Blockchain week trundles right along here at Stock Gumshoe — no one can talk about anything else when bitcoin is close to doubling in a week (heck, at one point it looked like it might double in a day today), so we’re looking at the newsletter promos that are trying to capitalize on that mania.
And yes, to answer the pleas from Down Under, we’re looking at an Aussie version of the bitcoin teaser today. This one’s from Ryan Dinse’s Exponential Stock Investor, which is published by Australia’s Agora affiliate (called Port Phillip Publishing), and he’s following a similar refrain to other pitches: buying the enablers of bitcoin and blockchain technology, not necessarily the actual coins/tokens/cryptocurrencies themselves.
Normally I’d say that’s a lower-risk way to go, but it sounds like he’s pitching some micro-cap Australian tech companies as his “blockchain collision stocks,” so they’re probably still plenty risky. Shall we dig and find out what they are?
Do note, if you’re not one of our small (but mighty) cohort of Australian readers, it might be difficult to trade some of these stocks in the US. Some Aussie stocks trade over the counter in the US or have official ADRs, but not a lot of tiny ones do — and when they do, they tend to be illiquid and dangerously priced for US investors (especially when you want to sell… buying illiquid stocks is always easier than selling them). I always recommend Interactive Brokers if you’re looking for a good low-cost international trading broker, I’d go through them to buy ASX-listed stocks.
Let’s see what the stocks are before we pass judgement, though, shall we?
Here’s a little taste of the intro to give you some idea where Dinse is is coming from:
“Put aside bitcoin and cryptocurrencies. They’re yesterday’s fads, with the best gains already banked.
“We’re actually on the cusp of the most insane tech advancement in 58 years. And it’s already making stealthy early adopters up to $642,245 for every $10,000 invested.
“Not since 1959 have you seen a ‘collision of techs’ this big. Like the Big Bang, these rare collision events create a new universe. And in the ensuing flux, unbelievable wealth…”
And, of course, the swelling sense of “fear of missing out” urgency that every newsletter pitch depends on….
“But if you want to siphon the ‘Tsunami of cash’ (in the words of Scientific American writer Morgan E. Peck) there’s no time to mull it over.
“You need to make the simple moves I suggest below NOW.
“This story is moving as you read this. Very soon there will be no putting this genie back into the bottle…”
With investors already frantic about their lack of bitcoin exposure, that’s like throwing gasoline on a fire. I’m more of a “mull it over” guy, myself, having been around long enough to see how fast things can go down when sentiment shifts, but perhaps I’ll miss out on lots of profit because of it… that’s the deal you make with yourself when you keep speculation in check, and it doesn’t feel nearly as fun as rolling the dice and “going big”. Gambling is fun and winning on a gamble feels fantastic… and that’s fine, but lock up your credit card (or your home equity loan, or your retirement savings) before you drive down to the casino.
But anyway, you didn’t come to me for the advice of an old fuddy-duddy… you want to know the stocks Dinse is picking for this Blockchain Explosion, right? Let’s check out some more of the ad…
That last “Great Collission” he talks about in the ad is the invention of the microchip, which “collided” with the already-existing computer and created the consumer electronics boom and the personal computer and, eventually, ludicrous wealth for early players like IBM and Texas Instruments and Intel and the like.
And the next one is big data colliding with blockchain… here’s how he introduces it:
“Just like 1959, this new boom is being triggered by the collision of two technical innovations.
“The first is big data.
“…as I’m sure you will have already guessed…
“…is something called blockchain….
“Because of blockchain, the era of cryptocurrencies was born.
“And with it, the ability to decentralise data.
“Like transistors improved vacuum tubes before, blockchain has triggered a giant leap forward in how data is used.
“But its true game-changing potential is only now…at the end of 2017…starting to properly take shape….
“BITCOIN AND CRYPTOCURRENCIES ARE RED HERRINGS
“The REAL story is what’s about to happen with the technology that birthed cryptocurrencies in the first place: Blockchain.
“It will be the people who figure out what happens next with blockchain…
“…and who have the smarts to invest accordingly…
“…who will become the next generation of tech mega-millionaires….
“The true epiphany is this:
“DECENTRALISED DATA ITSELF WILL BE THE NEW CURRENCY FROM 2018 ONWARDS”
Dinse goes on to say that he thinks the introduction of zk-SNARKs to the blockchain, particularly to ethereum, will be the breakthrough that really matters, bringing more privacy to cryptocurrencies… and that this will bring another huge move forward.
(The answer to “what is zk-SNARKs” is, I regret to inform you, math. Really hard math… but what it effectively is is a way to generate “proof” of a reliable transaction without sharing all details of the transaction. Since everything is public on most blockchains, if somewhat inscrutable to most, this is one of the ways that blockchains can try to implement real privacy… plus it’s much faster, at least in theory. And there my knowledge ends. zk-snarks was made possible in the latest ethereum upgrade, called Byzantium… there’s a coindesk article on it here that makes some sense even if you’re not a crypto-coder.)
I don’t know whether or not zk-SNARKS is the fundamental game changer for blockchain or not, there are certainly also other ways in which blockchain startups are trying to create faster, more private or more “controlled” networks. And, since we’re on the topic, Australia’s financial sector is being more aggressive than most with this — the Australian Stock Exchange just announced today that it is going to implement a blockchain system to replace its legacy trade settlement system (their contractor is Digital Asset, which is a young fintech company backed by a lot of huge strategic investors — including CME and Broadridge, incidentally, both of which have been touted in previous “blockchain” teasers that we’ve solved this week).
So yes, blockchain is sweeping the lucky country as well… what, then, are those stocks that Dinse is pitching? Here’s what he says he’s looking for:
“The rise in cryptocurrency prices is nothing compared to the effect this will have in the biotech, machine learning and artificial intelligence industries.
“And then the Blockchain Collision will ripple out even further…into security, transport, retail, agriculture, green industries and more.
“Find the stocks that are bridging the gap between blockchain and these industries and you’ve found yourself a quickly building fortune.
“I have the three best candidates on the planet for you….
“I’ve found three locked-in future NVIDIAs.
“These could be the most valuable stocks you ever add to your portfolio.”
And he goes on and on, but I’ll be kind to you and stop there (if you want to see the whole ad, it’s here)… we’ll move on to the meat of the matter, these are the clues for the first one of those “locked-in future NVIDIAs” …
“BLOCKCHAIN COLLISION STOCK #1
“WHY THIS COMPANY’S ‘SENTIENT CHIP’ COULD MAKE IT THE NEXT NVIDIA…
“This stock only trades at 15 cents.
“At the time of writing, it’s a genuine secret.
“You can only find traces of it on AI and tech trading forums….
“It’s a pure play on the collision between blockchain and AI.
“Perhaps the best AI pure play in the world right now.
“But it’s trading in obscurity, in the lower echelons of the ASX.
“It’s operating at the collision point that’s going to lead to the emergence of new tools for collecting and analysing data….
“… it’s about to become a global leader in something called ‘machine learning’.”
So what’s this company’s actual product, if it has one? These are our other clues…
“The sentient chip acts more like a human brain, in that it can process lots of different information paths all at once. But at the speed of a computer. Scary! But exciting.
“In some respects, it’s the superman of AI chips.
“Faster, stronger and more powerful. But only in certain circumstances.
“Make no mistake: What this 15 cent Aussie company has discovered and patented, is a huge deal.
“It’s a chip that can gather huge amounts of data, faster and using less power.
“That is going to be HUGELY valuable in the years ahead.”
So who is it? Thinkolator sez this is very likely BrainChip (BRN.AX, there is a legacy OTC symbol AZKLF on the “grey market,” thanks to the fact that BrainChip went public through a reverse takeover of Aziana in 2015, but it almost never trades in the US so AZKLF is probably best avoided unless you want to overpay for shares and commit to not selling them for a long time).
BrainChip is indeed a “hot” tech stock in Australia, at least some of the time… it’s got a market cap of over A$150 million (and close to $300 million at its past peaks, like back in January at 33 cents), so it’s very small but not as tiny as some US investors might assume, since we’re accustomed to share prices in the pennies meaning the company is microscopic (in Australia it’s much more common to find “real” companies trading at 10 cents or 50 cents than it is in the US… though they’ve certainly got more than their share of tiny junk, too).
That said, this is very much a startup company… they’ve raised money a couple times this year, including A$21 million back in October that helped to bring the shares down a bit, and they’re still trying to sell their technology to customers. They just shipped a BrainChip Accelerator Board to an automaker for evaluation in autonomous driving systems last month, for example, using what they call “Spiking Neural Network” technology, so I don’t know where they are on the timeline of perhaps getting their machine learning-focused systems actually designed into products. Their more established focus is a software-driven artificial intelligence product that won an award at a French cybersecurity conference last month because of its ability to speed up image search (like facial recognition in security camera systems, for example), and has at least one customer (Rockwell Collins is using it in a security system product), but has not yet generated meaningful revenue.
Their next product, beyond these introductions earlier this year, appears to be something they call AKIDA, so presumably the blockchain hopes, if any, would like there… this is how they describe it in their last quarterly report:
“The Company is also focused on the development of its AKIDA Neuromorphic Processor Unit. AKIDA is expected to be a leader in the emerging neuromorphic computing field, with multiple applications including surveillance, cyber security, financial technology and autonomous vehicles.”
So… they have plenty of money to keep going with development for at least a little while, depending on how much they accelerate their R&D or selling budget, and they have some products and patents that sound cool but are also either in development (like AKIDA) or very early in commercialization, which means there’s both potential and risk. Interesting story, and perhaps folks who like to speculate on technology will want to take some time to research this one. I’m not sure how to measure them against other AI startups, there are hundreds of AI and machine learning companies in Silicon Valley alone who have at least as much R&D capital as BrainChip, so being one of the few small public AI companies shouldn’t mean we assume they lack competition… and that would be enough to make me keep any speculation small and slow, but it is a cool-sounding technology at first glance, and it’s certainly in the “flavor of the month” category with that AI focus, even if it’s not really a “blockchain” company at the moment.
“BLOCKCHAIN COLLISION STOCK #2
“THE ‘BIG MEMORY’ CLOUD SPECIALIST WHERE A 666% GAIN IS ON THE LOWER END
“‘400% to 666% returns.’
“That’s not my prediction.
“That was the verdict a prominent tech analytics firm gave on this ASX-listed stock.
“It gave an estimates target price of 12 cents and 20 cents, per share….
“I think they’re lowballing it.
“I don’t think that projection takes into account the key role this company is going to play in the global, post-Blockchain Collision landscape.
“ESPECIALLY if, as I predict, a bigger company moves to acquire its newly licensed breakthrough tech in 2018….
“When the blockchain collides with big data, a third component will become more valuable than gold: Big memory….
“Enter my second Blockchain Collision play.
“Again, I don’t want to reveal too much about it in a public forum like this.
“It’s an Australian-listed company.
“It still trades under 3 cents.
“I genuinely believe it holds the potential to become the biggest next-gen data storage stock IN THE WORLD over the next three years.
“It’s on the cusp of developing a radical new memory tech, which I won’t name here.
“But it’s 1,000 times faster than Flash and is also non-volatile. This means it retains memory even when there’s no power.”
This one is not a perfect match, but I’m fairly certain the Thinkolator is right: the stock being pitched here is Weebit Nano (WBT.AX, no US OTC symbol that I’m aware of), which also came public in a reverse merger with an old mining shell company in Australia (Radar Iron, back in August of 2016).
The stock did indeed trade around three cents a couple months ago, and it would have been roughly a A$21 million market cap at that time (though not precisely) … and they are indeed trying to commercialize a next-generation of computing memory that is 1,000X faster than Flash and nonvolatile, and that would certainly be a big thing… though they’re far from the only company trying to develop this new memory, which is broadly called RRAM or ReRAM. Lots of other folks are also working on next-generation memory, of course — not just Micron and Intel with their 3D XPoint, which we talked about earlier in the week and also claims roughly 1,000X faster speeds, but plenty of others… there’s an interesting article about ReRAM here if you’re curious about the actors involved.
You can get a taste of their progress from their investor presentation here… the technology is licensed from Prof. James Tour at Rice University, and the company is Israeli, with a partnership with a French firm… and the other thing that causes investors to perk up their ears is that they landed David Perlmutter as Chairman, so that applies an extra dose of “instant credibility” (Perlmutter was thought to be in the running to be CEO of Intel, leaving when he was passed over in the last management transition). Interesting stuff, and they claim a great competitive advantage with the low cost and established base of their memory compared to many of the new gee-whiz innovations that require more exotic materials, so perhaps there’s some possibility. A company this small could easily be acquired, of course, and that makes it interesting to speculate as to why it hasn’t been… but it’s still early, so we’ll see how things advance.
I don’t particularly feel like placing a wager on an emerging memory technology when all the giants of the semiconductor industry are working on next-generation memory, but that doesn’t mean this one won’t be successful enough to get acquired by one of the big guys along the road. You can make your own call on that, of course (it is, after all, your money).
And there’s one more….
“BLOCKCHAIN COLLISION STOCK #3
“THE ‘BLOCKCHAIN BREAK-OUT ARTIST’THAT’S GOING ON A DEAL FRENZY
“This baby is already moving.
“It’s up 112% in the last year.
“But if my calculations are right, that is nothing…a tiny drop in the bucket…compared to what’s to come….
“This company is also a chipmaker.
“Its tech is already a proven leader in cryptocurrency mining….
“Over the last three months, this company has been on a deal brokering frenzy — partnering with Tesla Inc., Baidu Inc., Tencent, JD.com, Microsoft and Amazon.com.
“One deal in particular could see them enter the world of self-driving cars to counter rival, our old friend, NVIDIA Corp’s dominance of that market….
“On the 28 August, this company announced they would be partnering with one of China’s biggest tech companies to accelerate and power its data centres.”
Well, whaddya know — two teensy Aussie stocks, and then he throws in one big US company… this is our old friend Advanced Micro Devices (AMD), perennial also-ran to both Intel (INTC) and NVIDIA (NVDA) and one of the more obvious beneficiaries this year of the demand for GPU chips from blockchain miners.
My opinion on AMD hasn’t changed in the past two days, so I’ll refer you back to that article about Jeff Brown’s blockchain pitch from Tuesday if you want to see what I said about AMD (or don’t bother, it was a pretty wishy-washy opinion).
And that’s all we have from the land down under… any thoughts on these “blockchain collision” ideas from Ryan Dinse? Love or loathe them? Have other favorite small caps that you think will benefit from this “collision?” Let us know with a comment below… thanks for reading!