Acorn Energy: The Best Clean Coal Company No One Has Ever Heard Of

I’ve been following Acorn Energy (ACFN) for over two years, mainly because of its 72% ownership stake in Coalogix Inc. (Coalogix technology explained here.) Coalogix has been growing revenue 120% yr/yr the past four years now with expansion funding coming from Acorn Energy and Enertech Capital. Coalogix won the 2008 Platts Global Energy Award for Commercial Technology of the Year.

As the CEO of Coalogix stated, this award is really the equivalent of the Academy Awards with this award being the most coveted. The company was up against 200 nominees in 22 countries, most of which were multi billion energy producers, refiners, laboratories etc. So what I’m trying to say is this company is legit as it’s not a small two man scientist crew based in some warehouse deep in China. Coalogix is based out of good ole Charlotte, NC on a multi hundred acre plot of land with a 117,000 sq ft facility. Growth drivers for Coalogix stem from current and/or impending regulations to improve air quality in the United States such as: NOx SIP Call, Clean Air Interstate Rule [CAIR], and the Clean Air Mercury Rule [CAMR].

ACFN, Coalogix’s parent, is a private company incubator similar to Safeguard Scientific (SFE), except ACFN really only invests in energy technology. Investors might remember ACFN and Enertech’s most recent successful spin off and IPO of Comverge (COMV), a leader in smart grid technologies, which successfully IPOed around $20/share in 2007. COMV traded as high as $35/share and ACFN owned a significant piece of the IPO. ACFN has successfully sold off most of its position and has used the proceeds to acquire stakes in five other companies including Coalogix .

ACFN currently is trading at a $30M market cap with $14m in cash on its balance sheet although some of this cash is spoken for with the most recent $10 million financing commitment to Coalogix by both ACFN and Enertech. ACFN’s CEO, John Moore, has been quite successful in the past and brings a refreshing vision for the company . I’ve had the pleasure to speak with Mr. Moore on a couple of occasions, and he is quite impressive.

ACFN has some other very interesting investments, but Coalogix continues to be the reason why I’m watching it. I believe the most recent round of funding to Coalogix will be its last as a private company, and I would expect to see Coalogix spun off in the next 12-24 months. I estimate that Coalogix would trade $75-$100m+ market cap right now if it was a public company given the scarcity value of the product, service, and technology it provides. In essence, you are buying a cheap call option on Coalogix by owning ACFN at its current market cap. When ACFN spun off COMV two years ago, COMV IPOed at a $250m valuation and there is no reason why Coalogix won’t be a similar success.

Disclosure: No Position and No Affiliation

Comments

[JGK:]

Have you done a side by side of Coalogix with FTEK?

Jul 14 09:10 AM

[Stocktracke...:]

Great article first off.
Somehow the Coal Companies in Canada seem to get missed in all the articles. I would love to see some news articles on a few of them. Canadian Coal Mines export multi millions of tons of the highest quality Coal every year. If you want to see a Coal stock that has huge upside potential, check out Western Canadian Coal WTN.to. This company just amalgamated with Cambrian Mines CBM.L. Overnight this company went from a potential output of 2,000,000 tons of Coal to 7,000,000. Check it out and you will be amazed at the potential. As I write this they are exporting some of the best Coals in the World for making both steel and power. That is huge! They now have a profitable Gold Mine as well that came in the combining of the two companies. WTN.t also has interests in many other mines as well. This stock could and will go to the moon! A couple of other Canadian Mines worth watching are Grande Cache Coal GCE.to and Nemi Northern Energy & Mining NNE.A CA T

Thanks, and please keep up the excellent work you do on the web,
Dennis D.

Jul 14 01:37 PM

[Ian Cassel:]

JGK: I remember talking to the John Moore and he mentioned FTEK (probably a year ago). Don't quote me on this but I remember Moore saying that he isn't interested in investing in a company that is 1 of 1000 companies going after $10 billion in business, and that he loved Coalogix because it was basically them and FTEK going after $1 billion in business. Something to that regard.

Stocktracker: Thanks for the kudos.

Jul 16 05:02 PM

[Thomas Garrity:]

IC

You like the company and its prospects- when do you put your money side by side with other investors in ACFN?

T

Jul 17 02:52 PM

[Ian Cassel:]

T:

The problem is I think its going to stay undervalued until there is more clarity on Coalogix IPO. Once people have an idea you could play the arbitrage. If you look back at other private company incubators they really almost always trade less then NAV or around it. If Coalogix was a separate public company i'm more then sure that ACFN's 72% would be worth more then ACFN's whole market cap right now.

I've always followed ACFN because I find the CEO very interesting and a true entrepreneur and will look to invest closer to the time of Coalogix IPO. Right now I'm investing in low PE, non chinese based companies growing at a double digit cllip.

Hope that answers your question.

IC

Jul 17 03:13 PM

[Thomas Garrity:]

Good logic on your part to wait for clarity on the Coalogix IPO.
Holding company's are just what the label reads: they suppress (hold down) realizing the value of any particular sum of the parts until such time they are parceled and packaged for sale. The next best determination of share worth must then be determined on a fundamental basis vs intrinsical; at operational break-even or subsequent positive earnings. If Moore conveys his intentions to investors regarding the propensity (likelihood) for a spin-off of the goods (Coalogix) then waiting for the goose & eggs aka (BE/EPS) to arrive will not be the most important metrics for shareholders to keep a watchful eye on. Instead the analysis of the all important event being (a spin-off is inevitable) will have already occurred.

Jul 19 02:15 PM

[Ian Cassel:]

I agree. I really like John Moore as he has made money in many different ventures over the years. I will continue to follow it as I have been. The stock is up from 2.40 to 3.30 now since I wrote it up but so is everything due to the market run up. You are basically buying a call option on Coal logix. I also like their other subsidiary Coreworx. Could be nice back to back IPO's over the next 2-4 years.

IC

Jul 26 03:02 PM

[Ian Cassel:]

Wow great news out today..very impressive additions to the board of Coalogix.

CoaLogix, Inc., announced today that Holly Koeppel, CFO of American Electric Power Company, Inc. (NYSE: AEP - News) and John Eaves, President and COO of Arch Coal, Inc. (NYSE: ACI - News), have been elected to the company's Board of Directors.

finance.yahoo.com/news...

Jul 28 12:08 PM

[r2k4000:]

From what I am told, the shareholders of Acorn gained very little in the ipo offering of COMV. Is it true that they were not awarded any shares in COMV as part of the deal? If so, what makes you think the coalogix situation would be any different?

Jul 30 02:48 PM