Please read this detailed article by Seeking Alpha author Point of Return, written about a small-cap lithium battery materials technology company, Nano One Materials [TSX-V: NNO]. The link and can also be found at the bottom of these opening remarks by me, Peter Epstein.
Small cap stocks face many challenges. Poor execution, bloated overhead, unexpected competitive threats, technology risks and on and on. Yet nothing sparks fear in the hearts of investors quite like the overhang of an impending equity raise. Even if a success-based, growth enhancing, working capital cash injection — investors are frequently not happy.
Nano One Materials Corp. [TSX-V: NNO] is a company with all the routine small cap risks, but one with an increasingly bright future. A company with a strong management team, above and beyond legendary Chairman Paul Matysek. A company that’s technology agnostic when it comes to Li-ion battery cathode materials. A company facing limited competition, in an industry that could support multiple players. A company that on March 7th, announced it would receive a $2.1 million grant.
To raise that amount, Nano One would have had to issue nearly 7 million shares, and perhaps a half warrant for up to 3.5 million more. But no, the Company’s leadership, proven bench-scale technology and credible business plan garnered the strongest endorsement possible…. free money! The influx of cash equates to a 15% increase in market cap, meaning that all else equal, the shares should be at $0.435 (plus 15% from the March 6th close of $0.38). At the March 9th close of $0.35, the stock is trading at about a 25% discount. This discount is entirely unwarranted.
In an analogy I never thought I would have to use, Nano One Materials is emblematic of a, “pick & shovel” business model. In fact, it’s even better. While “picks & shovels” can be in high demand, they are commodity products. Barriers to entry are generally low. By contrast, Nano One is carving out a niche position with high barriers to entry, most notably from its growing portfolio of patents & Intellectual Property (“IP”).
Nano One is developing a battery materials production process that improves the energy storing performance and cost of feedstocks used in Li-ion batteries. The technology produces longer lasting materials, simplifies manufacturing, uses lower cost feedstock, brings production costs down by as much as 50% and uses less energy.
The purpose of these opening paragraphs is to paint a picture of what Nano One represents and what it could become. A game-changer? A paradigm shift? A sea change? It need not be any of these for an investment in the Company to be highly successful. For more details and analysis, I’ve left the heavy lifting to Seeking Alpha author, Point of Return.
Without further ado, please link to this description of the Nano One investment proposition.
Disclosure: Nano One Materials is a highly speculative, small-cap stock, not suitable for all investors. Readers are encouraged to consult with their investment advisors before buying or selling speculative stocks. At the time this article was posted, Nano One was a sponsor of http://EpsteinResearch.com., and the author owned shares in the Company. Please visit http://EpsteinResearch.com to sign up for free email updates of my work. Thank you.