Blackberry debut
Full motion image capture
Great for pic sharing
Tuesday, April 30, 2013
Monday, April 29, 2013
Financial Sarcasm Roundup for 04/29/13
There must be some sarcastic angle on the movement of the gold price, economic turning points, and the debate over whether austerity is discredited. This blog is the right place to find such material.
France is going absolutely ga-ga over the yuan. Maybe they could stick the trading center on Corsica to give the island some respectability. This is mainly about French multinationals wanting to piggyback on Chinese-funded development projects in Africa, but China is too wily to let the French in easily. The French Foreign Legion will have to learn to speak some Chinese if it wants to get missions securing Chinese project sites. I wouldn't blame Germany for feeling jealous if France drops hints about leaving the euro once it goes live with yuan trading.
Iceland is getting sick of both austerity and the European project. Voting in the parties who led the country into its banking crisis is pretty dumb. No one said the way out would be painless but grown adults in Western countries don't want to sacrifice for their own good anymore. They'd rather act like babies and throw temper tantrums when other adults in the room tell them to live within their means. That's why economists in America are so giddy that the Reinhart-Rogoff debt threshold theory is being attacked for calculation errors. Everyone wants to be the enabler of good times forever. Anyway, Icelanders like their welfare state and dislike the troika's preference for austerity, so the euro won't be coming there.
Maybe the House Republicans are smart to trade away entitlement cuts for tax reform. Entitlements aren't going to be cut anyway because both parties think they're untouchable. It all depends on what kind of tax reform they get. If it's a code full of bigger loopholes for corporate big shots and more earned income credits for welfare queens, then forget it. Two tax brackets and no deductions would be a colossal improvement. I've been mouthing off in favor a a flat tax for something like forever but I'll take what I can get. Maybe America will get lucky and have a simplified tax code in place before we get hyperinflation, which would really take care of the entitlement problem.
High-cost financing is now a way of life for ordinary Americans. A sub-prime nation deserves more than just sub-prime auto and home loans; it deserves a check cashing outlet on every corner to soak up all the income Americans don't need anymore for goods they can't afford anyway. I'm really impressed with the speed at which my fellow citizens have become addicted to formerly shameful ways of making ends meet. The crush of applicants for SNAP EBT cards, free cell phones, and SSI disability payments would not be complete without a surge in payday loans and pawn brokers. America is turning into one big trailer park and the final coup de grace will be to change our national mascot from the bald eagle to a mangy junkyard dog.
In other news, I'm still waiting for some shoe to drop in the markets and flush out a whole bunch of trust fund babies who should never have turned Mommy and Daddy Warbucks' money into a hedge fund.
France is going absolutely ga-ga over the yuan. Maybe they could stick the trading center on Corsica to give the island some respectability. This is mainly about French multinationals wanting to piggyback on Chinese-funded development projects in Africa, but China is too wily to let the French in easily. The French Foreign Legion will have to learn to speak some Chinese if it wants to get missions securing Chinese project sites. I wouldn't blame Germany for feeling jealous if France drops hints about leaving the euro once it goes live with yuan trading.
Iceland is getting sick of both austerity and the European project. Voting in the parties who led the country into its banking crisis is pretty dumb. No one said the way out would be painless but grown adults in Western countries don't want to sacrifice for their own good anymore. They'd rather act like babies and throw temper tantrums when other adults in the room tell them to live within their means. That's why economists in America are so giddy that the Reinhart-Rogoff debt threshold theory is being attacked for calculation errors. Everyone wants to be the enabler of good times forever. Anyway, Icelanders like their welfare state and dislike the troika's preference for austerity, so the euro won't be coming there.
Maybe the House Republicans are smart to trade away entitlement cuts for tax reform. Entitlements aren't going to be cut anyway because both parties think they're untouchable. It all depends on what kind of tax reform they get. If it's a code full of bigger loopholes for corporate big shots and more earned income credits for welfare queens, then forget it. Two tax brackets and no deductions would be a colossal improvement. I've been mouthing off in favor a a flat tax for something like forever but I'll take what I can get. Maybe America will get lucky and have a simplified tax code in place before we get hyperinflation, which would really take care of the entitlement problem.
High-cost financing is now a way of life for ordinary Americans. A sub-prime nation deserves more than just sub-prime auto and home loans; it deserves a check cashing outlet on every corner to soak up all the income Americans don't need anymore for goods they can't afford anyway. I'm really impressed with the speed at which my fellow citizens have become addicted to formerly shameful ways of making ends meet. The crush of applicants for SNAP EBT cards, free cell phones, and SSI disability payments would not be complete without a surge in payday loans and pawn brokers. America is turning into one big trailer park and the final coup de grace will be to change our national mascot from the bald eagle to a mangy junkyard dog.
In other news, I'm still waiting for some shoe to drop in the markets and flush out a whole bunch of trust fund babies who should never have turned Mommy and Daddy Warbucks' money into a hedge fund.
Sunday, April 28, 2013
The Limerick of Finance for 04/28/13
McDonald's and breakfast all day
Two concepts that should go away
People are just too fat
There's something wrong with that
"Eat more veggies" is what we should say
Two concepts that should go away
People are just too fat
There's something wrong with that
"Eat more veggies" is what we should say
Saturday, April 27, 2013
US-India Innovation Funding Panel at TiE Silicon Valley
I get emails from The Indus Entrepreneurs (TiE) all the time but yesterday was the first time I actually attended a TiE event. I've really been missing out on some quality insights all of these years. I journeyed on down to TiE Silicon Valley's conference center in Santa Clara to hear from panelists discussing U.S. and Indian joint initiatives in funding innovative technologies.
The best insight of the evening was from an Indian-American academic I met during the buffet dinner. BTW, one reason I'm now considering joining TiE aside from the great events is that they serve good Indian buffets. I'm sitting next to this guy and I ask him whether India still has a rigid caste system. His answer was that it's much like the class system in the U.S. and other countries. Indian class status is determined by economics now, and not so much by birth. I think that's progress.
The introduction from a senior TiE guy extolled the organization's application of the "pay it forward" Silicon Valley ethos where established business leaders mentor younger entrepreneurs. He noted that Steve Jobs was brazen enough to call Intel's Andy Grove in Apple's early days and Mr. Grove gave him a one our meeting. That is rare anywhere else but commonplace in Silicon Valley.
The Indo-US Science and Technology Endowment Joint Panel members gave their introductory remarks. The guy from the US-India S&T Endowment Fund said their fund originated from the US government's food aid program for India. They grant $2-3M/year to startups to promote commercialization of technology with social impact. The focus has historically been on accelerating India's development but US-based tech startups obviously benefit. The fund reviewed about 400 proposals in its third round and will soon announce awards of about $500K each.
The next guy represented the Indian government's sci-tech policy body. I didn't match all their names and faces with their jobs, so hang in there. He said India's economic liberalization in 1993 accelerated the country's development. Sci-tech funding grew rapidly and the number of published academic papers absolutely exploded. The Indian government has a fund for non-Indian companies that can benefit the Indian market. I believe he was referring to programs under the auspices of India's Global Innovation and Technology Alliance.
Another Indian guy on the panel addressed the country's business climate. He said Indian business failures often end up in court. Yeah, like that never happens in the US, right? Former partners sue each other all the time in Silicon Valley. I have digressed; back to the Indian guy. India has had positive GDP growth for 31 years. India doesn't seem to have much of a native VC sector, because 94% of all funding for early-stage startups comes from outside India. I discovered after the panel that there is an India VC Association but the announcements on the home page all refer to investment conferences outside of India. I think Indian VCs should pump their own activities because you gotta start somewhere. The Indian guy also mentioned that there's a lack of quality Indian mentors for startups. No wonder these guys came all the way to TiE; there's nothing like it back in India.
The panelist from the US Department of Agriculture predicted world population peaking in 2050, with water scarcity and limited arable land already setting limits on growth. The USDA wants to see new agricultural tech to help grow a sector still characterized by hard work and low pay. He mentioned that US cows in the 1940s produced 4000 gallons of milk (I'm not sure whether he said it was an annual figure or a lifetime figure), but today they produce 30,000 gallons. Technology drove this improvement in yield. I checked the USDA's National Agricultural Statistics Service for data on milk production. I clicked through to "milk - production, measured in lbs/head" because that seems to be the metric for how much a single cow yields in a given year. The data readout shows that the figure was 5007 lbs/head in 1947 and 21,697 lbs/head in 2012. Maybe the USDA guy meant to say pounds rather than gallons, but his current year number is still way off and his historical number looks like an average of annual 1940s numbers. Whatever, close enough for government work. His basic thesis is still correct. The technology revolution matters in agriculture.
The US Embassy India's Sci-Tech officer spoke last. He noted that an open government platform works collaboratively with Indian innovators. US and Indian coders rolled out upgrades to Indian government websites together and now the India government uploads much more data to its websites for public use. He mentioned several joint programs promoting women in science, clean energy R&D, oceanography, and health care initiatives. I'd like to see some Indian financial blogger run through that country's open source data like I do with US data.
Now we get to the panel discussion. Someone referenced India's innovation timeline as too small and slow, asking how to scale up Indian innovation to match Silicon Valley's rapid time scale. The panel said the board members of the Endowment Fund agree Indian innovation cycles are too slow. Their fund has done milestone-based grant funding so far rather than equity funding. One panelist said the Indian government has funded network centers that do virtual collaboration.
Another guy asked how entrepreneurs can expect to benefit from development funding if the Indian government's requirements for technology transfer are so restrictive. The panelists said the Indian government takes innovation seriously, but they need entrepreneurs to help show them how to be innovative.
One TiE gal (a rare woman in a mostly male audience) said there's a huge fear of failure in India but Silicon Valley culture sees failure as a stepping stone. She wanted to know how India would overcome this cultural fear. The panel guy who said Indian failures end up in court commented that the Valley's tolerance of failure is unique. Cultural change will take time. He said India's colonial history may have contributed to its risk averse culture.
Someone asked about Indian water quality and waste. The panel said different regions face different water contaminants, so there are many ways to deploy innovation. The Indian ministry that regulates water use is spending money on technology. I find it interesting that 90% of India's water is used in agriculture.
One of the final questions was about how India incentivizes US serial entrepreneurs to come and do business. The panel extended an open invitation. I got the feeling after several questions like this that the typical TiE serial entrepreneur is frustrated with the Indian government's limited understanding of how to develop an entrepreneurial culture. The TiE folks have their work cut out for them. A camera crew from the local IND TV studio was on hand to get shots of the action.
My hat is off to TiE. I can't believe I've missed out on this organization's awesome resources for so long. I am definitely coming down the peninsula as often as I can, and not just for the Indian buffets. TiE people have what it takes to blaze trails in business.
The best insight of the evening was from an Indian-American academic I met during the buffet dinner. BTW, one reason I'm now considering joining TiE aside from the great events is that they serve good Indian buffets. I'm sitting next to this guy and I ask him whether India still has a rigid caste system. His answer was that it's much like the class system in the U.S. and other countries. Indian class status is determined by economics now, and not so much by birth. I think that's progress.
The introduction from a senior TiE guy extolled the organization's application of the "pay it forward" Silicon Valley ethos where established business leaders mentor younger entrepreneurs. He noted that Steve Jobs was brazen enough to call Intel's Andy Grove in Apple's early days and Mr. Grove gave him a one our meeting. That is rare anywhere else but commonplace in Silicon Valley.
The Indo-US Science and Technology Endowment Joint Panel members gave their introductory remarks. The guy from the US-India S&T Endowment Fund said their fund originated from the US government's food aid program for India. They grant $2-3M/year to startups to promote commercialization of technology with social impact. The focus has historically been on accelerating India's development but US-based tech startups obviously benefit. The fund reviewed about 400 proposals in its third round and will soon announce awards of about $500K each.
The next guy represented the Indian government's sci-tech policy body. I didn't match all their names and faces with their jobs, so hang in there. He said India's economic liberalization in 1993 accelerated the country's development. Sci-tech funding grew rapidly and the number of published academic papers absolutely exploded. The Indian government has a fund for non-Indian companies that can benefit the Indian market. I believe he was referring to programs under the auspices of India's Global Innovation and Technology Alliance.
Another Indian guy on the panel addressed the country's business climate. He said Indian business failures often end up in court. Yeah, like that never happens in the US, right? Former partners sue each other all the time in Silicon Valley. I have digressed; back to the Indian guy. India has had positive GDP growth for 31 years. India doesn't seem to have much of a native VC sector, because 94% of all funding for early-stage startups comes from outside India. I discovered after the panel that there is an India VC Association but the announcements on the home page all refer to investment conferences outside of India. I think Indian VCs should pump their own activities because you gotta start somewhere. The Indian guy also mentioned that there's a lack of quality Indian mentors for startups. No wonder these guys came all the way to TiE; there's nothing like it back in India.
The panelist from the US Department of Agriculture predicted world population peaking in 2050, with water scarcity and limited arable land already setting limits on growth. The USDA wants to see new agricultural tech to help grow a sector still characterized by hard work and low pay. He mentioned that US cows in the 1940s produced 4000 gallons of milk (I'm not sure whether he said it was an annual figure or a lifetime figure), but today they produce 30,000 gallons. Technology drove this improvement in yield. I checked the USDA's National Agricultural Statistics Service for data on milk production. I clicked through to "milk - production, measured in lbs/head" because that seems to be the metric for how much a single cow yields in a given year. The data readout shows that the figure was 5007 lbs/head in 1947 and 21,697 lbs/head in 2012. Maybe the USDA guy meant to say pounds rather than gallons, but his current year number is still way off and his historical number looks like an average of annual 1940s numbers. Whatever, close enough for government work. His basic thesis is still correct. The technology revolution matters in agriculture.
The US Embassy India's Sci-Tech officer spoke last. He noted that an open government platform works collaboratively with Indian innovators. US and Indian coders rolled out upgrades to Indian government websites together and now the India government uploads much more data to its websites for public use. He mentioned several joint programs promoting women in science, clean energy R&D, oceanography, and health care initiatives. I'd like to see some Indian financial blogger run through that country's open source data like I do with US data.
Now we get to the panel discussion. Someone referenced India's innovation timeline as too small and slow, asking how to scale up Indian innovation to match Silicon Valley's rapid time scale. The panel said the board members of the Endowment Fund agree Indian innovation cycles are too slow. Their fund has done milestone-based grant funding so far rather than equity funding. One panelist said the Indian government has funded network centers that do virtual collaboration.
Another guy asked how entrepreneurs can expect to benefit from development funding if the Indian government's requirements for technology transfer are so restrictive. The panelists said the Indian government takes innovation seriously, but they need entrepreneurs to help show them how to be innovative.
One TiE gal (a rare woman in a mostly male audience) said there's a huge fear of failure in India but Silicon Valley culture sees failure as a stepping stone. She wanted to know how India would overcome this cultural fear. The panel guy who said Indian failures end up in court commented that the Valley's tolerance of failure is unique. Cultural change will take time. He said India's colonial history may have contributed to its risk averse culture.
Someone asked about Indian water quality and waste. The panel said different regions face different water contaminants, so there are many ways to deploy innovation. The Indian ministry that regulates water use is spending money on technology. I find it interesting that 90% of India's water is used in agriculture.
One of the final questions was about how India incentivizes US serial entrepreneurs to come and do business. The panel extended an open invitation. I got the feeling after several questions like this that the typical TiE serial entrepreneur is frustrated with the Indian government's limited understanding of how to develop an entrepreneurial culture. The TiE folks have their work cut out for them. A camera crew from the local IND TV studio was on hand to get shots of the action.
My hat is off to TiE. I can't believe I've missed out on this organization's awesome resources for so long. I am definitely coming down the peninsula as often as I can, and not just for the Indian buffets. TiE people have what it takes to blaze trails in business.
Friday, April 26, 2013
The Hidden Agenda Behind Retail Investment Proprietary Products
I despise proprietary investment products. These are investment securities specific to one brokerage, usually created by its investment bank or wholesale asset management arm. They've been around for years and need to go away. Like mutual funds, they've outlived whatever usefulness they possessed at their creation.
Internal hedge funds are stupid and probably a conflict of interest. The academic research on the inability of actively managed funds to deliver alpha over the long term is clear. The high expenses and volatility of hedge funds magnify this deficiency. Firms that create internal hedge funds use them as dumping grounds for securities they couldn't sell to retail investors and as make-work jobs for well-connected insiders who have nothing better to do for a few years.
Structured notes and principal-protected notes are just as dumb. They represent positions on a given sector or theme that knowledgeable investors can execute themselves with option strategies. Credit spreads and collars on ETFs are a whole lot cheaper than some note underwritten by an investment bank.
Proprietary products IMHO accomplish two functions very much in the interest of brokerages. They tie a client's assets to one firm and tie a broker's book of business to one firm. Think about it. A client who is dissatisfied with a broker and wants to move assets elsewhere won't normally be able to transfer the brokerage's proprietary products. They must be liquidated, incurring a capital gain, if the client wants to move all of their assets. This sets up the client for a very discouraging conversation with their existing wealth manager: "Oh gee, you can't move all those structured notes I sold you because the gains will mess up your asset allocation. You can't move your hedge funds either because you're locked in for five years."
A broker who wants to jump to another firm will face similar hurdles if she or he sold a bunch of proprietary stuff to a significant number of clients. The top-producing big shot who just had their gross payout reduced will have to think hard after realizing that proprietary products aren't portable from one firm to another. They are a crude form of "sticky" money that stays with a firm regardless of a broker's customer service skills.
Smart investors ignore sales pitches for the in-house favorite funds and notes. They cost a premium, which firms and salespeople like to collect, but add little to a well-diversified portfolio (i.e., large and small caps, laddered fixed income, hard assets, etc.).
Smart brokers ignore the internal bonuses paid for sales of proprietary products. They keep their books of business portable by focusing on widely held fund families and individual securities that any brokerage can hold.
I used to be stupid about proprietary products but I eventually got smart. I have not owned proprietary products since 2006. I tried to sell them to prospects when I was a financial advisor in 2005-2006; no one bought them from me. One prospect even ran away screaming when I described how a principal-protected note worked. I learned about structured notes' stickiness the hard way when I moved my assets from the full-service firm that fired me to a discount brokerage. The structured notes wouldn't move until I sold them. They netted out to just about zero gain after transaction costs. I will never invest in proprietary products again.
Internal hedge funds are stupid and probably a conflict of interest. The academic research on the inability of actively managed funds to deliver alpha over the long term is clear. The high expenses and volatility of hedge funds magnify this deficiency. Firms that create internal hedge funds use them as dumping grounds for securities they couldn't sell to retail investors and as make-work jobs for well-connected insiders who have nothing better to do for a few years.
Structured notes and principal-protected notes are just as dumb. They represent positions on a given sector or theme that knowledgeable investors can execute themselves with option strategies. Credit spreads and collars on ETFs are a whole lot cheaper than some note underwritten by an investment bank.
Proprietary products IMHO accomplish two functions very much in the interest of brokerages. They tie a client's assets to one firm and tie a broker's book of business to one firm. Think about it. A client who is dissatisfied with a broker and wants to move assets elsewhere won't normally be able to transfer the brokerage's proprietary products. They must be liquidated, incurring a capital gain, if the client wants to move all of their assets. This sets up the client for a very discouraging conversation with their existing wealth manager: "Oh gee, you can't move all those structured notes I sold you because the gains will mess up your asset allocation. You can't move your hedge funds either because you're locked in for five years."
A broker who wants to jump to another firm will face similar hurdles if she or he sold a bunch of proprietary stuff to a significant number of clients. The top-producing big shot who just had their gross payout reduced will have to think hard after realizing that proprietary products aren't portable from one firm to another. They are a crude form of "sticky" money that stays with a firm regardless of a broker's customer service skills.
Smart investors ignore sales pitches for the in-house favorite funds and notes. They cost a premium, which firms and salespeople like to collect, but add little to a well-diversified portfolio (i.e., large and small caps, laddered fixed income, hard assets, etc.).
Smart brokers ignore the internal bonuses paid for sales of proprietary products. They keep their books of business portable by focusing on widely held fund families and individual securities that any brokerage can hold.
I used to be stupid about proprietary products but I eventually got smart. I have not owned proprietary products since 2006. I tried to sell them to prospects when I was a financial advisor in 2005-2006; no one bought them from me. One prospect even ran away screaming when I described how a principal-protected note worked. I learned about structured notes' stickiness the hard way when I moved my assets from the full-service firm that fired me to a discount brokerage. The structured notes wouldn't move until I sold them. They netted out to just about zero gain after transaction costs. I will never invest in proprietary products again.
Thursday, April 25, 2013
Wednesday, April 24, 2013
Silver Bull Resources (SVBL) and Silver in Mexico
Silver Bull Resources (SVBL) is digging for metals in Mexico and Gabon. It was known as Metalline Mining until May 2, 2011, yet I am puzzled that the old MMG ticker still exists. What the name change has to do with operating a mine is anybody's guess. Hard data and results are more relevant.
The CEO is a geologist. I tend to favor operating geologists over consulting geologists but a breadth of consulting experience in different geologies and metals helps. The rest of the team also has deep experience in the mining sector.
Their project in Sierra Mojada, Mexico is coming along. Their 43-101 data indicated fairly sizable Ag deposits with attractive grades, albeit still in MII categories. The photograph of the site in their corporate presentation shows several large flat areas adjacent to the projected mine that can accommodate milling facilities and tailings piles. The site also has a railroad connection, grid power, and water wells. That is truly the logistics trifecta.
It is significant that Couer D'Alene Mines Corp. owns a big piece of Silver Bull Resources. It is also significant that Silver Bull's Sierra Mojada project is in the general vicinity of Orko Silver's project. Coeur D'Alene completed its acquisition of Orko Silver this month. That puts one of the largest silver projects in Mexico into a producer's control. I do not believe Coeur D'Alene Mines is ready for another acquisition because they have to shell out CAD$100M to former Orko shareholders and had about US$125M on their balance sheet at the end of 2012. Silver Bull's current market cap is about US$54M, a bit of a stretch right now for Coeur D'Alene Mines unless they're willing to go into debt or commit the next several quarters of FCF exclusively to another acquisition (unlikely IMHO).
Their most recent quarterly report dated January 31, 2013 shows cash on hand of US$1.66M and a burn rate of about US$700K/month. Holy canole, they were running on fumes at the end of that quarter. These people needed to raise some cash pronto to have a chance at taking Sierra Mojada into production. Fortunately they did collect about $9.2M from a private placement in February. That's enough to last another year.
I'm going to wait for Silver Bull's PEA to see how much they think full development will cost. I also want to see another 43-101 report with 2P data. Acquisitions in the neighborhood are certainly encouraging because producers need to replace reserves reduced by production. Let's see if the stock moves once they announce a PEA.
Full disclosure: No position in SVBL (or other companies mentioned) at this time.
The CEO is a geologist. I tend to favor operating geologists over consulting geologists but a breadth of consulting experience in different geologies and metals helps. The rest of the team also has deep experience in the mining sector.
Their project in Sierra Mojada, Mexico is coming along. Their 43-101 data indicated fairly sizable Ag deposits with attractive grades, albeit still in MII categories. The photograph of the site in their corporate presentation shows several large flat areas adjacent to the projected mine that can accommodate milling facilities and tailings piles. The site also has a railroad connection, grid power, and water wells. That is truly the logistics trifecta.
It is significant that Couer D'Alene Mines Corp. owns a big piece of Silver Bull Resources. It is also significant that Silver Bull's Sierra Mojada project is in the general vicinity of Orko Silver's project. Coeur D'Alene completed its acquisition of Orko Silver this month. That puts one of the largest silver projects in Mexico into a producer's control. I do not believe Coeur D'Alene Mines is ready for another acquisition because they have to shell out CAD$100M to former Orko shareholders and had about US$125M on their balance sheet at the end of 2012. Silver Bull's current market cap is about US$54M, a bit of a stretch right now for Coeur D'Alene Mines unless they're willing to go into debt or commit the next several quarters of FCF exclusively to another acquisition (unlikely IMHO).
Their most recent quarterly report dated January 31, 2013 shows cash on hand of US$1.66M and a burn rate of about US$700K/month. Holy canole, they were running on fumes at the end of that quarter. These people needed to raise some cash pronto to have a chance at taking Sierra Mojada into production. Fortunately they did collect about $9.2M from a private placement in February. That's enough to last another year.
I'm going to wait for Silver Bull's PEA to see how much they think full development will cost. I also want to see another 43-101 report with 2P data. Acquisitions in the neighborhood are certainly encouraging because producers need to replace reserves reduced by production. Let's see if the stock moves once they announce a PEA.
Full disclosure: No position in SVBL (or other companies mentioned) at this time.
Tuesday, April 23, 2013
The Haiku of Finance for 04/23/13
Charitable gift
More than just a tax write-off
Big chance to do good
More than just a tax write-off
Big chance to do good
Bluechiip (BCT.AX) Putting MEMS and RFID Together
Bluechiip (BCT.AX) is a tech company in an often-overlooked niche. They are developing a next-generation RFID electronic marking system that can identify samples stored in extreme environments. Their chip-based record solves problems that more primitive technologies cause for biobank records.
The bluechiip team is split along lines typical of a tech startup. The CEO is experienced in establishing commercial relationships and the chief technologist created bluechiip's proprietary tech. The rest of the team knows MEMS and product engineering but they need someone with experience in the biobank market.
RFID chips that can sense temperature have been around for several years and competitors exist. BioTillion's BoxMapper coupled with RURO's FreezerPro ColdTrack is one such example. Research Elemnts' Cryo Element combines barcodes with RFID. One key to success for bluechiip will be to demonstrate that their RFID reader can display a medical sample's record without requiring the sample's removal from its cryostorage container, thus eliminating the chance of thawing. I don't know whether their reader and chip have the same price points as competitors. If they cost more, they need to store and display more data than a barcode to be desirable.
One thing working for bluechiip is that customers who adopt their reader/chip solution will have switching costs of returning to less effective record methods or converting to a competitor's RFID solution. This can give them a competitive advantage if they sign up a major biobank as an early adopter. Committing to record-keeping infrastructure is just like most major IT decisions. One you have a company-wide solution, it's difficult (but not impossible) to change it.
I noticed something interesting in my background research on medical RFID platforms that use MEMS technologies. A lot of them operate from Australia, just like bluechiip. Bluechiip may be on to something. I'm not ready to invest in them because I need to see them capture some market share to prove that their concept works for clients. Let's see where they are at the end of 2013.
Full disclosure: No position in BCT.AX (or other companies mentioned) at this time.
The bluechiip team is split along lines typical of a tech startup. The CEO is experienced in establishing commercial relationships and the chief technologist created bluechiip's proprietary tech. The rest of the team knows MEMS and product engineering but they need someone with experience in the biobank market.
RFID chips that can sense temperature have been around for several years and competitors exist. BioTillion's BoxMapper coupled with RURO's FreezerPro ColdTrack is one such example. Research Elemnts' Cryo Element combines barcodes with RFID. One key to success for bluechiip will be to demonstrate that their RFID reader can display a medical sample's record without requiring the sample's removal from its cryostorage container, thus eliminating the chance of thawing. I don't know whether their reader and chip have the same price points as competitors. If they cost more, they need to store and display more data than a barcode to be desirable.
One thing working for bluechiip is that customers who adopt their reader/chip solution will have switching costs of returning to less effective record methods or converting to a competitor's RFID solution. This can give them a competitive advantage if they sign up a major biobank as an early adopter. Committing to record-keeping infrastructure is just like most major IT decisions. One you have a company-wide solution, it's difficult (but not impossible) to change it.
I noticed something interesting in my background research on medical RFID platforms that use MEMS technologies. A lot of them operate from Australia, just like bluechiip. Bluechiip may be on to something. I'm not ready to invest in them because I need to see them capture some market share to prove that their concept works for clients. Let's see where they are at the end of 2013.
Full disclosure: No position in BCT.AX (or other companies mentioned) at this time.
Monday, April 22, 2013
The Haiku of Finance for 04/22/13
Wear the latest trend
Pay premium for junk style
Worthless apparel
Pay premium for junk style
Worthless apparel
Lot78 (LOTE) Losing Money on Expensive, Trendy Threads
The pumpers at Trinity Investment Research never let me down when I need grist for my mill. They sent me a cute mailer touting Lot78 (LOTE), some London-based luxury clothing seller. I really couldn't care less about trendy clothing. I wear cheap, boring threads until they fall apart. Hot clothing retailers don't get me excited because the brain-dead consumers who sustain them with credit card purchases will soon be up against a financial brick wall. I have digressed. I must discuss this stock.
Their founder and CEO has a history in high-end clothing design. That's nice but I can't understand why a brand that has successfully placed its lines in high-end retail chains is still losing millions of dollars per year. Their retained earnings deficit gets worse every year and they have never generated any revenue. Their annual report from April 5, 2013 shows that their auditor has going concern doubts and that they must raise additional capital to survive. They admit they're in serious jeopardy of running out of cash.
What's most jarring about this company isn't the financial results, but its image. The models wearing the clothes displayed on the website look bored or irritated, as if they're uncomfortable wearing the clothes. Contrast this with the ads from dominant U.S. retailers like Macy's, where the models are overjoyed to be pictured in their clothes. The Lot78 clothes themselves look drab with odd placements for exterior pockets and zippers. I get the impression that some high-end clothing lines have signature styles that say "look at me, I'm expensive." The message I would get if I saw someone wearing this stuff is more like "look at me, I'm stupid."
I had to convert the item prices listed on Lot78's site from British pounds to US$ to figure out how much a San Franciscan in Union Square's shops would be set back. Today's USD/GBP is $1 / 0.65 pounds. Trans-Atlantic pop musicians and movie stars will always "need" $85 T-shirts and $306 lounge pants but commoners on both sides of the pond are bound to get hit with another financial crisis. Broke urbanites will do without new clothes if every spare penny must pay the rent. I don't understand why trendies spend money on spring and summer clothes that look as drab as a basement closet, and at premium prices. I just don't understand retail at all. That's why I don't own this stock or anything like it.
Full disclosure: No position in LOTE at this time.
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