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John Petersen

 
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  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    I've been notoriously inaccurate when it comes to market timing predictions, so I'll avoid the temptation to support your conclusion.

    The things I see as critical factors that are coming together in real time are:

    1. A precipitous decline in the month-to-month FINRA short percentages that tells me the PIPErs are either out of shares they can sell without restrictions or holding back on remaining inventory in anticipation of major changes.
    2. An upcoming underwritten offering that professional investors will view as Axion's IPO even though the stock has been quoted for a decade.
    3. Inclusion of the existing stockholders in the offering pool which should decrease post-deal flipping because the Axionista's are, by definition, patient long-term holders.
    4. An upcoming market upgrade coupled with a reverse split that will take the float down into the sub-10 million share range, an extremely tight structure.
    5. A total of five application niches that can move from the potential to the proven column at any time and change the outlook from extreme worry that nobody wants the PbC to unbridled optimism that everybody needs the PbC.

    I've been to this rodeo before, but the participants were weaker and the crowds were smaller. No matter what happens, it will be a great learning opportunity.
    Aug 21 09:39 AM | 10 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Bazoooka> I'm typically a three to five year guy, but I knew the process would take longer with Axion because I accepted the project at an earlier stage in the company's development cycle.

    I typically avoid R&D projects because they have so many uncertainties. The two big reasons I made an exception for Axion were the electrochemistry and Bob Averill.

    One of the nice things about chemistry is that its chemistry and a proven phenomenon is proven. There was a lot of solid work done on the basic chemistry before Axion was formed. Since both of my in-laws are PhD chemists and my former client Howard Schmidt is one of the best carbon nanotechnology guys on the planet, I was able to satisfy myself that there were no major risks with the electrochemistry and the asymmetric lead-carbon supercapacitor could do some amazing things if Axion could find a way to manufacture a product economically.

    The biggest reason my clients have failed over the years was that none of them had substantial manufacturing experience and many didn't have a clue. That's where Averill became a critical decision point for me. This was a guy who had started three different companies at the idea stage, taken them through the FDA approval process, created suitable manufacturing facilities and grown them to a point where they were desirable acquisition candidates. While Bob's manufacturing experience was in an unrelated industry, he knew the process of building a manufacturing company from the ground and I was convinced that he wouldn't step back from the PbC technology until all four corners of the manufacturing process nailed down, optimized and properly documented.

    R&D companies are very painful to work with from a financing perspective because the point of greatest optimism comes shortly after formation. As the process drags out and the costs mount, investors get more worried about whether the R&D will be successful and whether the market will want the product. So it's not at all unusual to see a wedge shaped valuation curve until the potential market for a product speaks. When the market for a product finally speaks, the company begins a whole new phase as the hype cycle begins to take effect.

    In my judgment, Axion is currently at the lower left hand corner of the hype cycle graph. The R&D process was successful and some monster big end-users are finishing their pre-implementation analysis of the PbC. As these companies transition from evaluation to implementation, the current pessimism will be overcome by unbridled optimism and the stock will perform beautifully. If you think back, Elon was broke and borrowing money from friends in the months leading to Tesla's IPO. Today he's worth billions on paper. That's the kind of bump you see when pre-IPO gloom is overcome by unbridled optimism.

    Securities lawyers are snobs. While there are many ways for a company to become publicly traded, including a reverse merger like the one Axion did in December 2003, we don't typically think of them as truly PUBLIC until they complete their first underwritten offering. Until we see an underwritten public offering we tend to think of reverse merger companies as private companies that have some freely traceable shares. Most institutional investors are equally snobbish and they tend to stay away from reverse merger companies until the first underwritten deal.

    As transition points go, there is no more important moment in a company's evolution than the effective date of the first underwritten financing.

    I stepped aside as Axion's counsel in 2008 because I thought it's next financing after Quercus would be the underwritten deal we're finally seeing today. Unless something really bad happens over the next few weeks, I think the billion dollar market cap is hit sometime in the next two years.
    Aug 21 06:58 AM | 11 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Underwritten deals are quirky because the underwriters can't make an offer to sell or accept an offer to purchase until the registration statement goes effective. All they can do is collect "indications of interest" from potential investors and set the stage for the offering itself.

    Since there's a big difference between an indication and a check, what the underwriters want to do is collect indications for anywhere from 200% to 400% of the amount offered. That way even if some people have second thoughts there will still be enough demand to absorb the entire offering.

    Because of the way underwritten deals and the indications system work, the underwriter always gets an "over-allotment option" or "green-shoe" that lets them increase the deal size by 15% if demand is strong. While the core deal will close on the effective date, a decision on the over-allotment option is usually delayed for about a week.
    Aug 21 06:16 AM | 5 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Most funds file quarterly holdings reports with the SEC, which is where the data you're looking at comes from. The holdings reports are due 45 days after the end of the quarter, so you shouldn't expect to see changes more frequently than once every 90 days.
    Aug 21 06:07 AM | 4 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Actually, they don't have any trademark protection in the US.
    Aug 20 09:41 PM | 3 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Market price is the most meaningless and transitory metric I can think of. It's a measure of emotion, not value. Despite the market price I'm not the least bit worried about return of capital because I know what the PcB can do and I understand where Axion is in the process.

    I have a very binary investment philosophy. I want a multiple or a total loss. Partial recovery of principal doesn't interest me in the slightest. The reality is that I've never lost money on a client that made it to a public trading market and I don't expect Axion to be an exception. I'm no longer looking for a 50 to 1 multiple but I am confident of a single digit multiple.
    Aug 20 09:39 PM | 8 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    I had a long list of personal goals when I did the reverse merger with Axion and agreed to serve as a director in addition to my work as legal counsel. The two items on the goal list that remain unsatisfied are:

    (1) a listing for the stock on a national securities exchange like the Amex or Nasdaq, and
    (2) growing the company to a point where it could finance its operations with underwritten transactions instead of unregistered deals.

    Both steps are critical milestones in the evolution of a company. In most cases a reverse merger company gets to a market listing before it's good enough to pull off an underwritten public deal, but every once in a while it all comes together at the same time.

    If everything had gone according to my original plan, Axion would have been at this point after the Quercus financing and without a reverse split. Unfortunately things didn't work out the way I thought they would.

    Successful completion of the reverse split, market upgrade and underwritten deal will satisfy all of my original ambitions and leave me a happy camper even if I don't knock down a 50 to 1 return on my money.
    Aug 20 08:23 PM | 10 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    In an ideal world Axion would have gotten to this point in its development with private money and done an IPO after it started selling products in reasonable volumes. Because of the unique circumstances and the early history of the technology, everybody was convinced that a public entity was the only practical way to clean up the mess and bring everything under one roof. I often wonder if anybody would have started down the path if they'd really understood how difficult, time consuming and costly the process would be. The only consolation is at the PbC turned out to be a better battery than I expected.
    Aug 20 07:26 PM | 7 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Since I'm underwhelmed with "Driving the World Forward" I've
    been trying to come up with a two to four word tag line that I can use on the front page of ePower's presentation in Detroit.

    So far the best I've been able to come up with is "Heavy Green," but I'm always open to suggestions that I don't have to pay for.
    Aug 20 06:48 PM | 2 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Batteries are complicated, and frankly a little boring. As near as I can tell the best way to sell a battery is to make it the essential component in something gee-whiz that Joe Lunchbucket understands.

    A battery powered switching locomotive will be slightly impressive because many people know what they do and understand that it takes a lot of work.

    A battery powered hybrid semi tractor, on the other hand, is something that should fire everybody's imagination because the reputation is dirtier than the reality and everybody knows it takes a hell of a lot of power to haul the freight.

    As an investor which would you rather own; a company that makes the batteries for a $100,000 EV that saves 600 gallons of fuel a year or a company that makes the batteries for a $100,000 tractor that saves 6,000 gallons of fuel a year.

    Stop-start for automotive and heavy trucking may prove to be a better business. When it comes to a market story, nothing even comes close to ePower.
    Aug 20 06:17 PM | 12 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    We do collect temperature data for Axion, but thermal management hasn't been an issue for us. Our boxes are vented for natural air circulation but we haven't seen any need for more aggressive systems. After all, even passive ventilation generates a lot of air flow when the battery box is moving at 65 mph.

    We may encounter thermal management challenges when customers start running tractors 8 to 10 hours a day, but an active system should be a relatively quick and inexpensive fix if needed.
    Aug 20 05:58 PM | 7 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Aidan O'Leary's phone number is 212-895-3609. You can be confident that he won't object if you call him before his team calls you.
    Aug 20 05:46 PM | 4 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    Let's just say I'm happy enough that I'll be formally presenting the data at the biggest electric & hybrid vehicle technology conference in North America.
    Aug 20 04:55 PM | 20 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    We ran the "Tour de Loop 275" last week with 55,000 pounds. – http://bit.ly/1nb5OzE–Indiana–Kentucky)

    We ran two full laps – 162.5 miles of painful ~500 ft grades as the loop dipped into and climbed out of the Ohio River Valley twice on each lap.

    Our peak amperage was in the 225 range up and down. Peak currents were ~120 kW discharge and ~170 kW regen, which isn't shabby for a 20 kWh battery pack.

    I don't plan to share the graphs till after the Battery Show.
    Aug 20 04:12 PM | 16 Likes Like |Link to Comment
  • Axion Power Concentrator 359 August 17 '14: 10-Q For Q2 2014; S-1 For $15MM Share Issuance; Changed Loan, IP-Secured MDA; David DiGiacinto Appointed Chairman And CEO [View instapost]
    The nice thing about an underwritten public deal is that there is no limit on the number of investors and there usually isn't a required minimum investment. The underwriters may balk if a prospective investor wants to buy fewer than 500 or 1000 shares, but they don't expect everybody to write five or six digit checks. Unless you already belong to an investment club, you don't want to form a vehicle to participate in a public offering.
    Aug 20 02:41 PM | 10 Likes Like |Link to Comment
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