Lightbridge (LTBR) is a small company, with extra-large potential, currently priced at $28 million. Before Fukushima that price was double. Because the company is small, and is not an overnight sensation, there is a scarcity of comprehensive coverage. I pulled from a variety of sources to put together the facts for myself. I am sharing my notes here to save you the trouble.
Before I discuss Lightbridge, I want to mention that this article advocates a bullish perspective, but is not predicting an immediate price movement. Although two of my articles (1,2) have given specific short-term trading ideas, this is not one of them.
First, some general information. Lightbridge has developed intellectual property that fundamentally improves existing nuclear power generation. The technology is currently in a testing stage. Endgame: licensing the technology to utilities. Although Lightbridge is an international company, it has its headquarters near DC, because the United States remains a world leader in nuclear tech. The majority of "big nuclear" (redundant, all nuclear is big) sits on Lightbridge's advisory board. Also, Lightbridge is a best-in-class consultant for newly nuclear countries. The current stock price for the entire company is around 10x historical Gross Margin, which means "the market" is not heavily optimistic regarding future expectations for the intellectual property.
Some background on the industry. Nuclear energy is a notoriously small community. At the center of it was Admiral Rickover, whose legacy is one of enormous significance, comparable to that of Tony Hawk in skateboarding. Tony Hawk had disciples, like Rob Dyrdek, who became prophets in their own rights. A Rickover disciple, Alvin Radkowsky, was the force behind Lightbridge's intelligence. Here is a good article for such background on Lightbridge.
Let's talk about money. Here is a great video with the CEO of Lightbridge, Seth Grae, giving an interview to Tobin Smith. Seth Grae, who is a lawyer, explains how Lightbridge can scale monstrously by licensing intellectual property.
(From Lightbridge Dec 2011 Investor Presentation)
Lightbridge is not the only promising company rethinking nuclear fuels. One of several companies is TerraPower, which Bill Gates is actively involved in marketing. India and China have recently demonstrated preliminary commercial interest in the TerraPower reactors. Bill Gates gave a talk at TED in 2008 explaining why many see nuclear as a crucial savior of our planet. TerraPower is living validation of the big-money, smart-money push toward improving nuclear fuels. What TerraPower in particular has done is interesting, because it has taken an accelerating technology (computer processing) and used it to model a linear technology (energy tech). By doing this it can hopefully leapfrog a step or two ahead on nuclear's linear stairway. Because TerraPower works in analogous markets and projects a similar timeline, some may consider TerraPower to be bad news for Lightbridge. This article explains why nobody including Bill Gates can eat Lightbridge's lunch. Basically, Lightbridge has a monopoly on intellectual property for modular upgrades that offer nuclear utilities an enhanced return on sunk costs.
2011 was a great year for energy books geared toward the general public. Nobel Prize winner Daniel Botkin gave us his unapologetic opinion of, well, everything. Federation of American Scientists President Charles D. Ferguson, previously with the Council on Foreign Relations, told everyone what he or she needs to know about the timely topic of nuclear power. And of course Daniel Yergin gave everyone something to talk about. The commonality in these books was the discussion of market forces. Even with forces of nature and technology at play, supply and demand always frame the ongoing negotiation of history. If you're like Yergin, and think global warming is more important than peak oil, you see the carbon-light value of nuclear power. If you're like Botkin, you're not only concerned with peak oil; you're also concerned with peak uranium. Ferguson refers to uranium/thorium supply as finite but large. In other words nuclear fuels are precious, but there's enough around to economically form a carbon-light bridge to hold us over the shortage until we create more sustainable sources (Ferguson believes in global warming).
It is said the scale of unexplained human tragedy at Fukushima put nuclear into a state of "hyperreality," where perception and reality are indistinguishable. Of course, this is the same hyperreality we know and love as the Stock Market. We pick stocks because we are contrarians. We think we're smarter than the market. Some say we're gambling, that everything told to us is fiction, but we're pretty sure we know better. If you want to leverage your contrarian conviction, your ability to pick the real from the image, consider an investment, not a trade, in Lightbridge. The stock is cheap because of Fukushima, because it's an unknown company, because hedge fund managers can't flip it in one year, and because Warren Buffett says we shouldn't invest in technologies we don't understand. In other words, all the humbling things that exist but people ignore for other stocks, people really pay attention to for Lightbridge. The value proposition Lightbridge cashes in on is economic--improving on sunk costs, societal--providing power for newly electronic global generations, and humanitarian--reducing danger of nuclear catastrophe. Supply and demand should negotiate a beautiful future for Lightbridge investors.
Disclosure: I am long LTBR.