Seeking Alpha

Dana Blankenhorn's  Instablog

Dana Blankenhorn
  • on Quick Picks & Lists
  • on Long Ideas
  • on Technology
Send Message
Dana Blankenhorn http://www.danablankenhorn.com has been a business journalist since 1978, and a futurist all his life.He warned about the coming Houston oil collapse in 1979. He began making a living on the Internet in 1985. He launched the first e-commerce daily for CMP in 1994, warned of the... More
My company:
Dana Blankenhorn
My blog:
Dana Blankenhorn and the War Against Oil
My book:
Moore's Lore: Better and Better, Faster and Faster
View Dana Blankenhorn's Instablogs on:
  • YELP And Its Claimed Push Into Delivery

    YELP (NYSE:YELP) began as a social site for chow hounds.

    It's had a controversial run at that. The system can be gamed. Often, it is. When it is, people stop using it. Usage peaked in January and is not rising

    Remember. This is a company that's never reported a profit, since it went public last year. Quarterly revenue is up 75% in that time, but expenses are also up. Cash balances have been declining steadily. Cash flow is barely breakeven. And none of the analysts following the company expect that to change in the current quarter or for the fiscal year.

    The only way this company can survive to profitability is to toss new ideas into the air and hope one sticks. So they're now calling the company and planning to do food delivery. Actually, two partners will do food delivery in limited areas.

    What the company is promising, through its blog , is that spas, yoga studios, salons and dentists - all sorts of professionals - will start booking appointments through its service. Why? Isn't this OpenTable (NASDAQ:OPEN) for other niches? And how is it that Yelp missed its home niche but is somehow going to out-do a company that knows how to do reservations in other niches?

    That's not to say OpenTable is great shakes, either. But it is profitable, and revenues are rising, albeit with declining margins over time. Still, I'd be a lot more willing to bet that OpenTable can execute a program of reservations for other purposes - since that's its business - than that a failing recommendation engine can do it.

    I hold no personal animus in writing this. I don't own YELP stock. I don't own OPEN stock. It's just that I've seen companies manage themselves through press releases many times in my 30 years as a tech reporter, and the story almost always ends in tears.

    That's the way to bet this time, too.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Jul 10 2:49 PM | Link | Comment!
  • Want Some American Vanadium?

    Usually I avoid penny stocks. If an investment is sound, what's it doing priced below $1/share?

    There are lots of bad reasons for this. A company could be a classic "pump and dump," a scam run by someone who will publicize a "discovery," get the price up, then dump their own insider shares for a fast profit. Penny stocks live in a sort of investment purgatory, many of them based in Canada, with investment advisors who are sketchy at best.

    With all those caveats, how about some American Vanadium? Here is its Google Finance page. It trades on what is called the Canadian Venture Exchange.

    The stock presently trades near 70 cents/share. That price looks solid, given that $2.5 million has just been placed in the company, with investors holding shares at that price and warrants offering additional shares at CD$1 each.

    American Vanadium has spent most of its corporate life blowing through cash, as its December 2012 and March 2013 statements show. Most of the managers are old mining hands, with the exception of President Bill Radvak, although Radvak also claims a mining degree.

    Radvak's bio on the company Web site says he raised $50 million for Response Biomedical, a Toronto stock (TSE: RBM) which last traded at C$2.30/share. Response makes diagnostics tests for clinical and environmental applications. The company is presently worth $15.4 million and seems to average $3 million in revenue each year.

    Radvak has been busy talking up American Vanadium to anyone who would listen. Here he is with a contributor to TheStreet, here he is blogging at The HuffingtonPost, and here he is making an InvestmentPitch printed at Reuters' site.

    American Vanadium sells what it calls a "vanadium redox" battery, dubbed the CellCube, made by a German outfit called Gildemeister, which can scale its storage and power levels independently, an important advantage in this market. More important for investors, American Vanadium has a mining operation in Nevada, the Gibellini Prospect, which leaches the metal out of of ore and could become the world's low-cost producer, although it presently has just 5% of the world's output.

    There are other vanadium redox makers other than Gildemeister, like Prudent Energy, which was also profiled by the IEEE. If the capabilities of these batteries are proven, it could dramatically hike the demand for vanadium, and thus the value of American Vanadium's mine.

    Now here is the thing. I've studied renewable energy extensively over the last few years. They're right. Vanadium does have unique properties. Grid storage is an immense opportunity, with a ready business model. There is huge untapped demand, and maybe vanadium can tap it.

    This is a sweet spot in the smart grid market. For every Gigawatt of energy throughput, the Department of Energy figures it really needs 200 Megawatts of storage, both to handle renewable energy inputs and to deliver cleaner, more reliable power to computers. The DoE estimates that outages cost customers $79 billion/year, in a $250 billion market, and the agency has been tweaking its rules, most recently in the form of FERC 890, to make certain storage has a business model. The market potential in 2014 has been estimated at $5 billion in 2014.

    So you have a company worth $22 million, with an inside track at an opportunity that will be worth $5 billion next year, and should grow quickly from there.

    If it can tap this market in a meaningful way American Vanadium skyrockets in value. The company has hired Scarsdale Equities as its investment advisor, a sort of Broadway Danny Rose among investment bankers with a half-dozen other clients, all of them penny stocks. But I could find no obvious ties to crooks or fraudsters or criminal records of financial crimes when looking at this company, just a guy who thinks he can make a market in a metal, with assets in place to take advantage of it, and a serious shot at doing just that.

    Want to take a flyer?

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: long-ideas
    Jun 28 12:04 PM | Link | Comment!
  • The Phony Fiscal Cliff

    For the last few weeks CNBC has become "Comedy Central," with all guests expected to harrumph and act troubled about the so-called "fiscal cliff."

    They've been talking the market down when there is no way for the market to go but up. We still have a natural gas glut, we're on track to lead the world in oil production a few years from now, and costs for both solar and biofuels continue to decline. With inflation in check and housing starting to pick up, with car sales rising and Christmas looking like a winner, and new technologies abounding everywhere, why not buy?

    Buy American stocks. Buy the QQQ, buy the DIS, buy the SPY. Buy.

    As I've written before, the "fiscal cliff" is a scam. It's designed by the ultra-wealthy to pass the costs of the last decade's wars and tax cuts on the poor.

    Look at who's represented on the so-called "Fix the Debt" group. Most are affiliated with Peter G. Peterson, a very rich man and a long-time opponent of the social safety net. They got theirs, they got a lot of it from the government in the form of defense contracts, but even though you paid for yours, you're not going to get it, because they're going to use the debt to take it away from you.

    If debt were really the issue in the "fiscal cliff" these guys would be in barrels lining up to go over it. Sequestration is an answer to the debt, a collection of tax increases and spending cuts designed last year to do what Congress had found itself manifestly unable to do, cut our debt.

    So what are Peterson and his friends wringing their hands about? They don't like tax hikes - who does? They don't like their own interests in government spending to be put at risk - who does? They don't like the priorities here - we just had an election about those priorities and their side lost.

    Rise above what? If we're rising above anything, tax increases have to be part of the mix. Why is "Fix the Debt" fighting so hard to rescind these tax increases? And why is the President even concerned?

    It's because, on balance, there's more deficit reduction in the package than the economy can take right now. It's the right medicine, there's just way too much of it. Growth, in the near run, will take a hit if we go over the cliff. Which increases the debt rather than decreases it. That's what the United Kingdom is experiencing.

    But that's no reason to sell stocks. It's an opportunity to get a better deal, either now or next month. One with a little less austerity. Which is what Wall Street will be clamoring for if January 1 comes with no deal. Bring on the Obama tax cuts, they'll say. Bring on the stimulus.

    What's really happening is that the supply-siders and Euro-austerity bugs who got us into this mess are trying to win through negotiation what they lost in the election. And guess what - Democrats are on to the game. That's why nothing is happening. Nothing has to happen.

    It's hysterical watching John Boehner prance about, claiming he's going to prevent taxes from going up January 1. Don't you get it - taxes are going up on everyone unless you do something. Spending is going down unless you do something. The fiscal cliff is what you wanted, what you voted for. This is all buyer's remorse.

    Eric Parnell is shocked, shocked, that the total national debt has risen $5 trillion in the last five years. Why did that happen? Did President Obama walk into office with a healthy economy? Did he walk in with America at peace? With a cooperative political partner on the other side?

    No. He walked into office with the economy collapsing, falling at a 9% annual rate, not the 4% rate he was given by the outgoing Administration. He also walked into a political environment where Republicans were devoted to only two goals - keeping the tax cuts and wars that were causing the deficit, and doing all they could to prevent a recovery under a Democratic President.

    So we had the Recovery Act, which did in fact pile almost $1 trillion onto the debt. But the fiscal impact of that act has disappeared. What's left, in terms of driving the debt, are mainly the tax cuts and the war. What I wanna know from Peter G. Peterson, Rick Santelli, all the folks at CNBC, from Simpson and Bowles and all their friends at Fix the Debt, is how they plan to pay for the damned war they put on our credit card a decade ago.

    Throw grandma from the train? Tell the poor to pound sand? They really think that's going to repay the $10 trillion (with interest) these two wars have cost the American people? Really? Really.

    There is an economic reality to all this. Too much austerity, too fast, and we go back into recession, which puts off any effort to pay down the debt by any means we can devise, other than literally eating grandma (nor raw, cooked) and playing "Hunger Games" with those newly graduated from college.

    But we don't have to deal with that this month. We can have Obama tax cuts, and a new round of stimulus, next year. That's what is probably going to happen, by the way, although it's likely the tax cuts on 98% of us continue, at least for a while.

    But how does that fix the debt? It doesn't.

    Fact is we put two wars on the credit card, and have to pay for them. My idea is to tax carbon, to tax fossil fuels. Get rid of all existing programs for renewable energy, and make the link to paying for the wars explicit, make it patriotic. It will take 10 years, but that's how long the wars lasted. We can do this. Ending the tax cuts, now or a little later, restores another piece of the balance. Anything else is along the margins.

    When anyone asks me about the debt I have one question. "What's your plan for paying for the wars we put on the credit card and left there?" Whatever you felt about the last decade, whether you supported or opposed the policies of that decade, we're all responsible for the result.

    What we need to rise above is our ignoring of that reality.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: economy
    Dec 05 10:34 AM | Link | 8 Comments
Full index of posts »
Latest Followers

StockTalks

  • Opportunity knocks when markets panic for no good reason.
    Apr 28, 2015
  • Ever notice how traffic here dives on down days? Fortunately with this blizzard we know no one is on a ledge. Enjoy.
    Jan 27, 2015
  • Rig counts indicate activity drying up in Eagle Ford, Bakken. The Premian, not so much. http://bit.ly/1FBLekS
    Jan 23, 2015
More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.