LiFeMgPO4 Lithium-iron Magnesium Phosphate Cathode Material Developed By Valence (VLNC) Shows A Strong Intellectual Property Position For The Firm; Industry Analyst Sees A Bright Future
January 6, 2011 - The Wall Street Transcript has just published 2011 Best Green Investments: Alternative Energy And Socially Responsible Stocks offering a timely review of the Energy sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Jon Hickman joined MDB Capital Group LLC in 2005 to cover emerging-growth companies in the technology, media and health care sectors. Mr. Hickman began his career in 1980, working with Bank of America's trust department in San Francisco, where he analyzed private companies. He then spent 16 years managing institutional growth-oriented money at Wells Capital Management and later at Jurika & Voyles. Mr. Hickman has a B.A. in chemistry and an MBA in finance from Brigham Young University.
TWST: Valence is currently ramping up production. Would you talk about some of the factors driving demand for them?
Mr. Hickman: Valence manufactures a battery based on lithium-ion phosphate chemistry. Valence appears to have a very strong intellectual property position in this particular battery chemistry arena, with a proprietary lithium-iron magnesium phosphate, LiFeMgPO4, cathode material. This chemistry provides a battery with a longer life cycle, a faster charging time and an improved safety profile. So the company, like many other battery companies in the lithium-ion battery market, is focusing on two segments, two distinct markets. The first market is transportation - here the company is trying to get their batteries in use in electric vehicles, and they have already made some headway there.
They are the battery supplier for the Segway vehicle, and also Valence batteries are in use in buses and trucks in several countries. Currently the company has yet to score a breakout contract with a major electric vehicle manufacturer, but they are working hard to do that. They have recently made interesting inroads in the marine space, putting their batteries on a line of yachts. But again, that's not - that still isn't a breakout order from the likes of Nissan (7201) or a contract to power the Chevy Volt. But the company does have a couple of positives going forward. One is they have production facilities up and running here in the United States, so they do have capacity to produce batteries. Secondly, the batteries have been in use for quite sometime in small quantities with some vehicles, so they have reference accounts that they can point to that are already using their batteries successfully.
TWST: How does Ener1 compare to its competitors?
Mr. Hickman: I am essentially not publishing on this company any longer, but competitive-wise, they also have a lithium battery under production. They have capacity that they are building out here in the United States. They also have capacity in Korea. They bought a Korean battery manufacturer early last year, and that Korean manufacturer is a large producer of small form factor lithium-ion batteries for cell phones and cameras, and consumer products like that. Ener1 (HEV) is changing over some of their production to larger formats for autos. Ener1 is interesting in that they do have contracts in hand for an electric vehicle. They are shipping batteries for the Think vehicle - Think is an EV company of Norway - and are working on some other large contracts. Ener1 also has a large shareholder who continues to fund the company's capital needs. It's actually a large fund out of Russia. I mentioned that Valence has capacity here in the United States. Ener1 is also building an impressive level of capacity here in the United States.
TWST: What is your number one stock pick and why?
Mr. Hickman: The one that's obviously performing with revenues, generating rapid revenue growth and accelerating bottom-line earnings is Satcon. The stock has actually moved up quite nicely along with the good news. I think it's trading around the $4 level right now. It's down a little bit today because of the capital raise announcement, but kind of the low $4. I would argue that at this level, the stock is still a very solid buy. I wouldn't be surprised if somebody came along and they wanted to get into the inverter business and snap them up. Of the others that we've talked about, Altairnano has its partnership now, so they are 51% owned by Canon. So that makes that kind of less attractive. I'm pretty interested in Quantum. With their Fisker contract, the potential for the post office and other initiatives in alternative energy, solar power, there's a possibility that calendar 2011 could be a very, very good year for Quantum. I think that's the one I would keep my eye on.
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