Tuesday, January 03, 2012

Blue Sphere (BLSP) Converts Farm Waste Into Nothing So Far

Prepare yourselves for another penny stock.  Trinity Investment Research sent me a mailer touting Blue Sphere (BLSP), some Israeli company that claims to be doing something in carbon credits and bio-waste.  Claims of launching projects all over the world mean nothing without operational results to back up those claims.

They haven't filed their 10-K for 2011 so it's impossible to tell how well they're doing now.  If the previous three years are any indication, there is plenty of reason to be pessimistic.  Blue Sphere has earned zero revenue since 2008.  Their massive increase in negative retained earnings came entirely from their SGA expenses.  It is unusual for a company with a claimed orientation in a high-tech sector to have such high SGA expenses while spending nothing on R&D.

It makes no sense for a bio-waste conversion startup to pursue small-scale waste sources on farms and landfills in emerging markets.  That's why Blue Sphere's approach isn't scalable.  Large-scale thermal depolymerization plants at big agribusiness installations would work.  This small-scale stuff Blue Sphere is doing is uneconomical.  They announce "discussions" with major farms in the U.S. but have no announcements of firm contracts to operate waste conversion plants.

This turkey traded at a whopping high of $0.90/share on Jan. 21, 2011 and is now at a nickel.  People who bought this stock then have seen their investment destroyed.  This is fitting for a company focused on biological waste.  I could make a joke here but Google probably wouldn't like it.  I watch out for my brand.  That's the difference between Alfidi Capital and Trinity Investment Research.

Full disclosure:  No position in BLSP, ever.