“This New Fuel will Kill Big Oil” (Dr. Kent Moors)

Kent Moors says, "If you could only own one solar company for the next 10 years, this would be the one."
(And yes, he said that about a different company last year)

By Travis Johnson, Stock Gumshoe, April 6, 2017

This article ran originally on March 30, 2016, so it might look familiar to a lot of you — but a few folks asked about it today, and it looks like the ad is running again without any real change, so I’m re-publishing this teaser solution. I’ve made some mild updates to these introductory paragraphs, but the balance is unchanged from a year ago.

Before last year, there was also a previous version of this Dr. Kent Moors “New Fuel Will Kill Big Oil” and “Magic Sand Power” pitch, back in the Fall of 2015. The stock he pitched so aggressively starting back then as the “greatest leap of mankind” stock for “free energy” had been crushed… and I kept seeing the same ads for his Energy Advantage, continuing to tease the stock, all the way down. Even as the company was filing for bankruptcy, the ad kept running.

But, apparently eager to keep using a sales pitch that must have been working nicely to bring in subscribers, they carefully swapped out the hints about that failed stock, and inserted hints about a new one about a year ago. The ad that started in March or so of 2016 and is still running today (I just saw it again) clearly hints at a different company (I don’t know on what date the ad changed, but the current version of the ad is still dated “February 2016” — both the new and old ads are still online in various places).

Which is probably a good thing — that first ad, which many of you no doubt remember for the pictures of sand and the implication that his favorite stock had found a new way to generate electricity from sand, was focused primarily on SunEdison (SUNE, now SUNEQ), which was one of the worst blow-ups in the market last year as they used hedge fund-suggested financial engineering and heavy debt to grow rapidly and finance new solar installations and expansions… then fell on their face when the “cheap financing” provided by that financial engineering proved to be unsustainable and they filed for bankruptcy protection from their creditors. They’re still in bankruptcy negotiations with creditors, this is not an easy one for folks to unravel, but the stock is pretty much at zero and will likely stay there until the creditors take control of the equity after whatever the reorganization ends up being (every once in a while stockholders do get a little something out of bankruptcy, but in my experience those situations are rare — in most cases, there’s nothing left for stockholders once the bondholders are satisfied, and the current trading stub for the equity holders, SUNEQ, will just get all the way to zero and disappear after a while).

The newer ad still has those zoomed in photos of sand, the talk about how big corporations like Google and Facebook and Costco are depending on this “new fuel”, and the general pitch for solar power. That’s essentially the same, with minor updates, as the ad that touted SunEdison.

I don’t actually know what Dr. Moors suggested to his subscribers as SUNE fell, or when — maybe he had them out of it at $3 or $2 or something along the way and shifted course, or maybe he remains convinced that their technology and their market presence will give them the chance to dig their way out and he never sold. I suspect he was at least worried a couple months ago when the SEC started investigating them for possibly misreporting their cash position pre-bankruptcy, and he must have sold at some point. We’ve left the original comments appended to this article down at the bottom, so you can see what some folks shared about it at the time, including some folks who said they were subscribers to that newsletter.

So Dr. Kent Moors, thankfully, is no longer teasing the bankrupt SunEdison, he’s now teasing someone else. So who is it?

—The balance of this article, other than the updated P.S. at the bottom, is unchanged from March 30, 2016. Assuming that the Thinkolator was correct, the stock being teased is down about 20% from where it was on that day–

Let’s check the clues. This is from the newest version of the ad that I got today:

“And while there will be numerous plays coming down the pike, you will NEVER have another opportunity like you have today – right now!

“You see, at the center of this energy revolution sits one tiny company that’s about to go from virtual obscurity to household name.

“Their revolutionary technology has completely transformed the way this fuel is harvested.

“At the same time, they have over 130 patents protecting their market share.

“To say this company is in the driver’s seat would be an understatement of epic proportions.

“At this moment, every major energy player on the planet is banging on their door looking for cheap energy.

“Their client roster is a ‘who’s who’ of global energy players, and they are poised for a global rollout of unprecedented proportions

“In short, the upside is staggering…

“Remember, Google, Walmart, Facebook, Apple, and the U.S. Department of Defense are making massive investments into solar. And with 130 patents, this company is in the driver’s seat.”

That might sound really, really familiar — and it is almost identical to the ad that was sent around last time. Here’s the version that was teasing SunEdison back in November:

“You see, at the center of this energy revolution sits one tiny company that’s about to go from virtual obscurity to household name.

“Their revolutionary technology has completely transformed the way this fuel is harvested.

“At the same time, they have over 750 patents protecting their market share.

“To say this company is in the driver’s seat would be an understatement of epic proportions.

“At this moment, every major energy player on the planet is banging on their door looking for cheap energy.

“In fact, their client roster is a ‘who’s who’ of global energy players.

“They’ve already locked in enormous long-term deals with the likes of Walmart, Google, the U.S. Department of Defense, and New York City.”

See those little changes to the specifics? No longer are we dealign with a company that has 750 patents and long-term deals with Walmart, Google, etc… now we’re dealing with a company that has 130 patents, and is in the driver’s seat for solar energy, which is also an area were Google, Walmart, etc. are making big investments, but isn’t necessarily specifically working with those mega companies.

The marketing spiel ends up giving the same impression, but the specifics are different. And, one assumes, the company being hinted at is now different — apparently Dr. Moors believes that SunEdison has fallen out of “the driver’s seat” and been replaced by a substitute driver at some point in the last few months.

So who might it be? This is what we get by way of clues:

“I’d like to introduce you to an extraordinary company.

“It is, quite literally, the SPARK that put solar on the fast-track to total domination of the global energy markets.

“If you could only own one solar company for the next 10 years, this would be the one.

“There’s no doubt in my mind…

“Remember, the energy sector is responsible for rare and exceptional trades big enough to turn $1,000 into $1 million in a single transaction.

“And while there are no guarantees, this ‘premier’ solar company could be the biggest win we’ve ever seen.

“Not just in the energy sector, but in financial history.

“Let me give you the facts…

“Own the Next Super-Major Energy Titan for Pennies on the Dollar!”

Huh. No actual clues in there, eh? That is, in fact, word for word, exactly the same thing he said about SunEdison back in the prior version of the ad.

Just a reminder to keep ahold of a healthy handful of skepticism whenever a pundit says “there’s no doubt in my mind” or “if you could only own one [company] for the next 10 years, this is it.”

So do we get anything else that might be a bit more specific about the substitute for SUNE in Moors’ affections?

Here are the hints from the old SUNE pitch:

“It’s a complicated process, and this company has taken it to a whole new level.

“You see, in its raw form, Si is full of impurities…

“These impurities inhibit the conversion process, making for expensive energy, once as high as $76 per KWH.

“That’s what makes this company’s patented technology such a remarkable breakthrough.

“During the process, very small particles of Si called ‘seeds’ are suspended in a cloud of gas.

“Si in the gas attaches to other Si particles, forming larger and larger beads.

“These beads eventually drop out of the gas like rain…

“The beads are then melted and formed into wafer-thin slices of 99.99% pure Si…

“The technology is 1,000% more efficient than the industry standard.

“And the big thing: The cost…

“Again, traditional solar cells delivered energy at a cost of $76 per KWH.

“This company’s technology is so efficient, and creates such pure Si, they are supplying a utility company with solar at 5 cents per KWH.

“That’s right. This company’s technology is so significant that utility companies are throwing in the towel and buying solar power!”

And now, from the updated pitch for the new mysterious solar company:

“It’s a complicated process, and this company has taken it to a whole new level.

“You see, in its raw form, Si is full of impurities…

“These impurities inhibit the conversion process, making for expensive energy, once as high as $76 per KWH.

“That’s what makes this company’s patented technology such a remarkable breakthrough.

“First, raw Si is melted in a mono-crystalline electric furnace.

“During the melting process, a stream of Argon is pumped into the furnace to remove impurities and inhibit oxidation.

“The molten Si is then cast into square blocks and cooled.

“The blocks are then sliced into wafer-thin slices of pure Si…

“The technology is scientific genius and creates highly purified Si, ready to convert sunlight into ready-to-use power.

“In fact, this tiny company’s patented solar cells set a NEW WORLD RECORD for power output.

“Incredible… and the big thing: the cost…

“Again, traditional solar cells delivered energy at a cost of $76 per KWH.

“This company’s technology is so efficient, and creates such pure Si, they are supplying a utility company with solar at 5 cents per KWH.”

Seriously? Those, again, are almost identical. Are there really two “remarkable breakthroughs” from different companies? Or did the copywriter just tinker slightly with the ad so it could apply to someone aside from SUNE?

Well several solar cell manufacturers over the years have set “world records” of various types — including efficiency, cost, output, etc. But if you’re talking about this particular silicon manufacturing process, and a world record for power output, and 130 patents, then what Dr. Moors is teasing this time around is JinkoSolar (JKS).

About which I know almost nothing — but it has not, at least, fallen apart like SunEdison. They are, like SunEdison, vertically integrated — they process their own silicon, including recycling, and create their own wafers and build their panels, but they also do develop solar power projects. Here’s how they describe themselves:

“JinkoSolar (NYSE: JKS) is a global leader in the solar industry. JinkoSolar distributes its solar products and sells its solutions and services to a diversified international utility, commercial and residential customer base in China, the United States, Japan, Germany, the United Kingdom, Chile, South Africa, India, Mexico, Brazil, the United Arab Emirates, Italy, Spain, France, Belgium, and other countries and regions. JinkoSolar has built a vertically integrated solar product value chain, with an integrated annual capacity of 3 GW for silicon ingots and wafers, 2.5 GW for solar cells, and 4.3 GW for solar modules, as of December 31, 2015. JinkoSolar also sells electricity in China, and had connected approximately 1,006.6 MW of solar power projects to the grid, as of December 31, 2015.”

They are not nearly as levered as SunEdison, which isn’t saying much — they have boosted their borrowing over the past couple years, so they have about $2 billion in debt matched by about $800 million in cash at the end of 2015, though they also have a much larger “accounts payable” line than they do “accounts receivable” — so it’s a larger operation than is indicated by the market cap of only $600 million. Their revenue has doubled over the past couple of years, and they have been profitable for a couple years, so presumably they can handle that leverage. On an Enterprise Value/EBITDA basis they’re in a fairly similar valuation neighborhood to both industry giant First Solar (FSLR) and the similarly sized Chinese solar company Canadian Solar (CSIQ) — JKS is at EV/EBITDA of 8.5, FSLR and CSIQ are both around 7.

When it comes to earnings, analysts expect that JKS will earn $5 a share this year and boost that by about 15% to $5.78 in 2017… which means there’s obviously some risk or fear in there that I don’t know about, because that means JKS is trading at only 4X expected earnings for the current year. That doesn’t generally happen unless a lot of investors smell a rat or are panicked about a sector. It could just be that analysts have no idea how to guess at earnings — JKS reported earnings that were dramatically worse than expectations for the first three quarters of last year (as in, 50% lower than expected), but then also reported earnings for that final quarter that were more than 30% higher than expected. So I’d use those analyst forecasts sparingly, don’t count on them too much. For actual trailing earnings, JKS earned about $3.30 a share in 2015 — so even on that metric it’s not terribly expensive at about 7X trailing earnings.

So… why is it so cheap in a sector that is generally seeing top line growth? Is it just that their earnings have fallen by about 25% a year over the last several years? Is it fear of the sector because of price competition? Are people still just afraid of all Chinese solar stocks because of the horror stories of fraud and the worry about being unable to trust numbers from some Chinese companies?

I have no idea, I’m afraid… but I am pretty sure that the Thinkolator is accurate in telling us that Dr. Moors has dropped SunEdison as his standard bearer in solar and decided to throw his weight behind JinkoSolar instead. Think it will work out? Have other favorites in the space? Let us know with a comment below.

P.S. If you’re wondering about the other two companies Moors is pitching in this ad, those appear to be unchanged — still Solar Window (WNDW) for their experimental “solar panel” windows for skyscrapers, and Tesla (TSLA) for their Powerwall battery that can provide “nighttime solar.” We covered those two in the follow-up article here, my opinion on them hasn’t changed. Tesla is hot again of late and is up 36% since November of 2015, when I first covered that Energy Advantage teaser… WNDW is up about 8%. (And in case you’re keeping track, SUNE is down 98% since the first tease in November of 2015, JKS would be down about 26% if Moors had teased that one in November instead of SunEdison, and the S&P 500 is up about 14% since that date).


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81 Comments on "“This New Fuel will Kill Big Oil” (Dr. Kent Moors)"

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Dutch
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Something to consider. Nobody reveals their investing secrets. All these web shysters make their bones from the subscriptions they sell. If they have the inside track on a stock, they will go in full bore and make their profit. They will NOT tell the world about it until after the fact. Another technique is to flood the news services and blogs with the virtues of a stock to bull the price and then short the stock. Another thing to consider is that NOBODY knows the future of the macro economy. For example, I’ve been hearing for 30 years on how… Read more »
Jeffrey Gorman
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My research shows that the new silicon energy potential is not in solar panels but in silicate liquid fuels. These would utilize the silica from sand to bond with the nitrogen in the atmosphere creating silica nitride as the exhaust product. This “exhaust” can be collected in a tank withing the car and recycled into fertilizer. No negative affect on climate change and a second revenue stream for the producers. it cannot be used in a piston engine due to the intense heat but a rotary or turbine motor is ideal.

pjwa
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pjwa

I think you are on the mark here. I cannot though find a listed company in this field. The leader seems to be Bloom Energy which is not listed. They have created a silica-based fuel cell, which is inproduction and use.
Separately, use of silica seems to be making big advances in battery storage technology, which will increase the efficiency of both storage and potentially actual batteries, replacing graphene as the counterpart to Lithium carbonate

Dave S.
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Dave S.

But where does the energy come from? Sand contains no energy and is not a fuel, and ditto N2 in air.

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