“100% Green Super Material — Invest in the Radical MIT Startup”

By Travis Johnson, Stock Gumshoe, August 27, 2008

This ad comes to us from James DiGeorgia, who apparently ran a newsletter called 21st Century Investor and sold that service a while back — this ad is for a new service that he’s launching called SuperStock Investor. He’d like $79 from you for your charter subscription (though of course, it has a “value” of $197.50, if they do say so themselves).

And he’ll tell you that the special report he’s hawking with this teaser is itself worth $79 — must be a really lovely report, I imagine. It’s called “The Best Way to Profit From the BioPlastics Revolution.”

Maybe this will turn out to be a fabulous newsletter, maybe not — hard to say at this point. But you needn’t try the newsletter if you’re just interested in finding out the name of the company behind this “super material” — for that, you can count on your friendly neighborhood Stock Gumshoe.

So what clues are we given by the kind Mr. DiGeorgia as he whets our appetite?

We start with “validation” from a major news media source, in this case Marketwatch …

“CBS Market Watch recently told investors:

“‘This is not just an R&D lab experiment… you can play this one with confidence.’

“Not only that, they predicted that this company could be ‘leaders on the ground-floor of an entirely new industry.’ And that their ‘market disruptive technology…’ has ‘tremendous upside potential.’

“Good news for you is: It just went public!

“And the customers are lining up. In fact, just this past Christmas, Target was their biggest customer. It began using this new Super Material to create 100% biodegradable, environmentally friendly greeting cards!”

Of course, those quotes from the Marketwatch story (it hasn’t been “CBS Marketwatch” for a few years now) are not an endorsement from Dow Jones (which now publishes Marketwatch), they’re just quotes from an analyst who covers the company — and who likes it, clearly.

If you’d rather read that article and hear what Marketwatch has to say, you can go straight there if you like. I’ll be crying in my coffee over the fact that my beloved readers ditched me before I was done pontificating, but that’s OK, you go right ahead. Marketwatch will tell you the name of this company, too, and share a bit more info as well.

Only true loyal friends of Gumshoedom left now, eh? Well, for you, we’ll proceed.

Some more clues for you:

“For example, this new Super Material is far more versatile, flexible, stronger – and above all cheaper to produce – than almost all of its dirty polluting industrial age competitors.

“What’s more, this new Super Material promises to:

“Reduce toxic chemicals in the waste streams by up to 80%!

“Give off 66% less greenhouse gasses than its competitive materials!

“Help clean up the oceans, preserve the forests, clear our darkened skies, and green the industrial landscape!

“Increase our energy security by reducing our dependence on Middle Eastern oil. (In fact, the only oil used in the production of this new green material is in the transportation of the raw goods!)

“But best of all: It promises to drive down the costs of many of your everyday appliances and technical gadgets. While prices of oil, copper, lead and zinc are going through the roof, and making all kinds of things more expensive, this new green Super Material is getting cheaper and cheaper, and promises to drive down the costs of all types of products from Chinese toys to kitchen appliances… from cars to computers… from toilet seats to Tupperware…”

Not bad! But we need some more details to firm this up …

DiGeorgia compares this to some past “Game Changing” developments that involved new materials and similar kinds of innovations …

“For example, in the fifties, the electronics industry was completely turned upside down by a game-changing technology. At the time the industry was dependent upon the vacuum tube. But vacuum tubes often overheated and burnt out. While the leading vendors worked on ways to enhance the existing tubes, a small group of scientists at Bell Labs research went in an entirely different direction. They focused on semi-conductors like silicon. Within a year the transistor had been created: An event that turned the vacuum tube industry on its head and sent many investors broke, while at the same time made a handful very rich. Intel was born. And within a decade this company had effectively wiped out all the leading vacuum tube vendors from Sylvania to RCA.

“The same happened again when Owens Corning created fibreglass and almost wiped out the entire wooden ship building industry. It happened again in 2001 when the digital photo revolution dealt a fatal blow to Polaroid: the age-old company who’d given us instant pictures.”

So, like many of the growth stock advisors out there, it’s pretty clear that SuperStocks will be looking for companies that have that one-in-a-million potential. That means there will be a lot of duds, if they’re like other peddlers of “story” growth stock ideas, but if they’re good and lucky maybe they will get a few of these thousand percent+ gainers. As with most services, the hope is that the two or three hugely successful picks will be so dramatic that the many mediocre ones whose stories don’t pan out can be ignored. Certainly there are several stock newsletters that have fine records using a similar strategy, but it can be very bumpy.

What, then, is this new material company that might be the next highflier?

Well, it’s possible that this ad has made the rounds before (if so, I missed it), because though it’s claimed as a “recent” IPO it’s been public for about a year and a half. I guess, in the grand scheme, that is fairly recent … especially since there have precious few IPOs since then.

The company being teased here today is …

Metabolix (MBLX)

The company was indeed founded with MIT technology — it licensed its first technology from MIT at its founding in 1993, and has bought other technologies along the way, including one from Monsanto. They’ve also had some joint ventures with Archer Daniels Midland to commercialize production, so they aren’t just working on R&D, this is an actual producer of bioplastics.

The main product they have, Mirel, is actually included in the list in the teaser — from what I can tell, Mirel is their brand name for a whole line of plastics that are made from polymers generated by genetically engineered microbes and plants. Interesting stuff, and their website has some good background and explanation if you’re like to dig in, but I’m certainly not competent to judge their scientific prowess in any way. Their most recent releases have touted a viable new process using switchgrass, so that would be exciting (if switchgrass prices haven’t already been jacked up due to ethanol demand by the time this gets commercialized).

So — bioplastics and “green plastics” are a growing industry, especially with the price of oil and other plastics feedstocks so high (both financially and environmentally) … we’ve seen some bioplastics companies teased before and I have very little knowledge about which of them might be more successful than others. The hurdle so far seems to be that bioplastics are still at a significant cost disadvantage to traditional petroleum-derived plastics, so either bioplastics have to get cheaper or oil has to get more expensive for the market to swing powerfully toward bioplastics — unless government mandates or personal environmental preferences increase demand for these products even if they cost more, which is certainly possible (and must be a key part of their business plan, at least for the near future).

It is certainly interesting stuff, the only caveat I’d share is that for any new technology that brings a sea change, there are a hundred forgotten competitors to the companies that actually became today’s leaders. We might imagine, for example, that there were many other companies looking for alternatives to vacuum tubes back in the dawn of the transistor age in the late 1940s, when Bell Labs is credited with that invention, and if we want to push it along to the dawn of the integrated circuit and semiconductor we might imagine that similar work was underway elsewhere — Robert Noyce and Jack Kilby weren’t the only folks working on integrated circuits, and Intel and Texas Instruments weren’t the first or the only companies in the business. It seems obvious in retrospect, but the winners and eventual leaders were probably not that easy to pick out of a lineup 50 years ago.

Metabolix might indeed be the “leader on the ground floor,” as some believe, but it’s also possible that this isn’t the defining moment in the development of bioplastics — it might be an entirely different company that gets looked at 20 years from now as the Texas Instruments or Intel of the bioplastics revolution. That’s both the fun and risky part of betting on emerging technologies … the technology might not emerge as expected, or it might emerge from a different R&D lab, but if you are right (and luckily), and have the stomach to hang in for some wild bumps in the ride, there’s always that small potential that you’ll be one of those who got the legendary 10,000% returns.

Nothing wrong with gambling, as long as you accept that’s what you’re doing. I have nothing bad to say about Metabolix, the price is certainly more appealing now than it was shortly after it went public — it traded around $25 for much of last year, and is now going for a bit under $11 ($10.85 as I type this). It is, of course, not making any money — they are expected to lose about $1.50 a share this year, though analysts are predicting a loss of only fifty cents a share next year. They do have sales that are growing very quickly at well over 100% annually (though the shares still trade for more than 100X sales, so clearly this is being valued on future potential, not current or near-future sales). And they have buckets of cash still, more than $4 a share in cash, so it seems unlikely that they’ll be running out of money anytime soon. It’s always dangerous to rely too much on the cash position when putting a value on a startup like this, or looking at metrics like book value, since of course they’re going to spend that cash and they’re certainly not going to give it to you … but it’s quite positive that they’ve got a great balance sheet and shouldn’t need to beg, borrow or steal to keep the business going (they have no debt).

As to what the future holds, and whether or not you’ll want to own shares in Metabolix … well, for that you’re on your own. It’s a real company, with a real product that people are buying, and it is in a growing industry … that’s not enough on its own, but it’s a start — if you research the company and get comfortable with their prospects, feel free to share.


Leave a Reply

25 Comments on "“100% Green Super Material — Invest in the Radical MIT Startup”"

avatar

Derek Jones
Guest
0
Derek Jones
August 27, 2008 11:36 pm
You make very interesting reading, I’m new to you, you have my attention, and I will continue to read, say do you know anything about this one A ‘Backdoor’ Energy Play That Could Deliver 400% Gains in 12 Months You’ll find it in drill bits and pipes used by deep-sea oil explorers. It’s used to separate sulphur from oil. You’ll also find it in every turbine installed in a modern nuclear power plant. It’s absolutely essential to the energy industries… and yet, you’ve probably never even heard of it! A brand new research report reveals what we believe will be… Read more »
elissa stein
Guest
0
elissa stein
August 28, 2008 8:43 am

Good morning, Gumshoe and Derek. I don’t think Moly is the answer to Derek’s question, Gummie. The “new” moly is Tantalum- and that is used in nuclear reactors. Regards!

Dick Tater
Guest
0
Dick Tater
August 28, 2008 9:07 am
James DiGeorgia did indeed publish 21st Century Investor; I was a subscriber back in the mid to late 90’s. He touted “tech” stocks all the way down–in fact chided subscribers not to sell out when the tech boom was clearly over. He said only the “weak hands” would sell out now. Overall, I thought he did a very good job of picking stocks, but a rather poor job of analyzing market conditions that would have major impact on all stocks, even the “good” ones. Hs failure to recognize a tech bubble was a major blunder; maybe he’s learned his lesson… Read more »
Ron Halackna
Guest
0
November 4, 2016 11:31 am

Man With Gold

farley 5
Guest
0
farley 5
August 28, 2008 9:50 am

Kinda got off topic, did we? I see nothing compelling right now in MBLX. This is a one for 5 positive, trades under the bearish resistance line, and does not show much demand. If it can break the triple top at $14, that would signal a change in trend and give it two technicals positive. If you really want to play it, try the March ’09 bull spread $7.50 – $12.50 for $2.40 dr. Be sure to read the options disclosure.

marcia crocker
Guest
0
marcia crocker
August 28, 2008 4:44 pm

Does anyone know what the “forever battery” is. I am getting newsletters to pay so much money to learn what this is.

Cool Soupy
Guest
0
Cool Soupy
August 30, 2008 8:49 am

The membrane battery technology is even being touted by Exxon in their TV ads. Look for a big company to come to market not these “pump & dumps”

Soupy

dasg
Guest
0
dasg
August 31, 2008 10:31 pm

jack Uldrich in his book green investing reviews Metabolix concisely. also a recent piece on it in either business week or in the economist, I don’t remember. My take home from all this is that it really has something to offer and is starting to make some meaningful strategic alliances after years of frustration for the founder. When and how the orders and profits roll in, I don’t know. but definitely one to watch.

on_a_remote_island
Guest
0
on_a_remote_island
September 4, 2008 12:30 am

Mphase, I read, went to meeting organized by Darpa, between manufacturers and techies. This was maybe ’04. There they picked up on this quasi-flexible and very light battery- the tech for which was being flouted, it was just out of the (basic) research phase but it’s a high priority requirement for the army. As usual, the beauty of this company is that it gets to play with jaw-dropping research, on the other hand, there are conditions which relate to the commercialization of the battery.

destry
Guest
0
destry
September 6, 2008 1:58 am

I was going to say, a doggie or a horsey…But, never mind.

womanwithportfolio
Guest
0
September 10, 2008 11:11 am

Getting back to moly, etc. I started watching Cabot (CBT) after figuring out that it was the company most likely to produce a substantial amount of the NEW moly, tantalum, and durned if it hasn’t climbed quite a bit since then, while other commodity cos. have been sinking.

Mark
Guest
0
Mark
September 11, 2008 11:17 am
I think Cabot’s recent surge is less based on tantalum, and more on carbon black, it’s biggest product, which is made from oil. The oil prices have eased, meaning its carbon black profit margins have improved, so it has gotten a number of analyst upgrades in the last 4 weeks or so. Lot of companies that depend on oil for their raw materials or for fuel are going to show better profitability as oil eases, and I think this is potentially a big investment theme for the coming months and maybe years if the oil price decline continues. The tantalum… Read more »
womanwithportfolio
Guest
0
September 11, 2008 12:38 pm

I agree, Mark. This is definitely a sector to watch — companies that will benefit from the easing of oil prices. Other carbon companies have also done well recently.

blackjack
Guest
0
blackjack
March 14, 2011 4:44 am

i think people need to look at the redux battery as these will be all the go for wind farms and solar banks – many advantages

I recently read that one mine will start up soon that will be able to supply the whole world with moly and so this should drive the price down and sink several other companies still in the exploration phase – watch out

womanwithportfolio
Guest
0
August 28, 2008 6:40 am

The “mysterious” alloy is molybdenum, also known affectionately as moly, which is used in oil and gas pipelines to resist heat and corrosion and also in power plants, particularly nuclear plants.

Brian B.
Guest
0
Brian B.
August 28, 2008 8:36 am

Believe this co. teased is Polymet. Correct me if I’m way off. Good Investing!

Bruce
Guest
0
Bruce
August 29, 2008 3:00 am

Hi Gumshoe et al
I thought Vanadium might be the answer for this – check Wikipedia & compare the photo – glossy silver like Chromium – the description includes all the things in the Teaser – oil pipes, drill bits, Nuke Plants.
and the company is……
Windimurra Vanadium Ltd ??
Not quite in the Pilbara but close enough for Western Australia
cheers
Bruce
(appologies to Gumshoe)

womanwithportfolio
Guest
0
August 28, 2008 9:09 am

Elissa is probably right. I was ignoring the separation of sulphur from oil, in which tantalum is used. (Moly is used in nuclear reactors and oil and gas pipelines as well.) So which company would be favored? One possibility is Cabot (CBT).

womanwithportfolio
Guest
0
August 28, 2008 9:41 am

Anyone interested in looking further into tantalum should take a look at this in-depth analysis of the industry: http://ir.lib.sfu.ca/retrieve/4028/etd1866.pdf.

Gravity Switch
Admin
11
August 28, 2008 9:57 am

Thanks Dick, good to know some history. He is clearly focused on “next big thing” stuff, which does indeed typically lead to some flameouts (and, hopefully, some big winners).

Diana
Guest
0
Diana
August 28, 2008 11:46 am

Hmmm,.. .40 spread on b/a there. Perhaps a diagonal using the march 15 calls with short october 12.50, roll them a couple of times and pick up some time decay. What do you think about that?

farley 5
Guest
0
farley 5
August 28, 2008 2:52 pm
Nice combo. I was trying to keep it simple for folks that have a real job and don’t want to manage the trade. You would have to have a fee account for the ~$0.95 you could get for the Oct’s. Otherwise comms would eat you alive. My training puts me on the in-the-money side of the trade so I probably would not risk the $2.50 on the 15’s. And besides, i said above that I don’t like this one long. I was just showing someone how to do this low risk. Read the disclosure etc.
Anonymous
Guest
0
Anonymous
August 28, 2008 6:41 pm
I was getting a lot of ‘notification’ about this product/company as well and I made a few postings on this ‘BoatDesign.net site under “Batteries and New Battery Technologies”. (posting #36) Ssbsequently I posted this at http://www.boatdesign.net/forums/showpost.php?p=197204&postcount=68 _____________________________________ Originally Posted by brian eiland Good afternoon gentleman, Well it’s happening again, my being bombarded by this ‘Forever Battery’ claim. Those are all some pretty startling praises, so I went to visit XDSL, mPhase Technologies http://biz.yahoo.com/iw/080326/0379601 http://www.mphasetech.com/ They have some sort of ‘coming out party’ this coming 3Apr. As I look thru a lot of there info, I see their claims for extremely… Read more »
idbjls2
Guest
0
idbjls2
August 28, 2008 6:45 pm

The forever battery being touted is MPHase, trading under the sumbol XDSL,a nanobattery technlogy based in N.J. This will revolutionize the battery industry. Check it out!

Gravity Switch
Admin
11
August 28, 2008 9:18 pm

Thanks — I have no idea whether it’s a pump and dump, or a small company with a possible idea that’s trying to get a foothold, or something inbetween … but they’re certainly not the only ones in the “advanced membrane” research game, and if they want to take over the battery world they’ve got some huge competition. I’ll keep an eye on them from time to time, but I don’t have a strong feeling about them one way or the ohter.

wpDiscuz