“The Death of Batteries” to “Hand Early Investors Life-Changing Gains?”

Looking into the Oxford Club's teased "tiny tech company" and their new "super-capacitor" breakthrough

By Travis Johnson, Stock Gumshoe, July 23, 2013

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If you can harness the frustration of the thousands of people whose cell phone batteries die at an inopportune time, or those whose children run through dozens of AA batteries in a weekend with their electronic toys, you might just change the world. Or at least, get a lot attention for your latest stock newsletter promo campaign that promises “The Death of Batteries.”

Battery power has brought incredible convenience and mobility to our lives, but it’s also a pain in the neck — you get dependent on these little power cells, and get to believe that you can have a supercomputer in your pocket that works all the time … but then you leave the GPS on for a couple hours, or play a few games of Fruit Ninja while waiting for the bus and, well, there goes your phone for the day. Wouldn’t it be great if these little gadgets could charge up in 30 seconds? Or hold ten times as much power? That’s basically the promise of most of the “next generation battery” teasers we see — that there’s a company who’s about to take away that frustration and inconvenience … and in so doing, naturally, make you filthy, stinkin’ rich.

That doesn’t mean these teasers always work, of course — I remember giving a presentation at a conference several years ago about a few of the most egregious teaser “promises” that had been made, and one of them was the oft-teased “Forever Battery” spiel about a company whose revolutionary advance would change the world because batteries would last, well, forever. The company did finally start selling a product, their idea is basically a new active membrane that means batteries don’t degrade over time so they could last “forever” if you don’t use them, giving you a nice $300 backup flashlight for your bomb shelter (“forever” means “twenty years”, by the way) — and they are trying to develop a “nano size” battery, too, for cell phones and such. Developing a teensy niche product after five years and selling a few of them doesn’t do much for the stock price, though, they went from about ten cents a share when they were first being pitched by Untapped Wealth to five cents a few months later, then they traded at about a penny a share for quite a while, and now they’re down to about a tenth of a cent. Amazingly still around and apparently still raising money from someone to stay afloat, with revenue of about $2,000 a year (that’s only ten of their fancy flashlights) and a market cap of a couple million dollars. So that’s the poster child I keep in mind when wondering whether a promising battery technology that sounds super-sexy in the teaser ads can become a product and generate sales.

But that’s not the story we’re being pitched today, of course (though I do still see those “forever battery” pitches from Untapped Wealth every now and then — sometimes these ads won’t die, even if the company they’re teasing does).

This time we’re looking at a substantially larger company, teased by the folks who run the Oxford Club, a much larger and more mainstream operation. So what’s their battery promise? Here’s a taste from the ad:

“The Death of Batteries

“Tiny Tech Company’s New ‘Super-Capacitor’ Breakthrough About to Revolutionize the Energy and Electronics Industries as We Know Them….

“Picture a world where you don’t have to charge your batteries any more.

“You’d never lose power in the middle of an important phone call…

“Or have to search for outlets in a crowded airport.

“No more untangling cords in the car…

“No more waking up to a dead smartphone…

“And say goodbye to those trips to the mall to replace your $25 watch battery.

“You probably think this sounds like a bit of a pipedream, right?

“But ‘The Death of Batteries’ is about to become a very real event, thanks to a new discovery that just won the Nobel Prize for physics.

“It involves a material that gives the world a radically new way to store energy.

“We believe this substance – and the battery revolution it’s about to trigger – will go down as the biggest tech story since the invention of the Internet.”

So … from that, the Oxford Club folks say that they’ve got the idea that will “Hand early investors life-changing gains.” What is it? More from the ad:

“I’m not talking about some far-fetched advancement that might… possibly… if everything goes just right… hit the markets a decade from now.

“Rather, it’s likely you will be holding this new kind of battery in your hand within a few years… if not months… from right now.

“And we’ve just identified one small company that holds over 230 patents on this remarkable material….

“… this one small company with a modest $1.3 billion market cap holds the key.

“And our research shows it’s ideally positioned to revolutionize the $89 billion global battery industry….

“This could very well be the best single-stock opportunity you’ll see in your lifetime.”

As you might have guessed by now, the “remarkable material” and “Rock Star substance” that the Oxford folks are talking about is graphene — the nanamaterial that’s produced from a sheet of graphite (carbon) that’s only one atom thick. The folks who were able to isolate these sheets of graphene using a mechanical process (um, “sticky tape”) did indeed receive the Nobel Prize a few years back, and graphene is being intensively researched by pretty much every University and electronics-related or materials-focused corporation in the world because of its incredible promise as a thin, incredibly strong, highly conductive material that could, among other potential veins of exploration, replace silicon as the foundation for the next era in electronic innovation.

What does this “tiny” company have to do with graphene? Here’s how the ad puts it:

“… most amazing is that one tiny company holds the most important patents for producing this material.

“Right now, Fortune 500 companies are lining up to get their hands on it… and roll out these new batteries in their next product lines.

“Imagine what this could do for a company like Samsung, for instance, if they suddenly were the first company to release a cell phone that didn’t need charging. Or a television that didn’t need to be plugged in.”

The promise, we’re told, is the graphene-based super-capacitor.

No, not Flux Capacitor — those are still a few years off, I’m afraid, and we’ll have to see if there are any DeLoreans left by the time that advancement happens.

Super capacitors are, as you might imagine, really powerful capacitors — a capacitor is sort of like a battery, but it’s much, much better at really fast charging and discharging and much, much worse at storing a large amount of energy in a small space, with energy density that’s far worse than a conventional battery. Part of the promise of graphene is that it might enable the creation of capacitors that are as energy dense as batteries, which would make recharging almost instant compared to current battery technologies. The ad quotes a recent Slate article about the potential breakthrough, that article was based on the “accidental” discovery of a cheap way to create graphene in a DVD burner. Check it out if you want a quick overview of what the reality of this technology is, but they don’t, of course, discuss our “secret” company in that article … for that we need to turn back to the ad and sniff out some more clues …

“… from our research, one particular company is far and away the leader in developing patented new graphene-based products.

“This doesn’t come as a surprise to anyone who’s followed this firm’s ascendance as we have.

“It has already successfully commercialized some of the world’s most advanced graphite-based energy storage systems.

“For example, thanks to one collaboration, its patented power products are found in 70% of fuel-cell based vehicles and more than 50% of buses worldwide…

“…it has the pole position in producing the next generation of graphene-based batteries that are going to transform the world.

“It already has the customers. All it has to do is roll out its new line and begin raking in the profits.”

OK, we know it’s never that simple — but still, sounds impressive. And a few more clues:

“Batteries are just the start for this company’s domination of the exploding graphite and graphene markets…

“… one of its most useful qualities is its ability to dissipate heat, which is greatly needed in all electronics.

“This company’s new products dissipate heat better than any others, which is why the biggest brands worldwide are all clamoring for its products.

“Apple, for instance, has begun using early versions of its heat-dissipating technology in iPhones and iPads.”

OK, so they have all these patents on graphene stuff and they’re practically ready to revolutionize the battery world if they just “roll out” their new line, and they have Apple as a customer? Geez, can’t you just feel your wallet expanding?

Well, thankfully we’ve got some time before this company revolutionizes everything — here’s how the ad puts it:

“Naturally, companies are taking some time before switching over from all their traditional batteries and components…

“It’s the reason you haven’t heard about this yet.

“And it’s also the reason that you can make a killing on this stock right now before the big switch happens.

“But if you wait on this situation, you are likely to miss out on one of the biggest stock stories of our time.

“Because a new technology like this… one that completely transforms multiple multibillion-dollar industries… has the power to reward shareholders like no other.”

Right. It’s not that they can’t get the science right yet or that it takes five years or ten years to develop these new products and make the technical and manufacturing breakthroughs to enable these products, it’s that they’re “taking some time before switching over.” It’s all in your perspective, I guess.

So how about a few more specific clues about the company being teased?

“Right now the company’s in the middle of a mammoth build-up in preparation for the huge demand coming in from companies all over the world.

“But why specifically are all these Fortune 500 companies turning to just this one?

“Because, as I’ll explain in a moment, it holds over 230 major patents in these crucial technologies. It is the gatekeeper.

“If major electronics producers want to keep going faster and smaller, they will need the help of this company.

“If automobile companies want to capture the multi-trillion dollar electric car market, they will need the help of this company.

“It has nearly doubled its staff of scientists as management continues seeking engineers ‘focusing on the development of novel graphene materials for a variety of applications.’

“It’s already locked down production agreements with the biggest electronics giants, including Apple, Samsung and Sony.

“And company executives, meanwhile, see this as the perfect buying opportunity. They just finished a 10 million-share buyback – and then promptly doubled down on 10 million more.”

That’s more than enough to feed into the Thinkolator, but just in case we do get a few specific clues for confirmation:

“The Vanguard Group owns over 6 million shares. Janus Capital has 4 million. Wells Fargo bought up 3.3 million.

“In fact, institutions now own 96% of this company’s publicly traded shares….

“the company holds a whopping 230 patents overall. And in recent years, it’s made four strategic acquisitions, and received seven R&D 100 awards…

“This small company ranked ahead of General Electric, ahead of Sony, ahead of Apple in its lineup of intellectual properties.”

And we’re told that it’s already profitable, with sales in over 70 countries from 19 manufacturing facilities, with 2011 sales of $1.3 billion and a PE ratio of 8.5, with gross profit margins of better than 20% five years running … and a share price of somewhere near nine dollars. So who is it?

Well, the name might sound familiar if you’ve been aboard the good ship Gumshoe for very long — this is Graftech (GTI), and the Oxford Club pitched the same stock last November with a different ad campaign. Graftech is an engineered graphite company, creating a variety of products from natural flake graphite.

Unfortunately, this particular investment in the future of graphene also means you’re investing in the present of steel, since that’s the major customer for their graphite products right now … so the stock isn’t at $9 anymore, it’s come down to about $7.50 in recent months. Largely that’s because they have had a couple weak quarters for graphite electrode demand (that’s their major product, it’s used in steelmaking), and because they’ve downplayed expectations a bit for this year because of the softness of the steel industry.

They are profitable, but they’re not really growing at the moment — their engineered products division is growing nicely, at a double-digit pace, but the core industrial division, which sells electrodes to steel mills, is not consistently growing and has been under pressure. Engineered products is only about 20% of sales, so you can see where the concern comes in — we can pitch it as a graphene company for the future, perhaps, since they are working on new applications, but we also have to pitch it as a stock that for the foreseeable future is very much dependent on graphite … mostly for steelmaking, but also for batteries and fuel cells and for heat dissipation shields in electronics, all of which are important and perhaps exciting growth areas, but none of which are going to “kill” batteries or be revolutionary enough to make headlines. Whether or not their work with graphite-based specialty materials for fuel cells and their flexible sheets of graphite for automotive and electronic applications and their other current core products mean they have a leg up on the “leap forward” technology of graphene is another matter, and one I’m not qualified to judge. They do

And they do have decent insider holdings and a pretty concentrated group of mutual funds that hold major positions (mostly from Janus, Royce and Fidelity) … but they are also one of the most-shorted stocks on the exchange, with 40% of the float sold short (they have a short ratio of about 16, meaning it would take 16 days of normal trading volume to “cover” those short positions).

A stock with a large short ratio like this can always turn into a “short squeeze,” where the shorts are forced by rising prices to cover their positions, buying the stock and forcing it up higher and forcing yet more shorts to cover. But typically that happens because of sharply better news from a company, or a big spate of buying for some fundamental reason — it’s hard to see that happening really soon for Graftech.

I’d be a lot more comfortable with Graftech than I would with most of the junior “graphene” names that get touted, or the emerging graphite miners, but that’s largely because they’re fairly large, stodgy, profitable and well-established — I’d take any prediction that GTI will climb dramatically on the strength of its graphene efforts over the coming two years with a bit of a grain of salt, if they rise rapidly in the short term it will be because global steel production booms again. There is growth in their other segments, but they’re so small that they will probably have to grow very fast for several years to make up for softness in the steel industry.


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22 Comments on "“The Death of Batteries” to “Hand Early Investors Life-Changing Gains?”"

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sagenot
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sagenot
July 23, 2013 11:20 am

Looks like you jolted GTI upward today Travis. It’s been in a “lower highs” cycle for over a year, so it’s probably a loser for most recent speculators. The need for a better world economy means that patience is required presently.

patrul2
Member
0
patrul2
July 23, 2013 11:36 am

I never trust anything I read that is issued by the Oxford Club and its affiliates in Maryland. They also issue the longest, most boring,sensationalized ” commercials ” in the history of the web. Stay away!!!

hedwig
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0
hedwig
July 23, 2013 11:45 am

Spike is because FTI competitor SGL Carbon hikes electrode prices by as much as 30%.

Solyom
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0
July 23, 2013 1:01 pm

An 18 y/o girl in California won a prestigious award for a capacitor that charges her cell phone in 30 seconds. In the TV program where I saw this they stated that one that would charge up your cell phone was couple of years away. By they she hold the patent.

jay22sb
Member
0
jay22sb
July 23, 2013 2:26 pm

A ‘nanocap’ nanotech company called Dais Analytic (DLYT) received a patent (and stock price spike) for a “revolutionary” capacitor in 2011. Not sure what they’ve done with it since.

Myron Martin
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0
July 23, 2013 2:45 pm
Graftech may be somewhat “stodgy” but they are well established in the marketplace and while I have made decent money with graphite miners by being early to the space, I do think a small stake in Graftech could be a reasonable speculative investment. Maybe it is because as a Canadian I am a big hockey fan, (played until I was 72) and like the analogy given by arguably the worlds greatest player (Wayne Gretzky) who gave as his success formula, anticipating the play by “skating to where he see’s the play going next” and that has been my formula for… Read more »
John Harris
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John Harris
August 2, 2013 4:49 pm

Funny I too took a $500 nibble at mPhase that is now worth $40 – not worth selling – the commission would take a quarter of it – so I too keep hoping they make something of themselves. Dream on .

sam7738
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sam7738
July 23, 2013 4:52 pm

Would like to know about A newsletter called. Instant money trader
This is something about cash codes put into your computer
Letter put out by. Lee Lowell Thank you

Kurt
Guest
0
July 26, 2013 9:46 am

My understanding is it’s about selling puts. I do not have his service, but have seen the ads as I do subscribe to wallstreetdaily.com, which for the money (I think it was $79), I have been happy with so far. I have not tried selling puts, but from the research I have done, it looks like you need to be able to hold a minimum of $10k – $20k in your account to be able to make much money. Anyone with experience selling puts, please share as I’m interested in doing this at some point.

frowningpiggy
Member
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frowningpiggy
July 23, 2013 8:45 pm

Hey Travis, I received this trailer from the “fools” today: http://www.fool.com/fool/free-report/18/sa-cabletvaudio-ext-278468.aspx?source=esaaepeml0870077&u=1810267743

It’s called: The $2.2 Trillion war for your living room begins now” would you mind putting that into the “Thinkolator”

All the best.

sinksmith
Guest
0
July 24, 2013 2:29 am
There’s possible competition from an unlikely source: an African bush called marabu that’s taken over disused sugar plantations in Cuba. When carbonized it has a huge surface area for it’s volume. From “Strathclyde University scientists end marabu weed nightmare” By Ken Macdonald BBC Scotland Science Correspondent . 17 January 2012. on http://www.bbc.co.uk/news/uk-scotland-glasgow-west-16597459 “The Strathclyde engineers are also using marabu carbon to take a step beyond batteries to super capacitors” Havana Energy’s site seems to say nothing about super capacitors, although I haven’t checked everything on their Media Relations page: http://www.havana-energy.com/mediarelations/ Apart from Havana Energy and their plans for biomass, there… Read more »
danielj1960
Irregular
17
July 24, 2013 7:07 am

Short % of Float (as of Jun 28, 2013) 42.20% I guess you were not kidding about that.

Johan
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Johan
July 24, 2013 9:50 am

I am a believer in graphite over the long term will be a good investment. I personally have a (very) small stake in Northern Graphite. We’ll see what happens over the next, let us say 5 years.

who noze
Guest
0
July 24, 2013 1:13 pm

don’t overlook Lockheed martin they developed a membrane using grapheme to clear water to drink

rigdale
Irregular
2
August 9, 2013 10:25 pm

To Kurt & others: I love LOVE puts. Everything we have (my husband lets me play in his retirement accounts) was on covered calls, but as I got called on some, I switched to cash covered puts. When a put hits my strike, it then switches to covered calls. I live from 3rd Friday to 3rd Friday and I’m in about 90% puts. We’re old and in the draw-down years, but I more than cover his withdrawals. My ONLY research is Gummy (lifetime subscription) and ValueLine at the library.

Kurt
Guest
0
August 11, 2013 10:15 am

Thanks for the insight & encouragement rigdale. Can you please tell me what is Gummy? Thnx!

rigdale
Irregular
2
August 11, 2013 10:36 am

Kurt, “Gummy” is Gumshoe, the thing you’re reading at this moment. I’m a “regular”, a paid subscriber, which gives me access to everything here.

Kurt
Guest
0
August 11, 2013 11:13 am

Oh wow, too funny LOL, don’t know how I missed that connection! Thanks!

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