recharge themselves.  On the other hand, they are mostly a drop-in or clip-on technology that is relatively easy for a carmaker to implement.  Mild hybrids, which offer even more efficiency, may follow along behind, but are anticipated to be slower off the block than the micro assemblies.

The sticking point is the energy storage device.  Even “advanced” lead-acid batteries face classic problems: corrosion and sulfation on the poles, slow re-charging, and limited life expectancy.  All the newer, more exotic batteries face cost issues, and some may face safety issues as well.  What is needed is a battery that combines the cost and easy of manufacturing of lead-acid with the better performance characteristics of higher-priced batteries.  The difference may lie with a relatively cheap ultracapacitor: carbon.

Several companies have been developing lead-acid batteries with new, potentially game-changing technologies.  Peoria IL-based privately held Firefly Energy (http://www.fireflyenergy.com) offers its Microcell(TM) foam grid technology.  With a strong scientific background, the Firefly battery is being tested by the US Army and by a small number of others, but does not seem to be in mass production.  Lyon Station PA-based privately held East Penn Manufacturing (http://www.eastpenn-deka.com) , a major supplier of lead acid batteries) is working with Japanese developer Furukawa on an UltraBattery with an enhanced negative electrode that also seems not to be ready for prime time yet.  And New Castle PA-based Axion Power International* (OTCBB: AXPW; http://www.axionpower.com) has introduced its PbC battery technology, being commercialized in a supply agreement with global battery giant, Alpharetta GA-based Exide Technologies (Nasdaq: XIDE, http://www.exide.com/).  The PbC battery may be the closest to the finish line with a multi-patented nanocarbon electrode that maximizes performance and minimizes lead-acid downsides such as corrosion and sulfation, while preserving its price advantage and ease of manufacturing and recycling.   One of these may be the winner of the micro hybrid sweepstakes.

Meanwhile, the King of the Hybrids, Toyota, is showing the 2010 Prius at the LA Auto Show — this time with a Panasonic lithium-ion battery instead of the NiMH batteries of the first two generations of Prius (http://www.greencarcongress.com/2009/12/prius-phv-20091202.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29).  Hyundai is showing the 2011 Sonata hybrid, with its own li-ion battery pack (http://www.greencarcongress.com/2009/12/hyundai-introduces-2011-sonata-at-la-auto-show-with-4cylinder-gdi-engine-gdi-turbo-and-hybrid-powert.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29). 

At the LA Auto Show it is clearly the Year of the Hybrid, and it is clearly the year of the Asian-made li-ion battery, which must be a bit of a trial for the US-based li-ion giants: Johnson Controls/Saft, Ener1 Inc, and A123 Systems.  Go see all the hybrids, see the future of vehicle transportation — and have fun!

Please do your own diligence before buying stocks — we don’t make recommendations; we just write on interesting companies.

* client of Allen & Caron, publisher of this blog.

EVs Anyone? Yup, Where Can I Plug In?

The New York Times ran an article that I suspect few people read, because it was in the middle of section 1 opposite a bunch of desperate retail ads for SALES-SALES-SALES, but it points at the soft spot of the move toward electric vehicles (EVs): how to get them charged when you are not at home (http://www.nytimes.com/2009/12/02/business/energy-environment/02electric.html?_r=2&partner=rss&emc=rss).   Henrik Lund, a professor of energy planning at Aalborg University in Denmark, puts his finger on it: “There is a psychological barrier for consumers when their car is dependent on a battery station.” 

Better Place plug-in -- sleek and easy

In this article, Palo Alto CA-based, privately held Better Place is teaming up with the largest Danish electric utility to put charging stations up across Denmark, and they have $100 million to spend doing it.  Kudos, but it is grid electricity, and it tries the imagination to think of grid plug-ins every few miles on the huge US Interstate Highway system.  Works for Denmark though.

We have relatively few EVs on the road today, and one of the big reasons is just that: how do you get them re-charged?  That is not to say that the EV movement is not taking off — it clearly is, but it is taking off from a different runway, so to speak.  Just to be clear, yes we are aware of Tesla, Fisker, Th!nk Electric, and several other small companies with slick-looking EVs and HEVs, but they are not very common yet.

Ford Transit Connect EV will be shown at the Chicago Auto Show Feb 2010

If you look at the recent announcements from Ford Motor Company (NYSE: F) and Oak Park MI-based Azure Dynamics* (TSX: AZD and Pink Sheets: AZDDF.PK; http://www.azuredynamics.com/), one of the most high-profile EV announcements in recent months relates to delivery vans: the super-successful (in Europe) Ford Transit Connect: http://www.fordvehicles.com/transitconnect/.  Point being that this EV is designed for vans that have routes to drive, especially urban routes with lots of start-and-stop traffic — very little open-road driving, so the mileage to “empty” is not an issue.  There should be thousands of these puppies on the road when they show up in select Ford showrooms in 2010.

In fact, from a non-scientific scan of the market, it appears that most of the pure EV announcements (not all, but most) relate to commercial vehicles.  Look at Kansas City-based Smith Electric Vehicles, whose website says they have led the EV market for 80 years (http://www.smithelectricvehicles.com/) — all the vehicles they show are commercial vans and trucks.  Makes sense, of course, because they all go back to the same place every night and can plug in.  Smith announced at the end of October that they will introduce a postal delivery vehicle: perfect application.

The much-heralded but perhaps under-funded commercial vehicle from Anderson IN-based privately held Bright Automotive is also clearly aimed at a barn-stored commercial user who can bed down vehicles next to a plug every evening.  http://www.brightautomotive.com. 

Same with Torrance, CA-based Enova Systems* (NYSE Amex: ENA; http://www.enovasystems.com), which creates drivetrains for hybrids and pure EVs for some of the largest commercial-vehicle manufacturers in the world (Freightliner, Laidlaw, First Auto Works of China).  The funding — partly because of tax breaks and stimulus money — is in commercial vehicles.

But back to the NYT story.  In order for ME to turn in my one-horse-open-shay for an EV, I have to be able to drive on the open road without worrying about finding a plug for my car to recharge.  I’ve pushed cars that ran out of gas, and it’s no fun, but at least there are gas stations pretty much all over the place.  Without that infrastructure , there is some nail-chewing about driving an EV.

Apparently there are some jurisdictions that are trying to pioneer the infrastructure for EVs.  There has been a fair amount of attention paid to privately held Campbell CA-based Coulomb Technology (http://www.coulombtech.com/), which has been signing deals with a variety of municipalities, most recently Houston, according to their website.  They are conducting demonstrations with stand-alone charging stations, but most of the ones they are installing today seem to be grid-connected — which probably doesn’t cut it for my drive through the Catskills.  There was a demo of interest  in Washington DC this year, where Coulomb worked with San Diego-based privately held Envision Solar (http://envisionsolar.com/) and New Castle PA-based Axion Power International* (OTCBB: AXPW.OB; http://www.axionpower.com).  The product was a pretty slick-looking, no-emissions, solar-powered charging station with inexpensive longlasting PbC batteries to make it work when the sun don’t shine.  Sounds good, looks good, is good — but how many miles of highway would have to be served in order for the Clampetts to get from the Appalchians to Beverly Hills?

This morning there was an announcement that Nissan will introduce an EV with a 200-mile range — in 2015 (http://www.reghardware.co.uk/2009/12/02/nissan_super_battery/ ).  They will use a lithium nickel manganese cobalt oxide cathode (say that five times fast).  But something that’s 5 years out has little effect on people who are considering buying a car today.

Nissan Leaf, due in showrooms in 2015 or so

The big lithium-ion battery companies — Ener1 Inc, A123 Systems, and Johnson Controls/Saft — all seem interested in grid-connected battery applications.  That is, they are interested in storing electricity generated in nonpeak hours for peak distribution (very helpful, by the way, but no help for my car).  But I have not read anyplace of anyone wanting to install lithium-ion batteries in solar car-charging stations out in BFE; they’re too expensive, and they might get wet (which is a no-no for lots of exotic batteries).  Ener1 Inc is Nasdaq: HEV; http://www.ener1.com.  A123 Systems is Nasdaq: AONE; http://www.a123systems.com.  Johnson Controls is NYSE: JCI;  http://www.johnsoncontrols.com/. 

Axion Power’s supply agreement with Alpharetta GA-based Exide Technologies (Nasdaq: XIDE; http://www.exide.com/) looks like a candidate, with the carbon-based PbC technology, to provide an affordable, long-lasting battery for a charging station.  And the Advanced Lead Acid Battery Consortium has a lot of information on souped-up lead-acid batteries that work-better-last-longer, but still have the same killer problems of short life and low rechargeability that makes them dowdy wallflowers at the EV prom.

All told it may be up to the Coulombs, the Better Places, the Envision Solars, the Axion Powers, the Exides to come up with the ideas and demos for charging stations (and they have).  But like the Interstate Highway system itself, a good way to get EVs on the highways would be for the federal government to puts a priority on charging stations.  More stimulus, anyone?

Please do your own diligence before investing in any stock.  We do not recommend stocks — we just write about interesting companies and interesting developments.

*client of Allen & Caron, publisher of this blog.

Healthcare’s Y2K. And SmallCaps That May Save the Day.

As the first decade of the second millennium comes to a close, it is tempting to reminisce about where we were during the last few months of 1999. The excitement of entering a *new century and seeing a year end in 00 caused concern for IT departments the world over because many computer programs would not be able to recognize the year 2000 from 1900, the so called Y2K bug. The speculation of Y2K’s coming wrath ranged from paperwork headaches to Armageddon.  You may recall reports of people forming militias and stockpiling canned food in shelters in advance of Y2K ’s threat. This actually happened! Well, the global community passed that test  with only mild nuisances.  Maybe the issue was overhyped, or maybe the $300 Billion spent to mitigate the threat was the best money ever invested. We’ll never know.  Here is a good 1 pager on all things Y2K. http://en.allexperts.com/e/y/ye/year_2000_problem.htm

Healthcare’s Y2K is known as ICD-10. It won’t spook people to start many militia movements and, it won’t cost $300 Billion to fix. Rand projects a bill of $425 million to $1.15 billion, with $5-$40 million in lost productivity per year. Blue Cross found the conversion to run from $5.5-$13.5 billion, with $150-$380 million per year in lost productivity. Though the cost estimates vary greatly – this is a definite revenue opportunity for health insurance data companies large and small.

So what the heck is ICD-10 already?

I’m glad you asked. ICD-10 is an international protocol that calls for more detailed coding in healthcare treatment, i.e. labeling diseases, symptoms, abnormal findings, complaints, external causes of injury or diseases, as classified by the World Health Organization.  With 155,000 different codes, ICD-10 is more than 10 X detailed than the current standard, ICD-9. The deadline for meeting the mandate is October 2013. The American Academy of Professional Coders (AAPC) lobbied to push it back –the HHS had originally called for a 2010 date. On the surface, it may seem like a stimulus project to create more jobs. Not true. Its purported goal is to make it easier to discover relationships between patient, diseases and treatments. In fact, the U.S. lags other countries in its adoption.

Humana’s (NYSE:HUM) CIO Bruce Goodman, in a Q&A with Wall Street Journal writer Ben Worthen, explains, “You have got to go through all the systems where those kinds of codes are carried and expand those fields and bring in those new code sets. A lot of it can be automated. But it means remediating millions of millions of lines of code across lots of systems—systems hospitals use, we use, doctors’ offices use.” http://online.wsj.com/article/SB10001424052748703932904574511171834716390.html

Another beneficiary of ICD-10 will be financial systems used by hospitals to manage revenue and information flows to payers, like Humana. Expect **Trintech (NASDAQ: TTPA), through its healthcare division, Concuity to benefit from this as they already process huge amounts of financial and patient data for large hospital systems like Cleveland Clinic and Providence Health Networks. Chicago based Concuity currently provides payer contract compliance solutions, financial modelling and patient financial responsibility solutions in all payer all care settings.

Lest you think the healthcare industry has plenty of time to focus on the 2013, consider that there are 17 pages of ICD-10 related jobs listed on today’s Monster.com (NYSE:MWW) Job Board.  http://jobsearch.monster.com/Search.aspx?brd=1&q=ICD-10&cy=us&lid=316&re=130. Greater exposure to IDC-10 hiring may be had with a small cap that specializes in technical staffing. Tampa’s Kforce (Nasdaq: KFRC) health information management segment provides coding, project management, transcription and data analysis staffing. You may want to follow its IDC-10 related placement going forward.

The biggest concern with handling this mass data migration is privacy. Fines for patient privacy breeches begin at $50,000 per violation and with this in mid, you may want to take a closer look at Dallas-based Zix Corporation (Nasdaq: ZIXI.) The Company’s Email Encryption Service enables healthcare organizations to protect sensitive personal health information sent via email. Zix Corp email encryption is used by the leading private insurers and one out of every 7 hospitals in the U.S.  The company delivered a 17% YOY revenue increase in the third quarter, which was at the high end of its guidance.

If you do some basic Internet research of ICD-10, it won’t be long before you come across health IT firm QuadraMed (Nasdaq: QDHC) of Reston, VA is all over it. It intends to be the source of all things ICD-10, and the Company launched a suave marketing push called the ICD-10 Countdown Program last month. This package includes coding simulator software, educational tools and services to guide healthcare providers through the ICD-10 conversion. The American Health Information Management Association has signed to use its simulation software to train 4,000 future coders nationwide. Not a bad product entry point to say the least.

Are any of these companies acquisition targets? Time will tell, but Blackstone (NYSE:BX) controlled Intelenet, a Mumbai-based healthcare records processing firm just made a $30 M acquisition to gaine xposure to the U.S. market for ICD-10 conversion. http://economictimes.indiatimes.com/infotech/ites/Intelenet-likely-to-buy-US-firm-in-30-million-deal/articleshow/5258781.cms

So, how do you plan to spend October 1, 2013? This is ICD-10 deadline day, after all. Don’t say you were not given a head’s up.

* Technically the new century began the first day of 2001, but that number does not pack the same cache. Blame Madison Avenue.

** Client of the publisher of this blog.

A Rising Index Will Not Lift All Dry Bulk Stocks

The Baltic Dry Index (BDI), which tracks worldwide international shipping prices of various cargoes like iron-ore, coal and grain, currently sits at its 2009 peak and just recorded its largest weekly gain of the year. A newbie investor keen on the shipping sector may well be inclined to pick the cheapest stock based on p/e ratio or one trading closest to its 52 week low. After all, there is no brand value to be had in this industry. A venerable shipping firm with a centuries old history can expect no more for use of its ships than the going rate set by the BDI – the same for an upstart with little or no experience in the business.

How do you spot premium value in a commodity business?

Kevin Sterling, Transport Analyst with Winston-Salem based BB&T (NYSE:BBT) notes that when it comes to spotting winners for the long haul (sorry, couldn’t help myself) the balance sheet is king.  Low debt and a healthy cash stash will catch his eye, but he also looks for management that has been through multiples cycles of the shipping industry (which typically last 5-7 years), the type and duration of contracts, the quality of shipper’s clients, and the age of its fleet.

“For as long as the shipping industry has been around, there have been new companies that race to enter the business as they see rates going higher,” noted Sterling. “This leads to over capacity and a bottoming out of the cycle. They’ve never learned. The Companies with debt so high they can barely afford to cover their interest notes represent this cycle’s next targets for companies that have mastered the cycle.”

Today the BDI hovers at a relatively historical norm of 4,111. The last two years saw the index reach peaks well above 11,000. Sort of like that 4 bedroom colonial whose value doubled in 3 years, these prices were not sustainable. Banks may be forced to take ownership of the ships from shippers underwater on their loans, and they will not hesitate to sell, even at a loss.

Sterling says experienced management teams are likely to lever up in down markets and raise equity in good markets. Most lever up at the top of the market, and bankers make it easy to do. When the inevitable down market hits, the cycle masters will be positioned to buy on the cheap from their distressed peers.

Wall Street currently rewards shippers that provide good earnings visibility. This means that analysts value stable contracts locked in for 3-5 years over the potential upside that could come with leasing on the spot market. Risk management may not be sexy, but neither is bankruptcy.  The Street has loved and will again love the hare, but the tortoise has the momentum.  Shipping analysts are now more attentive to the balance sheets of a shipper’s clients - 5 year leases with companies that are bleeding cash will not impress.  Sterling notes that Athens-based Diana Shipping (NYSE:DSX) goes the extra mile to add visibility. Diana discloses the credit facilities and balance sheet condition of every one of its customers.  

Though experienced management is considered an asset, an experienced fleet is not. Even if global trade returns to normalcy, a glut of previously ordered ships due in the coming years is expected to limit the extent of a meaningful price recovery. Sterling says that companies with the youngest fleets will have first access to the best routes. “Given a choice between leasing a new ship or an old one, it’s a no brainer. Clients usually pay the fuel costs and the newer ships will be more fuel efficient. That decision goes directly to the bottom line.”

As for using the BDI as a tool in his analysis, Sterling believes the correlation was more relevant a few years ago. The index does not tell you much about individual ship capacity and is likely a better measure for the commodities market.  Besides, the BDI measures spot pricing and most shippers have left the spot market upside for the consistency, often as the insistence of their lenders.

But he does appreciate how far the term Baltic Dry Index has come in terms of popular nomenclature. “A few years ago no one outside of the shipping industry would ever use the term. Now because some view it as a barometer for global economic activity and because CNBC profiles it every day, it’s gotten to the point where you expect to overhear people at cocktail parties reference the BDI.”

Asked what other metrics he pays more attention to and the answer goes to where one might expect. China. He watches China’s manufacturing activity and order flow.

So on a scale of 1 to 10, how much emphasis does a dry bulk analyst put on Chinese economic data? After all, it’s a big world out there and the BDI measures 40 different trade routes across the globe.

“I’d say a 9 or 10. Make that 10. You can not underestimate the importance of China.”

There is a dry bulk stock to fit just about any investor style. Diana is considered the poster child of consevrative management and is lauded by Motley Fool Matthew Barker as a company Darwin would love for its adaptability. Barker writes that Diana intends to parlay its pristine balance sheet into opportunistic growth by acquiring vessels “in a gradual and disciplined manner” at favorable prices. http://www.fool.com/investing/general/2009/11/12/how-do-shippers-look-now.aspx?source=itxsitmot0000001

Greece-based Paragon Shipping (Nasdaq:PRGN),  a smaller firm founded in 2006, is quickly developing a reputation for prudent management. Its debt level is manageable enough that management just voted a 5 cent quarterly dividend (4% annual yield). As for visibility, assuming all options are exercised, Paragon has secured contracts for 100%, 90% and 45% of its fleet capacity in the remainder of 2010, in 2011 and in 2012, respectively. Paragon CEO Michael Bodouroglou said in the last quarterly release that ”Our chartering strategy provides us with substantial visibility into both our revenue and cash flow going forward. This gives us the confidence to strategically invest in the growth of our business as the right opportunities present themselves.” Sounds very Diana-esque.

Fellow Greek firm Navios Maritime (NYSE:NM) is not taking a wait and see approach. It seems to be zoning in on the new fleet strategy and just announced a $400 M financing to continue growth plans that call for delivery of 21 new deliveries before 2013. The firm has taken steps to manage the downside risks by locking in 100% term charter coverage through 2010 and buying insurance against contract defaults.

Whether or not you invest in this sector, rest assured that one size does not fit all when it comes to dry bulk stock selection.

Anchors Away.

Foodie Stocks: Nuts for Cheese, Espresso & Organic Foods

Now that cooler days have arrived, and the frost is on the punkin, so to speak, my thoughts turn to comestibles: fancy foods, treat foods,  holiday foods — even health foods.  So I thought it might be worthwhile to do a completely unscientific survey of some of the small foodie companies that a person might find interesting on a dreary day when indoors is better than outdoors.

Please do your diligence and consult someone you trust before you buy any stocks.  We are writing about companies we find interesting, and not recommending any investments.

AHFP Cheese Clock -- sorta makes your mouth water

The most distinctive and different company we found is NYC-based Artisanal Premium Cheese, whose corporate moniker is American Home Food Products Inc (OTCBB: AHFP, http://www.artisanalcheese.com/).  This is the only real sophisticated cheese company we can find — and do they have cheese!  Soft, hard, semi-soft, smelly-stinky, grating, European, American (you name it, and they probably have it).  Perhaps more important, they have found ways to categorize it and make it intelligible to people who work in retail stores and people who want to serve cheeses at home without just guessing what’s what.  Their “Cheese Clock” is a well-thought-out consumer education program.  Their cheese caves are in NYC, and they offer tastings, and a Cheese-of-the-Month Club.  How can you miss?  AHFP shares barely trade, probably because most of them are owned by the cheesies who run the company: $0.10 on Friday the 13th, with average volume of just over 16,000 shares per day. 

More mainstream is Morton Grove IL-based Lifeway Foods (Nasdaq: LWAY, http://www.lifeway.net/), which sells health foods, possibly most notably Kefir, a drinkable beverage made from fermented milk and not unlike yogurt.  They also sell Kefir Bars for energy boosts, along with a plain farmer’s cheese and numerous other healthy alternatives to high-sugar snacks.  They have inaugurated a new website, http://www.kefir.com, where you might win some comestibles yourself.  LWAY closed on Friday at $11.67 on an ok average volume of about 31,000 shares per day, and a market cap of just under $200 million.  LWAY revenues are surging, most recently at 38% year-over-year growth.

If your tastes run to organic foods, you might want to look at Toronto-based SunOpta Inc (Nasdaq: STKL, http://www.sunopta.com), a billion-dollar revenue marketer of organic, natural and health foods, which lost money in the third quarter due mostly to noncash charges.  SunOpta is a full-cycle company, offering organic and natural foods from seed to packaged goods.  STKL closed Friday at $3.51 vs a year’s range of $0.79 to $4.40, with average volume of 285,000 shares. 

What more can you say?

On those chilly mornings, nothing tastes better than a good cuppa, and there are a couple of coffee roasters you may want to look at: Staten Island-based Coffee Holding Co (NYSE Amex: JVA,  http://www.coffeeholding.com/) , which sells green coffee beans, private-label roasted coffee and espresso, and its own brands of roasted coffees.  Some of the labels are Entenmann, S&W, Via Roma, and Cafe Caribe.  JVA closed at $4.50 on Friday, vs a year-high of $5.21, and average volume of about 35,000 shares a day.  Market cap is $24 million or so, with sales in the range of $70 million for 2009, based on their 9-month results.  JVA is profitable, though the profits are skinny, and it is a member of the Rainforest Alliance.

If you have both coffee and tea drinkers in your group, look at Vista CA-based Javo Beverage Co (OTCBB: JAVO, http://www.javobeverage.com/), which makes coffee and tea concentrates.  Sales look to be running around $24 million annually, and the company is making losses, but revenue is growing rapidly.  JAVO closed at $0.17 on Friday, vs a year-high of $0.40, with average volume of 117,000 shares, and a market cap of $48 million.

John B Sanfilippo & Sons (Nasdaq: JBSS, http://www.jbssinc.com/) , based in Elgin IL, has a winning product line for me, a nuts-nut from way back.  JBSS sells about $500 million of peanuts and tree nuts, extrapolating from its latest quarterly earnings, and it is profitable, with a return on sales in the range of 3% or so, if my math is right.  Filberts, pistachios, walnuts, pecans, pine nuts, macadamias and more (see http://www.fishernuts.com for their public face).  How can it get any better than that?  JBSS closed at $13.80 last week (not far off a year high after a strong run up), on average volume of 25,000 shares.  Market cap is just shy of $150 million.

Finally, you gotta look at Paramus NJ-based Smart Balance Inc (Nasdaq: SMBL, http://www.smartbalance.com/), which makes the best organic, light, olive-oil-based buttery spread in the market (that’s an unashamed personal endorsement), and a really good peanut butter too.  SMBL closed at $5.13 last week, on volume of about 450,000 shares, for a market cap of just over $320 million.  SMBL is doing about $60 million a quarter in revenue, and moved from a last-year loss to a this-year profit in the Sept 30 quarter.  Sales are growing in the mid-single-digits.  Great products.

Boosting Prospects for Primary Care Physicians Is Strategy for Obamacare

Much has been made about President Obama’s health care reform plans and what effects the administration’s cost-cuting concepts will have on physicians. According to the Wall Street Journal, the Democrats are waging a “quiet war” on specialists in favor of primary care doctors who cost less to train and use less expensive procedures and technology (http://online.wsj.com/article/SB10001424052748704471504574443472658898710.html).

Whether that’s accurate remains to be seen, but there are several medical device companies, including small caps, that are focused on providing services to primary care doctors as a key part of their growth strategy. If they can provide services for these physicians that will help them boost their revenues that will drive sales, is how the thinking goes.

It’s a tried and true method, as followers of small medical products and diagnostic services companies like Hayward, CA-based Cholestech (www.cholestech.com) surely remember. Cholestech was successful enough to be acquired by Waltham, MA-based Inverness Medical Innovations (NYSE: IMA, http://www.invernessmedical.com), a large (more than $3 billion market cap) developer and manufacturer of medical device products.

Among the small caps, companies like Poway, CA-based Digirad* (Nasdaq: DRAD, http://digirad.com) bring cardiac imaging services directly to the primary physician’s office, allowing the doctor to earn the imaging revenues rather than farming them out to a cardiologist or other specialist. Bothell, WA-based Cardiac Science* (Nasdaq: CSCX, http://www.cardiacscience.com ) manufacturers and sells cardiac monitoring devices, including the well-known stress testing equipment, directly to primary care physicians.

*Indicates Allen & Caron client

50 Emerging CleanTechs Each Year: An Interview with Mungo Park of CleanEquityMonaco

We had a conversation with  our old friend, Mungo Park, on Friday the 23rd, primarily to talk about the annual CleanEquityMonaco conference (http://www.cleanequitymonaco.com/) hosted by his company, London-based boutique investment bank, Innovator Capital (http://www.innovator-capital.com/).  The 2010 edition of CleanEquityMonaco* is set forMarch 4-5, 2010, and it will follow the established mandate of finding 50 of the most innovative and potentially world-changing emerging technologies in the cleantech/greentech world. 

 

Innovator Capital's Mungo Park, organizer of CleanEquityMonaco

Mungo Park (a descendent of the 18th-century Scots explorer of the same name) has spent most of his professional life working with emerging technology companies, largely in the role of  investment banker.  The Irish Mr Park started at Prudential Bache, and then came up through the ranks at northeastern US investment banks of legend, many swallowed up by larger institutions in the consolidation frenzy of the latter years of the 20th century: Alex Brown & Sons, Cowen & Company, Dillon Read & Co.  He headed Nomura’s European i-banking operation before founding Innovator Capital.  Innovator was at first devoted to life science banking, and broadened over the last 5-6 years to include cleantech banking, due to its obvious connection with preventive healthcare and societal wellness. 

The following are excerpts from the conversation:

SCW: You were originally attracted to life sciences.  Why are you now seeking out alternative energy and greentech companies?

MP: I was working on a financing for a company that had a technology to remove oxides of nitrogen from diesel emissions and I realized that not only was this a way to make people healthier (less asthma, fewer respiratory ailments), but the business plans of cleantech companies follow a similar pattern to what I had seen in biotech and healthcare in general.  That is, invention, research, development into a usable product, commercialization.  A biotech product has to survive 7-9 years of test, however, and in many cases a greentech product can be ready for market in 7-9 months, which means the potential for a return on investment is much closer, if the wheel lands on your number.  Most green technologies do not have to clear through an FDA-type regulator in order to be “legal,” which makes all the difference in the world, often reducing the length of time from conception to commercialization.

The most important reason I am working on cleantech is, however, that it ticks the “ethical box” — that is, it improves the quality of human life.  And that is also the reason for CleanEquityMonaco.

SCW: Other than the name, what’s different about CleanEquityMonaco?  There are greentech/cleantech scientific or financial conferences springing up everywhere.  And how does a company get invited to participate?

MP:  About the time I was becoming more and more interested in cleantech, His Serene Highness Prince Albert II became the sovereign of Monaco.  I have had the good fortune to know him and he has significant credentials in environmental issues.  Shortly after his accession I had a meeting with him and we came up with the idea for CleanEquityMonaco, a conference whose purpose is to introduce emerging/early-stage, innovative, next-generation technologies from all over the world.  The fields of interest are, broadly, clean energy, clean earth, clean water, clean air.

Many of the presenting companies are fresh out of academia or an inventor’s laboratory.  Many are working on their first proof of principle and are very early stage.  They need money, yes, but they need other things as well.  CleanEquityMonaco is set up as a platform to introduce them to sources of investment (financial and strategic), but also to media, politicians and political influencers, potential licensees and potential technology partners. 

As to how a company can be invited, there are numerous ways.  We have developed a list of about 300 companies that we are looking at ourselves.  Many of those, as it turns out, are not qualified because they are too large or too well-established.  We try to invite presenters who are below €250 million in fair value — and that is an important distinction between our search for emerging technologies and other conferences’ searches for faits accomplis.  But we accept nominations from people we trust, and apply our diligence principles to those.  We try for a geographic spread that is global, so we don’t want more than, say 10 companies from North America, preferring to be clearly and fairly global.  And we give some preference to companies that are not yet listed for trading in a public market — and that may not have that as a goal either.  We are interested in the entrepreneurial spirit as it affects the cleantech/greentech movement, and, potentially, the health of people around the world.

Hotel de Paris, Monte Carlo

SCW: Why would a company want to present?

MP: If we put it together right — and so far the conferences have gone pretty well — in the 2 days of CleanEquityMonaco, the companies can cover a huge amount of ground.  They can save a lot of time and money because there is such a good mix of people there.  We have heard back from the participants that it is an extremely productive meeting.

We have two levels of participation for companies in different stages of development: full participation for companies who are post-development/expansion stage, and a “Next Wave” participation for companies who are pre-revenue/early-stage.  The Next Wave companies make a shorter presentation, but they have all the opportunities for networking which, in the final analysis, is what the conference is about.

SCW: We hear that Sir Stelios Haji-Ioannou will be presenting a new award at the conference. 

MP: Of course Stelios is very well known in Europe as a hugely successful entrepreneur, perhaps most famous from EasyJet and EasyGroup, but from many businesses that he has started or encouraged from scratch.  And as a successful entrepreneur, he wants to give something back to the world.  He has been looking at cleantech for a while, and attended CleanEquityMonaco 2009.  He is sponsoring the conference, and has indeed agreed to present an award for entrepreneurship in cleantech, but he is particularly looking forward to meeting people, sharing his experience.  The Stelios Foundation (http://www.stelios.com/ ) has as its areas of interest: the environment, education and entrepreneurship.

SCW: What makes this conference different from other conferences?

MP: The extraordinary thing about this conference is the rich texture of participation.  We invite 50 companies to present, and about 300 attendees to mix, mingle and offer their help.  The focus is strictly on emerging technologies — not on upcoming financial deals.  The view is global, not country specific, and the attendees tend to be quite senior in their positions, representing international organizations like the UN, sovereign governments, big international corporations, academia, and finance.  We expect to see big multinationals there, shopping for investments and looking for junior partnerships — companies like Philips, GE, Siemens, Nissan and IBM.

Perhaps most important, the attendees go to Monte Carlo specifically for the conference, and they tend to be in attendance for all the sessions both days.  If we tried to do the same thing in London, we would have people popping in and out, coming to the lunch, and some presenters would get short shrift.  That is simply not the case in Monte Carlo.  It is a two-day event for everyone concerned, and the attendees tend to be at the conference 12 hours a day.

SCW: The upcoming conference will be the 3rd annual.  Have you had particular success stories that came out of the first two editions of CleanTechMonaco?

 MP: Several come to mind right away.  Zenergy Power (http://www.zenergypower.com/ ) presented in 2008; they are a superconductor energy technology company, listed on AIM, but operating in Germany, the US and Australia.  They have a variety of products targeted at electric utilities, and have done very well with the technology for transmitting large quantities of electricity over long distances with little or not leakage.  They got a large amount of recognition at CleanEquityMonaco, which also resulted in a lot of publicity.  Subsequently they have received additional funding and are, I believe, the first superconductor developer to be partnered by a major US utility.

Ener1 (http://www.ener1.com/ ) presented at that same meeting.  At the time they presented, they were pretty early-stage, and had recently restructured their capitalization.  They spent a good deal of their time at the conference with Think Electric, an auto company from Norway that was also presenting – and the two have subsequently partnered in several ways.  Ener1 has been a success story on the stock market, and was the recipient of a large US stimulus matching grant to expand its manufacturing in Indiana. 

Heliocentris Fuel Cells AG (http://www.heliocentris.com/en/about-us/profile.html) , based in Berlin and traded in Germany, is a hydrogen fuelcell company that presented to the 2009 conference.  Very soon thereafter they were able to announce a new financing that has helped them expand their business considerably.  They are partnered with many of the leading fuel-cell companies around the world.

US Geothermal (http://www.usgeothermal.com/) is headquartered in Idaho and traded on the NYSE Amex.  It is what its name implies: a company that uses the earth’s own heat to generate power.  They have had a steep growth trajectory, and were recently awarded a grant by DOE for a project in Oregon. 

Scots company Aquamarine Power (http://www.aquamarinepower.com/ ) is installing the world’s first nearshore wave energy device that will generate clean energy from the movement of waves.  They presented at the 2009 conference and have won numerous awards and commendations from all over the world.  They were able to raise a fair amount of new capital during a very difficult market subsequent to their participation in CleanEquityMonaco, and we are pleased that the timing was so propitious for them.

SCW: It is all business then?

MP:  CleanEquityMonaco is held in one of the most beautiful cities in the world, and the camaraderie that comes out of the meeting may be as important in some cases as the sharing of scientific developments. The meeting is small enough and senior enough that it helps create a network that’s not dissimilar to some “old school” or university networks — reaching all over the world and to many parts of society and industry. 

We have special rates from the best hotels in Monte Carlo: the fabulous Hotel de Paris, the beautiful beaux arts Hermitage, and the modern seaside Monte Carlo Bay Hotel.  We will be announcing several social events, including a CEO-only dinner on the night before the first day of meetings.  However serious we are, it is still Monte Carlo, after all.

SCW:  Many thanks. 

*Allen & Caron, publisher of this blog, is working with CleanEquityMonaco on a collegial basis in North America.