AN OCCUPATION, NOT A WAR
George Lakoff has it right. Click here.
BUT A PROFITABLE ONE
(Thanks to Arianna Huffington for these two links.)
From the ACLU:
Today we lost our effort to open marriage to same-sex couples in New York State. It was a 4-2 decision at the state’s highest court, where four different marriage lawsuits had been consolidated, including ours and Lambda Legal’s.
The majority opinion said that there were at least two reasons the state could rationally exclude us from marriage. First, it adopted a rationale advanced by NYS Attorney General Eliot Spitzer and NYC Mayor Michael Bloomberg. Pointing out that stable relationships between parents are important for children, that straight couples can have kids by “accident,” and that gay couples must plan their children in advance, the court reasoned that straight couples who parent are less stable than gay couples who parent and therefore need the stability of marriage, whereas gay couples do not. So all of the anti-gay stereotypes we’ve been living with for so long have now been turned on their head — suddenly we’re responsible parents in stable relationships with no need for the stability that marriage could bring.
Second, the majority said that the legislature could think that kids will do better with a mom and a dad. Amazingly, this is precisely the argument that the Arkansas Supreme Court rejected last week, recognizing that the social science makes crystal clear that kids do just as well when raised by gay people as when raised by straight folks. Who would have thought that New York was behind Arkansas on this issue?
With the stock at $11.72, we’re well past a double. The latest tender offer is for $9.50, which management recommends taking. I sold the shares in my tax-sheltered account at $10.64 – no one ever went broke taking a profit – but am holding the rest.
FMD . . .
. . . dropped $8.85 a share yesterday, to $46.75, giving back roughly half our profit in a single day.
‘I thought I might hear from you,’ replied my guru when I e-mailed in distress. He has a good chunk of his considerable net worth tied up in this stock, so the price drop got his attention, too. ‘Having no inside information, my take is as follows:’
1. FMD has consistently been a highly volatile stock for the last 12 months, as the market tries to discern the true durability of what might appear to be an overly rich business model. As we’ve discussed, the bears would say this will either 1) invite aggressive competition, or 2) encourage larger clients to take their private Student Loan business elements provided by FMD in house. We’ve been over this debate ad nauseum at this point.
2. One month ago, the stock was at 45 and had subsequently gone up 12-13 points (before today) based on strong fundamental evidence: 1) the company raised their earnings guidance, 2) the company completed two securitizations that delivered fatter margins than anticipated (an indication of pricing power and advantageous contracts) and diminished client concentration, and 3) the company announced several new, long term partnership agreements, GE being the most prominent among them. All in all, a very, very good month for the bulls and strong factual validation of the investment thesis.
3. Today, FBR (a chronic and exaggerated bear that has made several very wrong calls on this stock over the last year) reiterated the bear case with a new bit of relatively arcane and unquantified information: BOA, FMD’s largest partnering relationship, is testing an alternative underwriting and servicing provider, EduCap, a not-for-profit company located in D.C. (information is very sketchy around the elements and degree to which this is proceeding). FBR also mentioned that they believed Chase was also testing keeping some of their new private student loans on their balance sheet, rather than securitizing them with FMD (not sure I got that part right, but it goes something like that).
4. In response to FBR’s report, FMD has gone on record to say that BOA has the right to test with other providers if they so choose, but they expect no change to their current relationship. BOA has gone on the record to say that they maintain a good relationship with FMD and that they do “from time to time” test working with alternative providers.
5. Bear Stearns (a chronic bull, and consistently right, on this stock) apparently countered that (paraphrasing here, second-hand) they don’t believe there is any material business risk in the near term, and that EduCap, while qualified, doesn’t have the scale or experience that FMD does. Also, they traditionally operate in a higher risk space of the private student loan market where FMD may not be interested in playing.
6. There have been at least two other short term “precipitous drops” of 15-20% over the last nine months – most notably in last November and December. These have proven (at least until now) to be extraordinary buying opportunities. The stock has generally recovered in a matter of weeks, if not days. Both of these drops have been provoked by unsubstantiated bear arguments and aggressive short selling.
7. If I were not so heavily invested right now, I would be adding to my position.
The last person to buy this stock yesterday paid $9.50 a share. The last person to buy a share in its Roche Bay iron ore subsidiary (RCHBF) paid $10.60. Since BOREF is divided into 5 million shares and owns 5 million shares of RCHBF, the person who paid $9.50 got – indirectly – one $10.60 RCHBF share . . . and was thus paid $1.10 to take the rest of Borealis.
Not to say one should read too much into this. If the testing of the iron ore formation disappoints, or required Canadian government approvals do not come through, or the price of iron ore collapses, RCHBF could be worthless. This company’s logo should be a constellation of pies. (Get it? In the sky?)
But what pies!
There’s the Chorus Motors subsdiary (CHOMF) that owns the WheelTug subsidiary that made an electric motor the size of a watermelon that – according to Boeing and Air Canada’s chief pilot who was in the cockpit – drove a fully loaded 767 around a desert tarmac like a golf cart.
(I know. I know. But you try doing that trick. So maybe they’ll never be able to exploit this technology. Certainly, one would have hoped for more visible progress in the year since that test succeeded. Or maybe it will one day be worth a small fortune.)
And there are the Cool Chips subsidiary (COLCF) and the Power Chips subsidiary (PWCHF) – in each case, your $9.50 share of BOREF represents a share of these, too.
Last week – not sure which subsidiary this fits into, or whether it will spawn a new one – the company claimed to be patenting a possible breakthrough that just might reduce the cost of solar panels by 90%.
A long-time BOREF holder – and at seven years, we are by no means the longest – rolls his eyes. (That was me rolling my eyes Wednesday.) But could they actually have something viable here? Presumably not . . . but if they can move a plane . . .
And now, for the nanotechs in the crowd, we get this, regarding yet another subsidiary you are paid $1.10 a share to take (if RCHBF is actually worth $10.60 and you can buy BOREF for $9.50):
Avto Metals plc
Chairman’s Letter to Members
14 June 2006
Materials are important.
While we take them for granted today, unique materials have defined the age in which they were prevalent. We know of the stone age, the bronze age, the iron age. The 19th century was driven by steel, a material which made it possible for railroads and engines and a host of other transformative technologies to rise to the fore.
Materials are now more important than ever. We use custom-engineered materials in everything from roofing materials to prosthetics, from probes in deep space to those under the sea. But arguably the most critical new material technologies today are found within electronics. As others have said, we now live in the electronics age, and so much of what we are technologically capable of depends on the capabilities and limitations of the electronic materials at our disposal. Massive research budgets are devoted to finding ways to maximize what can be achieved with the materials we have, and indeed, to try to find new materials.
One key problem is that there are a finite number of possibilities. The periodic table gives us all of the elements there are, and for well over a hundred years technology has sustained itself by learning about the elements, and novel ways in which they can be combined with other elements to form alloys, electronic junctions, or any number of other things.
The search continues. There are lots of things we would like materials to do that we cannot do today. For example, there is always interest in finding a harder or stronger or lighter or cheaper material to replace the ones we now have. Within electronics, there is a hunt for better electronic materials to replace silicon. We’d like electrons to be able to move with less resistance, making electronics run both cooler and with less waste. There are so very many things that we can imagine but cannot yet build because we lack the material. Within the technical world, there is a name for the material which would be perfect, if only it existed: unobtanium.
Today’s materials explorers have a new landscape to explore: the nanoscale. It turns out that while a bulk material has a mechanical strength of X, or an electrical conductivity of Y, those very same atoms in clusters of just a few atoms, or spread very thinly across another surface, can demonstrate very different properties. Gold is an excellent conductor. But nanoclusters of gold can be insulators. Soot is a nuisance which we try to eliminate, but if you look closely, the nanotubes and nanorods and graphene contained within soot have astonishing material properties. The mind boggles, for example, at the potential of nanotube fibers forming a single foot-thick cable which stretches from the earth’s surface to an anchor in orbit.
While nanotechnology is undeniably attractive, we think that most of the interest around nanoelectronics is hype. Nanomaterials today are not found in electronics, but in products which use nanopowders, such as golf clubs or sunscreen. Nanoelectronics are much harder to build, because they are quite complex and extremely difficult to fabricate. The more complicated a nanomaterial or structure is, the more unlikely it is that it will ever get out of a laboratory.
This problem with nanotechnology is completely sidestepped with [Borealis subsidiary] Avto Metals, a nanotechnology which is both extremely useful and easy to manufacture.
An Avto Metal is a thin film of material which has a simple corrugated pattern on it. The pattern seems to alter the electronic energy levels within the material, and as a result, electrons emit more easily than they otherwise would. This is known as a reduced work function, and it is quite handy. It means that a material canemit electrons at a lower temperature and/or with a lower applied voltage.
This may seem like arcane trivia, but the fact is we already know where Avto Metals should come in handy because we know where today’s cathodes are used. The list includes:
- Technology ( Application )
- Cathode Ray Tubes ( TVs and monitors )
- Cold cathode displays ( Flat-panel displays )
- Vacuum fluorescent ( Displays on laptops, others )
- Power Tubes ( Triodes, rectifiers, pentodes, tetrodes, etc. )
- Field Effect Transistor ( For FETs and MOSFETS Power electronics )
- Klystron: convert electron beam energy into radio frequency waves, often with significant amplification ( Radar, satellite and wideband high-power communication [very common in television broadcasting and EHF satellite terminals], and high-energy physics [particle accelerators and experimental reactors]. )
- Travelling Wave Tubes ( Space communications )
- X-Ray generation ( Imaging, including for industrial analysis )
- Microscopy: SEM, TEM, Surface Analysis and Metrology ( Scientific and industrial instruments )
- Lithography ( Semiconductor manufacture )
- Electron Beam welders ( Advanced fabrication )
- Free Electron Lasers ( Experimental laser )
- Thyratron ( Pulse drivers for pulsed radar equipment, high-energy gas lasers, radiotherapy devices )
- Krytron [not to be confused with Klystron] ( Igniting exploding-bridgewire detonators and slapper detonators in nuclear weapons, either directly or by triggering the higher-power spark gap switches. They are also used to trigger large flashlamps in photocopiers, lasers and scientific apparatus, as well as firing ignitors for industrial explosives. )
- Magnetrons: Radio waves at high power. ( Used in low power applications like microwave ovens, as well as specialized high power applications such as military radars. )
For each of these markets, an improved cathode would be welcome. And this is just a short list of markets which already exist — history has shown us that when a new material is discovered it is put to work in a host of markets and applications which the initial inventors had not considered.
After Dr. Avto Tavkhelidze first conceived of Avto Metals, it was a back burner project within Borealis for a number of years. The biggest reason for this was that we were not entirely sure how to make them; the small structures required have dimensions which were not easily achieved using conventional techniques in the late 1990s. We did some work which showed enough results to keep us interested, and looking for potential partners who had the technology and expertise to make the structures Avto Metals requires. And we started finding them in 2004; we are working with some select suppliers and consultants within the nanotechnology sphere. We have also teamed with leading physicists at three universities to consult with us on our Avto Metals, Power, and Cool Chips (AMPCC) research efforts.
After considerable work, our team was sufficiently confident of the early results to submit a paper for presentation at the 2005 International Vacuum Nanoelectronics Conference (IVNC) at Oxford University last summer (this paper can be found on our web page). The results showed that the idea of wave interference for electrons had experimental support, and we could indeed modify the work function of a metal (in this case, gold). These results proved the concept, and we have been working since then on optimizing the effect in order to have a commercially valuable product.
This year we plan to complete a sizable number of Avto Metal samples and hopefully to commence sales of cathodes to some of the above markets. At the same time we continue to explore other applications and markets as we learn more about this new materials class and seek to maximize the return to our shareholders.
We thank you for your continued support!
Avto Metals plc
Rodney T. Cox
Chairman and Chief Executive Officer
Isaiah W. Cox
President and Chief Operating Officer
☞ What to make of all this? I haven’t a nano-clue. But if someone wants to give it to me for free and throw in $1.10 a share to boot, I’ll take it. (Though only, of course, with money I can truly afford to lose.)
Quote of the Day
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