Friday, February 7, 2014

This blog is moving to a new home at LeviathanCap.com (under News & Views)

On March 1, 2014 we will be moving to our new home at LeviathanCap.com...  You can keep up with us and our latest posts at leviat.hn/1kmRg2w.  We look forward to providing you with great insight and increased capabilities, once we're up and running.  Thanks for your continued interest and support.

In the meantime, you can stay connected with us on Twitter @LeviathanCap.

Tuesday, December 10, 2013

Are You Ready? Fuel Cells May Be Ready to Revolutionize the Energy Industry...

They're back... Since the late nineties, the companies that comprise this industry have struggled to find a place in the energy world and turn a profit.  From the late nineties through the mid-part of this decade, fuel cells have been like a not so grand experiment.  In recent months, it's become clear that they have started to carve out niche markets and focus on areas that are ripe for disruption.  Two of the oldest companies in this space, Plug Power ($PLUG) and FuelCell Energy ($FCEL), have both forecasted profitability in the next 12 months.

A quick look at the largest customers of Plug Power reflects the buy-in of corporate America with concern to the sustainability and ability of fuel cells to increase productivity:

http://www.plugpower.com/Customers/WhosUsingGenDrive.aspx

The list of Plug's customers includes the likes of Walmart, CVS, FedEx, BMW, Mercedes, Sysco and Kroger.  These are some of the world's largest companies and they are currently using Plug's GenDrive solution at a limited number of sites.  GenDrive is essentially a fuel cell that has been retrofitted to replace the lead acid batteries that are currently used to power forklifts.  This application increases usable warehouse space by eliminating the battery room that usually consumes about 5-10% of floor space and productivity because the forklifts in each warehouse can continue to operate rather than being sidelined for a period of time to recharge.  Plug's CEO Andy Marsh has suggested that they will announce expanded deals to cover more warehouse sites for at least one and maybe two of these customers by the end of the 4th quarter.  He has also said that these deals will include recurring revenue, in the form of maintenance agreements with respect to the units that they deploy.  He expects $PLUG to no longer be solely dependent on selling units, but that recurring revenue from maintenance agreements will become a part of their business model going forward.

Walmart is a key customer and as the largest employer in the US represents a major opportunity for Plug; their buy-in also says much about Plug's solutions with concern to commercial enterprises in the future.  As Michael Bigger quotes in his blog entry:

"Walmart ($WMT) is about data and return on investment.  It measures everything."

                                     - Andy Marsh, CEO | Plug Power

Source: http://leviat.hn/1jEItqW

FuelCell Energy has also carved out its' own niche.  They are more focused on stationary power generation and according to their press release:

"We installed our first commercial fuel cell plant in 2003 and announced one billion kilowatt hours of ultra-clean power production in January 2011, which is a time span of eight years," continued Mr. Bottone. "We generated the second billion kilowatt hours in just under two years and the next billion is expected to be generated in less than one year as a 15 megawatt fuel cell park is nearing completion in Bridgeport, Connecticut and a 59 megawatt fuel cell park, the world's largest, is nearing completion in South Korea."

Source:  http://leviat.hn/1dnLPd4

It appears that fuel cells are about to come back in a serious way; not as an energy solution, but as part of the energy solution that will help power our energy future.  These investments represent significant risks and if they are realized, may take many years to do so.

An investment in any company can be more likely to end in loss rather than profit.  This entry is intended to note a trend in the energy industry and NOT intended to be a recommendation for purchase.  Any investment in any of the stocks mentioned is made at your own discretion and more importantly, your own risk.  Investments should only be made with the assistance of a financial professional and following your own due diligence.  We are NOT an investment advisor and DO NOT provide investment advice.

Wednesday, October 9, 2013

The Debt Ceiling & the Constitution


Sean Wilentz, a professor of history at Princeton, was on Bloomberg this AM; he makes several important points, as follow-up to his Op-Ed in the NY Times….

1.     The President can’t invoke the 14th Amendment to authorize payment of our debts until we default; to do so before default, would be unconstitutional.

2.     According to Section 4, it is unconstitutional to question the debts of the US, authorized by law, and whether they will be paid. This essentially refers to our existing debt which has already been authorized by congress.

3.     This part of the constitution was written specifically to address such a threat, like the one being mounted by the tea party, and was previously used to ensure that the US government would be able to pay all authorized debts incurred during the battle against the Confederacy.

14TH AMENDMENT: SECTION 4

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.  But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.


An excerpt from the Op-Ed by Mr. Wilentz:

“Congress passed the 14th Amendment and sent it to the states for ratification in June 1866. Its section on the public debt began as an effort to ensure that the government would not be liable for debts accrued by the defeated Confederacy, but also to ensure that its own debt would be honored.

That was important because conservative Northern Democrats, many of whom had sympathized with the Confederacy, were in a position to obstruct or deny repayment on the full value of the public debt by paying creditors in depreciated paper money, or “greenbacks.” This effective repudiation of obligations already accrued — to, among others, hundreds of thousands of Union pensioners and widows, as well as investors — would destroy confidence in the government and endanger the economy.”

Sunday, September 1, 2013

How do you like them apples?!

One of the more unfortunate perceptions in the investment community that's often perpetuated by the media is that Apple is being out-innovated; more to the point, many believe that the company no longer innovates at all.  Here's the reality... Innovation, as often suggested by those with a very short attention span, is NOT making phones in different sizes or colors.  Henry Ford didn't invent the automobile, but he developed the assembly line and transformed an industry.  That is why he's considered one of our greatest innovators.  In contrast, whoever decided that consumers would buy automobiles in different colors and sizes isn't considered to be an innovator and for that matter, is barely remembered.

Samsung has taken Apple's lead and been more willing to adapt it's copy of the iPhone for the masses to move product.  They are playing a volume game, but it will NOT and CANNOT win the race in the long run.  Samsung builds a product that is dependent on the charity of another corporation, Google.  Their open-source Operating System (OS) is the heart of the Samsung phone and tablet.  Should Google decide not to continue its' free support of the Android OS, Samsung will be in trouble... Have you ever taken a look at or used the OS for Samsung's televisions or DVD players? It's terrible. It isn't functional, attractive and barely useful.  In contrast Apple products are not only attractive hardware, but the software that powers it's hardware is very attractive & highly functional.  Whether you like Apple products or not, it's clear that they are easy to use and the ecosystem that accompanies these products is very sticky.  Samsung doesn't have the same kind of sticky ecosystem and as a result, it's not nearly as profitable per unit sold.

Apple has created, at least, four new markets in the last 6 years through innovation: iPod & iTunes (digital music market), iPhone (SmartPhone market), App Store (app market), iPad (tablet market).  Keep in mind that we're not suggesting that Apple invented the aforementioned.... Rather, like Ford, we're saying that they innovated & made these devices infinitely more accessible & attractive to the masses thereby creating markets that previously hadn't existed.  Clearly, Sony created digital music players before Apple, but they were unable to create a market because they couldn't put together a package or ecosystem that resonated with consumers.  Apple cracked the code & did it three more times in a relatively short period.  Innovation isn't easy.... It takes time; many companies will not transform their industries three or even four times in their existence.  We'll see whether Apple can continue to innovate, but it won't be because Samsung can make a copy in different colors, shapes and sizes.

It will be because Apple doesn't come up with another market to transform.  The timeline on this is more like 1 - 3 years; it's not yesterday or tomorrow, as some have suggested.  Innovation takes time and our immediate gratification, Twitter culture lacks patience... We imagine that the innovations in the previous paragraph were in the works for several years before Apple shared them with us, as consumers; the same is probably true for their next set of innovations.  Curious about what those innovations might be? Take a look at some of the items on what seems like a laundry list of patents filed and obtained by the company, on a weekly basis....

Welcome

Welcome to our blog; this blog will be used to provide additional thoughts on the items posted to our Twitter feed.  Periodically, we'll also use it to address some of the misnomers that are perpetuated by the main stream media with regards to the financial system and the businesses that comprise it... Please stay tuned.