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

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.

There are as many opinions of the federal stimulus plans as there are people.  For some, the stimulus plans have been the safety harness that rescued us from global collapse.  For others the stimulus plans were a sneaky path to bonus heaven for greedy bankers.  For some the job creation rate of the many and varied stimulus plans is far too small, far too slow.  Judgments are probably equally split between favorable and unfavorable, but they come in all stripes.

So it is no surprise to read that some tier-two and tier-three RLECs (Rural Local Exchange Carriers) are “giving up” on the $7 billion+ federal rural broadband stimulus plans (http://blog.telephonyonline.com/unfiltered/2009/10/14/are-rlecs-giving-up-on-broadband-stimulus/).  The article, in Telephony Online, points out that companies like CenturyLink (NYSE: CTL; http://www.centurytel.com/, $33.52) and Windstream (NYSE: WIN; http://www.windstream.com/, $10.03) — both midcap companies and out of our area — did not even apply for funding under the programs.

But an article last month in the same publication said there were 2200 applicants in the first round of rural broadband funding requests, asking for a total of $28 billion (4x the amount allocated):   http://blog.telephonyonline.com/unfiltered/2009/09/10/broadband-stimulus-applicants-abound-who-needs-big-carriers/.  So it is possible that only the largest and best-funded companies are hanging back, one might surmise.  Speculation has always been that it is too expensive for the big telecom companies to take broadband to the hinterlands, so they might do best to sit quietly and not be noticed.

The Rural Utility Service (RUS, http://www.usda.gov/rus/ – one of the agencies tasked with soliciting and sifting applications for this stimulus program) says it is painfully aware that the process is confusing and flawed, and that it is looking for constructive suggestions: http://telephonyonline.com/independent/news/rus-improve-stimulus-application-process-0930/.

ABC News wonders if the stimulus money is being spent too fast: http://abcnews.go.com/Business/stimulus-money-spent-fast/story?id=8838798#.  They point out that the FCC isn’t due to publish its National Broadband Plan until February 2010, which may put the broadband stimulus plan at 6s and 7s, as they say.

But there really is a rural broadband industry, although views of it differ depending on how you define “rural.”  There are, for instance, various hardware suppliers who sell to countrified service providers — and those companies have a big stake in how the stimulus plans are structured.  Privately owned Petaluma CA-based Calix Inc (http://www.calix.com) is selling backhaul devices, customer premise devices, and all manner of interface widgets to companies like the aforementioned CenturyLink.  And Huntsville AL-based ADTRAN Inc (Nasdaq: ADTN; http://www.adtran.com/) is pumping along at about $500 million in annual revenue, reporting profits and paying cash dividends on the strength of its network access business.  ADTN shares are trading at $25.61 at the moment, not far off the year-high of $26.14, for a market cap of $1.6 billion and average daily volume of 870,000 shares, pretty liquid by any measure.

Smaller rural companies do not loom large in the federal plans for big bucks, since it is harder to put a lot of dollars (and people)  to work with smaller companies.  Not to be buffaloed, though, Omaha-based KeyOn Communications (OTC BB: KEYO; http://www.keyon.com/) is a supplier of broadband and VoIP to western and midwestern rural markets.  It features an ARRA logo on its splash page, and applied in August for $150 million in stimulus funds, and announced in September what sounds like an ambitious roll-up plan, though it is hard to come by specifics (not unusual).  KEYO shares are not far off their 12-month high, selling today for $2.48 (vs a high of $2.60), though the market cap is still small at $36 million, and daily trading is rather low at 36,000.  Given their stock chart, it looks like someone may have made a fair amount of money in a fairly short time.

 Privately held Reno-based Yonder Media Inc* (http://www.yondermedia.com ) is also looking to pick up coverage in Smallville USA, and has installed its first 22 communities, all in Nevada and California at present.  Much of the business plan is a roll-up map, with targets being small onesy-twosy locals who could benefit from new technology and marketing.  Interestingly Yonder has announced a pending merger with South Jordon UT-based Bayhill Capital Corp (OTCBB: BYHL), which will serve 2 purposes.  First it will act like a reverse merger for Yonder and take them public, though probably under a different ticker.  More important perhaps, it gives Yonder Bayhill’s wholly owned Commission River subsidiary, an affiliate marketing organization with major growth potential and significant synergies with Yonder, whose YonderSpot web pages will benefit from the intensive marketing capabilities of Commission River.  So far BYHL shares have not felt an updraft, trade lazily at $0.35 when they (yawn) trade at all.  One suspects a bid would bring out some supply, though.

Some are looking for indirect access to stimulus dollars instead of going straight at them.  League City TX-based ERF Wireless Inc (OTC BB: ERFW; http://www.erfwireless.com/) is a broadband supplier specializing in the energy industry in the US, with recently Canadian expansion announcements.  They are looking for broadband stimulus dollars via partnerships with companies who are getting them from the feds: http://www.erfwireless.com/graphics/pdfs/StimulusPartnership.pdf.  ERFW shares have been beaten down a bit, trading today at $0.33, vs a year-high of $1.67, for a market cap of about $42 million, on average daily trading volume of 239,000 shares.

We do not recommend stocks; we just write about interesting companies.  Please do your own diligence or consult someone you trust before you buy or sell. 

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

A business traveler without access to email can be like an infant without a blanket.  Each provides a type of security that can lead to crankiness if taken away. While cranky babies can ruin a flight, cranky business travellers can ruin an airline.  Airline industry suits see In-Flight wireless access and services as a way to keep their business clients happy while creating a new revenue stream.

Just this week, Lufthansa unveiled a marketing and PR blitz for its new Internet service, FlyNet, that will allow passengers to connect to the Web using a Wi-Fi-enabled laptop or smart phone via a satellite-based technology provided by Panasonic. The final price has not been announced, but an earlier attempt at a similar service charged passengers $10/hour and $27 for the entire flight.  http://www.nytimes.com/2009/10/13/business/global/13air.html?_r=1

Even though airlines are cutting back on capacity and labor to account for the still cloudy economic climate, spending for IFE&C, In-Flight Entertainment and Communication, is expected to grow. Charging a la carte for movies on demand, conference calls, email, etc. was identified as a key revenue growth driver by nearly two-thirds of airline executives surveyed by IdeaWorks.  A survey by airline IT giant SITA showed that 70 percent of the 116 global aircraft carriers it surveyed plan to introduce Wi‐Fi and GSM/GPRS connectivity for short‐haul flights by 2012, and around 65 percent for long flights. Frost and Sullivan estimates World In-flight Entertainment and Connectivity Market will grow to $2.72 Billion in 2012 from $1.68 Billion in 2007. This figure represents revenues earned from the largest 20 participants, which includes giants Rockwell Collins (NYSE: COL) and L-3 Communications (NYSE: LLL).

But smallcap names have designs on the expanding IFE&C market as well. Eatontown, NJ-based Emrise (NYSE Arca: ERI), which operates in the United States, England and France, creates electronic devices products for a variety of applications including in-flight entertainment and communications systems for commercial aviation customers enabling them to product such revenue-generating services as Internet, email, text messaging, mobile phone and satellite TV.

 EMS Technologies (Nasdaq: ELMG) of Norcross, GA provides hardware and software for the aerospace, defense and transportation industries. Its Aero Connectivity division designs and manufactures satellite-based broadband communication systems that enable worldwide high-speed Internet, voice and video capabilities. EMS Technologies provides the network and application servers and wireless access points for Gogo, the leading flight Internet service that has already been selected by airlines representing more than half of the North American mainline market.

The IFE&C market may help breathe life into one of the most famously ill-conceived business ventures of all time – Iridium’s satellite phone. (Nasdaq: IRDM)  The Bethesda, MD-based company launched at the height of the Internet boom of the late 90’s (of course) to provide satellite phones for globe-trotting executives. The business folded, a combination of obsolescence (the wireless connectivity improved faster than expected) and poor timing (the dot com bomb.)  But the spare satellite capacity is available for IFE&C developers to use. Rather than position itself as an alternative to conventional wireless calling, the company wants to provide communication in parts of the world not reached by mobile networks. Iridium CEO Matthew Desch affirms that less than 10% of the earth’s surface has wireless coverage after 25 years and it’s never going to get much more than that. That includes airspace, the sea, and mountaintops. http://www.businessweek.com/technology/content/oct2009/tc2009106_078908.htm?campaign_id=yhoo

East Aurora –based Astronics (Nasdaq: ATRO) provides high-performance lighting, electrical power and automated test systems for the global aerospace and defense industries. The Company’s patented EmPower® in-seat power system allows airline passengers to power their laptop, MP3, or personal DVD player directly from a power outlet built into the airline seat. It is also a leading supplier of products used to provide the power for In-flight entertainment systems built into the seat-backs of passenger airlines. This past summer, the Company announced EmPower contracts with two Asian airline carriers worth $7.4 M. The Company reduced  2009 earnings guidance in part due to continued weakness in the commercial transport and business jet markets. However, much of the purchases for sophisticated IFE&C markets will take place over the next several years.

Air travel is the last vestige of cell phone-free public space, valued as either an oasis worth preserving or a frontier in need of development. For those who can not even stomach the idea of a transconetinental flight stuck between two yacketty yackers, well that’s ’progress.”  On the bright side – maybe they can uncover a breakout smallcap that sells specialty in-flight ear plugs.

The World Series is in sight.  The market is reaching for Dow 10,000.  Topcoats are coming out of closets in the upper midwest and northeast.  Leaves are turning red, orange and gold in the hardwood forests.  And that other cheery mark of autumn is back with us this year as well: deal flow.  Although it is clearly out of our bailiwick, this morning’s Blackstone article is a keynote: CEO Stephen Schwarzman is looking for 8 big IPOs in the near future: http://finance.yahoo.com/news/Blackstone-CEO-sees-up-to-8-apf-176726039.html?x=0&sec=topStories&pos=2&asset=&ccode=.  Call it a series of liquidity events for Blackstone; call it a mitzvah for the NYC-based asset manager.  At the same time, Kohlberg Kravis Roberts is looking to monetize its purchase of Dollar General Stores in an IPO.  The earth trembles at the footfall of giants.

But the smaller fry are active as well, and that may be considerably more important for the vast majority of us.  Throwing a dart at the board, look at Milwaukee-based employee-owned investment bank, RW Baird, fairly recently emancipated by former owner Northwestern Mutual Life, whose headquarters is virtually across the street.  In an industry that was quiet as a tomb a year ago, Baird has completed 7 follow-on offerings since the week before Labor Day.  Those 7 offerings total $831.6 million raised, probably a better-than-expected September.  And the deals were all over the place: http://www.rwbaird.com/ci/investment-banking/equity/equity-transactions.aspx. 

Point is that Baird is not alone in making hay while the sun shines (a particularly autumnal saying).  One of the sure-fire signs of life in the deal business in Manhattan is the line-up of Lincoln Towncars outside the big law offices at night, when the indentured young lawyers work on prospectus alterations, re-model changing forecasts, etc.  An informal survey shows very long lines outside Cravath Swain & Moore in Worldwide Plaza on 8th Avenue, and outside Proskauer Rose in the Morgan Stanley building on 48th St.  Hmmm.

Deal Flow Media’s database service, PrivateRaise, put out a press release this morning announcing that deal flow in the PIPE market “returned to historical levels” in the 3rd quarter: http://www.privateraise.com/press/2009-10-14.php.  US companies raised $7.9 billion in 290 PIPE deals.  Microcap issuers raised $3 billion in 242 deals in the quarter, according to Brett Goetschius, ed of The PIPEs Report.

In our sector of the market, we tend to see more PIPEs than registered offerings, although smaller companies are hastening to put shelf registrations on file, and smaller underwriters are increasingly doing “registered-direct” offerings, which combine a lot of the marketing advantages of a PIPE with the immediate-liquidity of a registered offering.  Another dart thrown lands on San Francisco-based Merriman Curhan Ford* (Nasdaq: MERR; www.merrimanco.com).  As an investment bank, MCF is specialized in Cleantech, Internet/Media and Healthcare, and the deal flow there has noticeably improved from their published tombstones.  Two deals (a financing and an M&A transaction) for Prague-based KIT-Digital (Nasdaq: KITD; http://www.kitd.com) , a debt deal for Bellevue WA-based Coinstar Inc (Nasdaq: CSTR; http://www.coinstar.com/) , a debt deal for Houston-based Rick’s Cabaret (Nasdaq: RICK; http://www.rickscabaret.com/), an M&A deal for Raptor Pharmaceuticals (Nasdaq: RPTPD; http://www.raptorpharma.com/), a follow-on offering for Mountain View CA-based Vivus (Nasdaq: VVUS; http://www.vivus.com/), a registered-direct deal for Gaithersburg MD-based GenVec Inc (Nasdaq: GNVC, http://www.genvec.com), a follow-on offering for Bethesda MD-based Micromet Inc (Nasdaq: MITI, http://www.micromet.de/), and a private placement for Australian coal producer Cougar Energy.  While not the investment banker’s full-employment act, it is a lot better than packing your things in a cardboard box and waiting to be checked out, which was what was happening a year ago in midtown Manhattan.

From what we can tell, much of the deal flow is entering the stream through small investment banks commonly called “boutique” banks — many of whom do not offer the “full-service” that bigger, more traditional banks offer.  They may or may not be broker-dealers, for instance.  They may or they may not have a proprietary trading desk or market-making operation.  They may or they may not have a sales force, many of the smaller boutiques choosing to outsource virtually everything but the brain-power and essential connections and networks of the partners.  Sometimes it is hard to tell a banker from an asset manager in these cases, because many of them co-invest in their deals a la the traditional UK or European “merchant bank.”

Like many companies in our space, we are watching several deals-in-the-making, and have conducted several “beauty pageants” for companies looking for investment banking services.  Although the pace of deals does not seem feverish as it did a couple of years ago, it is definitely oiled up and ready to rip.  And many of the recent big-deal offerings have performed quite well, thanks very much.  Look at the stock of A123 Systems (Nasdaq: AONE), which has virtually doubled the investment of people who bought on the recent offering and held the stock instead of flipping it.  And, stripped of the glamor, A123 is basically an early-stage company whose horizon is pink with sales potential, but whose glory days are putatively out there in the unknown future.

Stay tuned, lots of new products hitting the market week by week. 

*Allen & Caron, publisher of this blog, has provided project services to MCF for certain of its international ADR clients.

Anyone who can read a newspaper or watch a television knows that the “green” movement is, as Mike the Ford spokesman says in a current tv commercial “kind of a big deal.”  The recent IPO of Watertown, MA-based A123 Systems (Nasdaq: AONE; http://www.a123systems.com/), which has virtually doubled the money of those who put their bets down on the IPO, has only served to underscore the obvious: that migrating wildebeests moving from the Serengeti to the Masai Mara ain’t got NUTTIN’ on the greentech movement.   A123 Systems, a company about which there is a considerable split of opinions, is the largest and most prominent US-based lithium-ion battery company, with a market cap of about $2.3 billion, which puts it out of our realm of interest, although we do try to keep an eye on energy storage as perhaps the most important enabling technology in the green movement.

But what we want to do today is have a look at some of the folks at the edges of the green movement — not the scientists or engineers, not the R&D workers or the panel installers, not the guys in white overalls in clean rooms — but the enablers, the ones who are green by reflected glory, dedication or avocation. 

The most obvious green fringe companies are the ones that put on conferences, which, to be clear, are hives to which the little green bees can bring their pollen or store their honey.  There are numerous investment banks that have either greentech conferences or greentech “tracks” in otherwise more general investment conferences.  Those include San Francisco-based Merriman Curhan Ford (Nasdaq: MERR; http://www.merrimanco.com/), a company we have written about on numerous occasions, and whose stock has done rather well in the recovery.  They also include Rodman & Renshaw (Nasdaq: RODM; http://www.rodmanandrenshaw.com/), whose enormous convocation in Manhattan late in September created enough hullabaloo that there was simply not room for all the invited guests at the opening night gala, which took all of Ellis Island and featured Diana Ross singing her heart out.  RODM traded as low as $0.14 earlier this year, and is currently at $6.20 (yikes!), a dizzying gain.  it also includes Newport Beach-based Roth Capital (www.rothcapital.com), whose growth-stock conference in February is an eagerly looked-for event for the largely snowbird investment community.  And to be fair, there are lots of other investment banks/ broker-dealers whose conferences are wowie-zowie and who have strong greentech banking groups.

The purely greentech conference scene also includes conferences with a distinctly tree-hugging personality.  January 20-21, 2010, will kick off the greentech conclave season in Palm Springs, with the CleanTech Investor Summit (http://www.cleantechsummit.com/), sponsored by greentechies like Milwaukee-based RW Baird and Wells Fargo, lawfirms like Morrison & Foerster and Orrick Herrington & Sutcliffe.  Limited to 500 attendees “for the maximum networking experience,” this Summit (they are all called “premier” events, by the way) could easily be the greentech version of speed-dating.  But heck, you can cover a lot of, um, ground.

Then on February 24-26, 2010, The Palace Hotel in San Francisco will host another premier event with a similar name, but distinguished by its fancy-looking Roman numeral: Cleantech Forum XXVI (http://cleantech.com/cleantechforum/).  This event is for startups and VCs only, which seems a bit like matching giants against babies, but that is the point of such events, with the lucky babies getting to suckle at the VC tit in exchange for a long period of indentured service.  Clearly a worthwhile experience, and with a lot of marquee names.

The elegance in this field, however, is all in Monte Carlo March 4-5, 2010, with CleanEquity Monaco (http://www.cleanequitymonaco.com/).  This conference gathers up no more than 50 small companies from all over the world, and invites scientists, investors, the media and UN influentials to a series of high-toned seminars and presentations punctuated by the lavish and eye-poppingly beautiful area around the famous Casino.  Smoothly run under the serene eye of Prince Albert II, the organizer is London-based Innovator Capital (www.innovator-capital.com).  Allen & Caron, the publisher of this blog, is a sponsor of CleanEquityMonaco for 2010. 

The media clearly has a stake in greentech as well, and are overall no more united or careful about what they say in this regard than in any other, with lots of entries on social media like Twitter, and nearly uncountable blogs (like this one, I suppose).  It may be simply the nature of media to run in packs (different packs to be sure, and often snarling at each other).  There are far too many to enumerate, but there are some growing empires in that area.  Worth mentioning are the GigaOM internet publications, frequently one of the firstest with the mostest: http://earth2tech.com/?utm_source=gigaom&utm_medium=topnav.  The CBS Interactive property, CNET, offers the insightful Martin LaMonica, who is a good source and worth pointing your news aggregator at:  http://news.cnet.com/8301-11128_3-10367683-54.html?tag=mncol.  There is also the slightly stuffy-looking but extremely wide-ranging GreenCarCongress, which is SO not just about cars: http://www.greencarcongress.com/.     And never one to be outdone, HuffPo has a hyperactive and wide-eyed Green Section: http://www.huffingtonpost.com/green/.   And lots more, lots more. 

Finally, have a look at http://www.guardian.co.uk/globalcleantech100 in which the respected GUARDIAN allies itself with the sponsor of the San Francisco conference mentioned above, and set for Feb 24-26, 2010.  This is a somewhat idiosyncratic list of what someone thinks are the “Top 100″ cleantech companies in the world, a little like a rolodex that some cards fell out of.  Somewhere between a Mr Blackwell Worst-Dressed List and an uptown awards ceremony, there seems to be little pattern to the choices — but it is a sign of the greentech culture that this sort of list begins to appear.

Please keep in mind that we do not recommend stocks; we simply write about companies we find interesting.  Do your own diligence, please.

Apparently the domestic clinical laboratory industry does not lack in lobbying power. While much of the rest of the country was focused on such issues as “death panels” and the “public option,” the laboratory industry, at least in September, lobbied with all its collective force against a new proposal in the healthcare reform bill targeted squarely on their top line: a $750 million non-deductible annual fee starting in 2010. For the industry, which generates an aggregate of approximately $45 billion annually according to Roth Capital Partners, the proposed fee represents about 1.7 percent of revenues.

By Sept. 23 the companies were no doubt breathing a sigh of relief. The fee has been removed from the bill.

Proposed as a way to help pay for healthcare reform, the fee would have been levied based on each company’s share of the market so the biggest labs, like Quest Diagnostics (NYSE: DGX, http://www.questdiagnostics.com) and Laboratory Corporation of America (NYSE: LH, http://www.labcorp.com) would have been hit hardest. Indeed Quest and Lab Corp, with $9.7 billion and $7.2 billion market caps respectively, saw their stocks track downward earlier in September as investors learned of the tax but then jumped back up when the tax disappeared.

For the small cap lab companies, the tax would not have been as severe but worrisome for investors nonetheless. Some of the leading small caps in this space include Aliso Viejo, CA-based Clarient* (Nasdaq: CLRT, http://www.clarientinc.com), Carlsbad, CA-based Genoptix (Nasdaq: GXDX, http://www.genoptix.com), Redwood City, CA-based Genomic Health (Nasdaq: GHDX), http://www.genomichealth.com) and Ft. Meyers, FLA-based NeoGenomics (Nasdaq: NGNM, http://www.neogenomics.org).

My good friend John Westergaard used to tell me regularly that investors do not want to buy into small companies — instead they want to buy into companies that are going to be big companies, which lets them “get in on the ground floor.”  Keeping that in mind, I decided to scout around and see if I could find some likely candidates.  I looked for companies with fast-accelerating revenues, big niches that they can dominate, or assets that could make them much bigger very quickly. 

Please keep in mind that we never recommend stocks.  We write about companies that we find interesting, and we always suggest that investors do their own diligence before investing.

If you are interested in finding companies that are on trajectories that may make them a lot bigger, here are a handful of interesting companies that you may not have noticed yet.

First, consider New York City-based interCLICK Inc (OTC BB: ICLK, http://www.interclick.com/), a behavioral advertising networker that is growing at a furious rate based on their ability to generate a cost-per-customer that gives advertisers an attractive “ROI” and a steady stream of buyers.  I heard CEO Mike Mathews present at the Rodman & Renshaw conference last week, and found the story compelling.  Revenues for the most recent quarter (keep in mind that we are in a troublesome economy) were up 126% year-over-year, and their growth chart is beginning to look Matterhorn-ish.  The stock closed at $2.05 on Friday the 11th on volume of 225,000 shares, close to its 52-week high of $2.25, and far above its low of $0.45, for a current market cap of about $85 million, which puts them at less than 2 times what looks like this year’s likely revenue, and just over par with 2010 revenue if it continues to rise the way it is rising now.  The management has a messianic attitude about their techniques and know-how, and a big-company client list as long as the CEO’s arm.

Then have a look at New York City- and Prague-based KIT Digital Inc (Nasdaq: KITD; http://www.kit-digital.com/), a video enablement company that allows big brands, telcos and entertainment companies to distribute video content via the Internet, mobile networks (think cellphones), and IPTV set-top boxes.  Their business is a little difficult to understand because it is largely unseen by viewers, but their most recent quarterly results were up 91% year-over-year, and seem to be running at a rate of $40 million minimum, with a current market cap of about $37 million.  KITD presented at the Rodman & Renshaw conference as well, and has a future lineup of other conferences that you can find out about on their website.  The stock recently moved from the Bulletin Board to Nasdaq, and closed at $7.72 on Friday, vs a year-high of $9.80.  KITD suffers from low trading volume, probably largely because of its low level of awareness among investors.

Next, cast your baby blues at Scotts Valley CA-based VirnetX Holding Group* (NYSE Amex: VHC, http://www.virnetx.com/), which has an IP portfolio of internet security patents that sprang largely from super-spook midcap company, SAIC Inc (NYSE: SAI).  Their patents cover the ability to establish secure Virtual Private Networks among computers, mobile devices, and other devices  with a single mouseclick, as well as the right to issue Secure Domain Names.  Current interest is focussed on their gargantuan lawsuit against Microsoft which, if VirnetX prevails, could give them a gazillion-dollar award.  But the Secure DNS part of the business could well justify a significant increase in value separate from the MSFT litigation.  What’s the catch?  VHC is pre-revenue, and has yet to announce their first significant licensing deal, most likely because potential customers are waiting to see the outcome of the MSFT case, which got a favorable nod from the court that is trying the case in its “Markman” opinion this year.  VHC closed at $2.89 on Friday, far off its 52-week high of $5.00, and the shares have average trading volume of 152,000 shares.

Check out London-based Sirius Exploration PLC (http://www.siriusexploration.com/) , which owns some salt and potash mining properties and options in the US and Australia — properties that are envisioned by the company to become storage locations for unused energy in the form of compressed air.  Sirius shares trade feverishly on the London AIM, closing Friday at 0.14 GBP on volume of 8.6 million shares.  Their US ADR trades on the Pink Sheets and closed Friday at $107.60, up $21.00 on the day, and vs a 52-week low of $13.00.  The problems are that there is almost no volume in the US trading, and there seems to be very little recent news on Sirius (the most recent news on Yahoo Finance is from April), as well as a fair level of skepticism on the Internet.  It’s a mining company — dig deep in your due diligence, please. Caveat emptor!!

Finally, look at Foster City CA-based SciClone Pharmaceuticals Inc (Nasdaq: SCLN; http://www.sciclone.com/), which is developing and commercializing drugs for cancer and infectious diseases in China and internationally.  It has drugs for hepatitis B & C, as well as a raft of cancers, including pancreatic cancer, Stage IV melanoma, and liver cancer.  SCLN closed at $4.83 on Friday, up from a year low of $0.63, on volume of 555,000 shares, with a market cap of about $225 million.  Clearly someone is interested with trading like that and a fast rising valuation.

Mr Westergaard died in 2003, but I have a sense that he may be “up there” keeping an eye on these and other small companies with interesting potential.

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

Just after we published our brief survey of small investment bank stocks last week, the first-mentioned bank in the article, Merriman Curhan Ford (Nasdaq: MERR; http://www.merrimanco.com/) wriggled free of some problems in its past via a financing that included veteran Tommy Unterberg and a new Director for Merriman Curhan Ford, Andrew Arno.  The effects were covered in The Wall Street Journal: http://online.wsj.com/article/SB125140071820064485.html (sorry, you have to pay to read it).  But apparently as a result of the deal, MERR shares added some value, and were trading at $1.10 this morning, off a touch from Friday, but the whole market is off a touch this morning.

While we are having a second look at MERR, we ought also to take a gander at New York-based Rodman & Renshaw (Nasdaq: RODM, http://www.rodmanandrenshaw.com/), which has hit the ball out of the park since March, when it traded near $0.20, vs this morning’s $3.80 (up $0.27 in a down market), nearly touching recent highs achieved last week.  Rodman has consistently ranked among the Valhalla gods of PIPE placements, and its annual conclave is due in New York next week with all the glamor and glitter that a Wall Street firm can muster: the opening night party, which takes over Ellis Island on Wednesday night, will kick back to a live concert by Diana Ross — sounds like the good ol’ days, doesn’t it?  Certainly an energetic kick0ff for the fall season, and a sign that RODM is leading the conga line of PIPErs once again.   RODM is adding new tracks on marine transport, cleantech/greentech this year.  For information on attendance, go to http://www.rodmanandrenshaw.com/conferences?category&id=30 and pick your track. Should be quite a show. 

We don’t recommend stocks; we just write about smallcap companies we find interesting.  Do your own diligence please.

A dart-throwing investor would have had a good chance to make money investing in small investment banks recently.  We’ve looked at this specialized sector several times in the past, and of course in the Bad Old Times these stocks were as depressed as any in the market.  But recently the number of multiple-base hits and long balls has been increasing.

San Francisco-based Merriman Curhan Ford (Nasdaq: MERR; http://www.merrimanco.com/) is a case in point.  The full-service investment bank has become the market leader in PAL services for the OTCQX top-end Pink Sheets market, and they have carved out several industry niches, including a strong bid for the smaller deals in the greentech space (near and dear to us).  Recently they have announced some registered-direct deals that look interesting.  MERR shares closed yesterday at $0.63 (about a double from the low), vs a year-high of $1.46, but the stock has been tending to the upside pretty strongly.   Still, the market cap is only $8 million, which may make it worth a closer look.

Houston-based Sanders Morris Harris Group (Nasdaq: SMHG, http://www.smhg.net/) has always had a strong mandate in energy and more recently in alt-energy, and has a very oil-y gas-y customer base.  Recently under the leadership of George L Ball, they have been focusing more on asset management, and have announced their intention to sell off most of the investment banking group to Siwanoy Capital, after taking impairment charges on that group throughout the financial downturn.  SMHG has rebounded to $5.95 after a Feb low of about $3.76 and a 52-week high of $11.07.  Market cap is about $170 million.

Miami-based Ladenburg Thalmann Financial Services (Amex: LTS, http://www.ladenburg.com/), also a full-service financial services and investment banking firm, has also done a near-double from its springtime lows, with shares closing yesterday at $0.75 and a market cap of about $125 million.  LTS has been active in SPACs, and in the placement of public and private debt, and is now the parent of well-regarded healthcare boutique Punk Ziegel.

NYC-based Cowen Group (Nasdaq: COWN, http://www.cowen.com/), after a March low of about $3.59, has rebounded to a close yesterday at $6.70, no doubt due at least in part to its recent deal with Ramius LLC, a large asset manager that has partnered with Cowen (Ramius is now the control shareholder).  But clearly the combination is being seen favorably, and Cowen is a good old name as well — and with some smart bankers in its chosen niches of healthcare, technology, greentech, communications, and aerospace/defense.  COWN shares trade about 150,000 per day, and the market cap is just over $100 million.

Minneapolis-based Piper Jaffray Companies (NYSE: PJC, http://www.piperjaffray.com/) would have been a long ball if you bought it at the springtime low in the teens.  PJC is now trading at $50.65, near its highs, with a market cap just a hair below $1 billion, and daily trading in the range of 210,000 shares.  Founded in the 19th century and later acquired, it was spun out of US Bancorp a few years back, and has an enviable reputation as a full-service investment bank for tech, healthcare, media, telecom, alt-energy and financial services.  Good research staff.  And probably good upside from these prices.

Portland OR-based Paulson Capital Corp (Nasdaq: PLCC, http://www.paulsoninvestment.com/) has rebounded very nicely as well, thank you very much.   After trading as low as $0.80 in late spring, the shares closed at $1.95 yesterday, though admittedly on very low volume.  Longtime leader Chet Paulson must have been smiling when he announced a profit of $0.18 for the 2nd quarter versus a wrenching loss in the year-earlier period, and the company has announced some deals recently in the smallcap, nanocap tech sector that has become a hallmark of Paulson deals.  Paulson also runs the Westergaard Waldorf conferences, founded by brilliant and insightful John Westergaard 30 or so years ago.

A complicated story, but worth studying, is Arlington VA-based FBR Capital Markets (Nasdaq: FBCM, http://www.fbrcapitalmarkets.com/).  FBR, whose initials originally stood for Friedman Billings Ramsey, has been through the wars regarding financial peril, but maintains its position as a high-toned investment bank, though a youngster in a field populated largely by oldsters.  FBCM is trading at $5.27 for a market cap of about $330 million, and trading volume of about 225,000 shares.  FBR recently separated from a company now known as Arlington Asset Management, which is the largest holder of FBCM.  A recently filed registration statement will free up Arlington to divest its holdings, which may mean some significant blocks could be available. 

We never advise people to buy, sell or hold — we simply look at interesting companies and comment on them.  Please look carefully before jumping into the water — make sure there are no rocks under the surface, no alligators, and no toxic substances.  We like the small investment banks; they are full of smart people prepared to take judicious risks, but do your diligence please.