I very nearly didn’t write about this one for you today, even though I know the solution and the Thinkolator was able to make a 100% certain match to the clues.
Why? Because Nick Hodge shouldn’t be teasing individual stocks with no trading volume and $7 million market capitalizations to his email lists… and I didn’t want to compound that problem by telling a few thousand of my closest friends about it.
But, we’ve made a commitment to treat you like adults here at Stock Gumshoe… and I know you’re perfectly capable of making your own decisions, so I’m going to explain what the stock is that Hodge is teasing. I’m waiting until the market closes to post this article, just in case, but that won’t protect you from yourself for very long, so please don’t rush out and buy this stock without thinking it through very carefully.
So with that disclaimer, what are we being pitched here?
“A whistle-blower named George Howels just released a very sensitive report…
“One that’s catching almost every single solar manufacturer with its pants down, jaw open, and in a state of panic.
“It could also make you a boatload of money over the coming 17 months as the market’s hottest energy sector kicks into high gear.”
And the ad includes several little video snippets of Hodge’s conversations with “George Howels” … and he says that “industry CEOs across the planet are calling him ‘Solar’s Snowden'” because of this “very sensitive report.”
Sounds quite exciting, no?
And apparently this “George Howels” has done this before:
“Following him around to his various projects — no matter how boring or vanilla — in the past would have paid you more money than hotshot investment bankers, hedge fund managers, or risky day traders!”
Those other “projects” included stints at Honeywell and Norsat, and included a big buyout:
“Honeywell paid $600 million to acquire George’s quality control company for the paper industry, called Measurex.
“Of course, George wasn’t solely responsible for all those achievements. Breakthroughs like these involve teams of smart engineers and strong leadership….
“… his ability to make simple tweaks to the quality and consistency of products has helped to revolutionize industries!
“It’s how the share prices of companies like Norsat International launched to outer space… and how Honeywell nearly quadrupled!”
And then the big fat promise:
“If what he recently told me was correct… and the basic math behind it is right… this latest opportunity could be the BIGGEST grand slam that members of my Early Advantage stock advisory service have ever seen.
“The ultimate set-it-and-forget-it growth stock!
“Because of him, not only is the entire solar sector on the cusp of radical advancement, but…
“The one stock that will fuel it all could hand you 11.7 times your money over the coming months.
“Here, let me explain…Are you getting our free Daily Update
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“PVI Report Gives Solar Firms Two Options: Join Us… or Die!”
And he says that…
“This is the very first quality control report ever published in the 60-year history of the solar industry….
“… it’s his handy work that helped to transform the steel industry back in the late ’80s through the early ’90s, when his team at Dofasco came across a patented method to cut nearly 40% of the errors and waste from manufacturing lines.
“That led to Dofasco being sold to one of the largest steel companies in the world for over $5 billion.
“George knows what he’s doing when it comes to forming and exiting quality control companies for all sorts of industries…
“And when it comes to solar, he’s at it again!”
So the basic pitch is that this company has a “unique measurement device” to improve efficiency in manufacturing photovoltaic solar cells — primarily, it seems, because it can help weed out defective wafers earlier on in the process. Nick Hodge calls this machine the “QCM” … but what is it, really?
Well, the product they’re teasing, and that they show in action in the promo video, is the Decima CD, which is an inline measurement device that can be used on a solar cell manufacturing line to scan and monitor the quality of the wafers. (That’s probably not an entirely accurate description, but it’s the basic idea). That’s combined with a control system and software that monitors these sensors on a continuous basis, and they imply that this is substantially better than the existing testing processes that require pulling wafers off the line to test individually (is this true? I have no idea — I’m not going to become a process engineer in an afternoon).
And the company making this Decima CD? The stock being teased is called Aurora Control Technologies (ACU on the Venture Exchange in Canada, AACTF on the pink sheets).
And in case this didn’t sink in enough before, this is a stock trading at just about 30 cents but that doesn’t even fully describe the teensy-ness. The market capitalization of the entire company is $7 million. So it’s absurd, really, to be talking to you about this — people should not buy stock in $7 million companies that just hired investor relations consultants. They’re even tiny compared to the ridiculously small Natcore (the other solar stock Hodge has teased off and on for a few years and also references in his latest ad, that’s the one he calls the “absolute black” solar company), which has a market cap up near $25 million.
Will Aurora Control become a viable company on the back of this Decima CD testing equipment? Will it become a “must have” piece of equipment in every solar cell manufacturing line? I have no idea, all I can say is that it hasn’t happened yet. I don’t know much about the solar cell manufacturing process, but there are huge companies in semiconductor and solar cell equipment and testing — the notion that a little startup is going to develop the must-have testing device and sell it and make investors rich is not completely impossible, innovations hit high-tech industries all the time, but you’d have to be a real expert on the business to call the odds on it and make your guess about whether the company’s technology should be worth anything — the appeal of these little companies often diminishes when you understand the marketplace or the competing products, but I don’t have any of that understanding on this one.
There are a few articles out there from investment-minded bloggers to provide some perspective on the company — a SeekingAlpha contributor interviewed one of their executives here, and Discovery Investing posted this look at the company’s potential over the Summer.
In general getting into nanocap stocks when you have no particular expertise on the company and its sector is generally a terrible idea — these companies are hugely volatile, they go out of business all the time, their stock gets manipulated, and it’s important not to let the idea that it trades on an exchange give you any kind of certainty about your ability to trade the stock in any meaningful way or do anything cautious like protect yourself with stop loss orders.
But that said, who doesn’t love a startup and a dream? The “George Howels” who is quoted (and pictured) in the ad is, by the way, a guy named Michael Heaven — he was one of the founders of the company, intentionally following the model of Measurex (the measuring/quality control company where he was VP when it was sold to Honeywell a couple decades ago), and he’s the Executive Chairman at Aurora Control. And he did work at all the other places teased in the ad, in a variety of roles. Right now he’s also the COO of White Water West, a company that makes water park equipment.
And the company itself? Well, as you might suspect for a tiny little startup firm, they’re not making any money and they never have — they’ve been around in this iteration for about three years, since they introduced their first iteration of this Decima product in 2011 (it was covered by a trade magazine here if you want some background). Since that product was introduced they’ve reported about $175,000 in revenue, about $50,000 of it in the last quarter and, before that, nothing since 2012.
They run through something like $300-400,000 in cash most quarters, almost all of it in selling, general and administrative expenses, and they just raised $1.3 million in cash in August in a couple of private placements — so they should have enough cash to get them to the Spring if they keep up their current burn pace. They gave their investor relations consultants 280,000 incentive options at 38 cents in addition to the $90,000/year they’re paying that firm, so they’re probably motivated to get the attention level up — perhaps they even helped catch Nick Hodge’s attention, I don’t know.
I also don’t know whether the general Outsiders Club disclaimer is just overly permissive in saying that Nick Hodge might own the stocks he writes about, or whether he really trades these nanocap stocks while his readers are investing in them, with “secret” teaser picks they generally don’t divulge whether they own the stock because, well, they’re supposedly not telling you the name of the stock. With a stock this small the actual fundamentals of the company almost don’t matter — it’s going to be manipulated by any attention it receives. That doesn’t mean Aurora Control can’t build a meaningful business in testing equipment for solar cell manufacturers — presumably they have a chance, but I have no idea — but any guess as to whether this company should be worth $7 million or $100 million or should disappear into bankruptcy depends on knowing an awful lot about their product and their market… if you’re an expert, feel free to chime in with a comment below and illuminate us, but non-experts are generally not well-served by monkeying around with little companies like this that have no revenue and no particularly understandable timeline toward hitting any sales goals.
Aurora does have an investor presentation up on their website here and factsheet here which you can peruse if you like — the info in them is about a year old but, frankly, the company looks still more or less the same as it did then — they have shipped a few units to manufacturers and have a couple purchase orders, from what I can tell from scanning their press releases, and there is at least some revenue in Fiscal 2015 (no idea how much) that they say they expect from sales booked during the last couple quarter… but I have no idea how long it might take to reach real commercial scale if the initial testing and use of the equipment bears fruit.
So we’ll hand it over to you, gentle readers, to dig into this one, read those exciting SEDAR filings, dig around in your tea leaves to see whether you see a strong future for the Decima CD, and let us know what you think. Enjoy!