Rising Cocoa Bean Prices Find An Unlikely Hero In Algae [View article]
Innov8r,
Sorry, I don't have the energy to go into detail about what you wrote. But to keep things short:
1) They're evolving, so do you mean 2 years ago, today, or 2 years from now? If you actually ask for today, you really don't seem to care about knowing what will be reflective of their normalized operations. The company's also provided a nice graphic of how these costs have come down in the S-1 you dismissed along with the $3.44/gallon cost region they believe they can produce at in a fit-for-purpose commercial facility based on 2011 predictions when sugar was priced higher. 2) They have product revenues & product COGS - but they don't distinguish whats included. You need to be more specific as the company covers a wide spectrum of product. 3) Not all the oil has not been part of R&D projects, some were for commercial purposes. Also, no they didn't, nor would that be representative of what's to be expected. 4) The project cost $26/gallon, not the fuel itself - it included research revenues. You might also want to consider this: http://bit.ly/WESxCu 5) Somewhere between 0.3 to 0.4 is the magic # you need. You can do the math. 6) I'm not aware of too many other sugar-to-oil platforms. There are other sugar-to-specific chemical compound platforms however. You just need to look at the conversion efficiencies to do the math on those - although that probably doesn't help much unless you incorporate the worth of those compounds compared to oils. 7) Yes, they can. You also make an errant assumption that they will only have fixed prices. Read up on Dow/Solazyme 8) Some of it can be found in the patents. 9) Some of it is, yes.
I just wanted to add that your barrage of questions was a little over the top on the skepticism. If you want to dismiss the hypotheticals outright, you sure don't leave a lot of room for discussion, or for that matter, a different point of view away from your belief that the company can't succeed.
If you are only satisfied with current profitability, I would suggest you stay away from this company until it proves to become profitable on the income statement. Also, I don't want this to be read the wrong way, as I'm honestly saying all of this with the best of intentions out of respect to your inquiry. Addressing these issues are quite time consuming however, and much of this information can be found yourself with some great effort.
Rising Cocoa Bean Prices Find An Unlikely Hero In Algae [View article]
@ Burt Rothberg:
I believe anytime an industry has its major input cost rise over 300% within a decade as seen in the chart above, there's reason to be concerned going forward. The same goes for experiencing 20% price volatilities year-over-year.
This article wasn't to suggest that chocolate was doomed or that the price increases couldn't be absorbed. It was merely to point out the inefficiency of the logistics system supporting it.
Power Struggle At CommonWealth REIT Highlights Undervalued Shares [View article]
Sounds like things are starting to heat up. Luxor Capital's follow-on support for Corvex & Related was clearly more hostile:
"Luxor Capital Group and its affiliates collectively control in excess of 6.7 million shares of CWH, representing greater than 8% of the current common shares outstanding. We would have liked to address our concerns regarding the RMR and CWH conflicts directly with you in a private, less hostile forum, but our request to meet with the Independent Trustees was denied on December 28, 2012 by the Company. We would have preferred to discuss our concerns regarding the Offering with management, but we were denied access to meetings by the underwriters of the proposed Offering at the behest of the Company. We are one of your three largest shareholders, yet management saw to it that we were excluded from a group lunch for the Offering. It seems to us that any shareholder with the opinion that a series of strategic decisions have benefitted RMR to the detriment of CWH is deliberately and actively ignored."
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
While i'm having trouble understanding what you're implying, I think it might be worthwhile to note that they're not selling myristic acid so much as they are selling highly-concentrated myristic oil from which higher yields of myristic acid can be derived. Just a thought.
Solazyme's Management Presents at Morgan Stanley Technology, Media & Telecom Conference (Transcript) [View article]
I guess its hard to provide the right amount of balance between flavor and information. I'm glad he broke down how to calculate potential revenues though to keep things clear and simple.
Solazyme's Management Presents at Morgan Stanley Technology, Media & Telecom Conference (Transcript) [View article]
Glad to see Seeking Alpha is providing transcripts for conference presentations like these now. Still a rough translation at times & full of mistakes, but it's much appreciated.
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
I guess anything's possible. But one thing that has been a trend is that SZYM is sticking to locating its refineries next to the feedstock source. So if there's a logistics system setup to handle various carbohydrate-based feedstocks, it's possible. Otherwise, I wouldn't put much weight behind the thought.
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
Adam Aloisi,
I agree with you that the lack of clarity on various metrics provides haziness as to the pricing of the company stock in the present. However, I am a strong supporter of the idea that until proven otherwise the company's information should also be taken at face value. The company has provided various figures that allow us to piece together a decent picture of market potential. There are many here who would be quick to discredit this as being reliable, and yet they have no reason apart from their doubts as to state why. There are many here who also disagree with me on this principle of trusting what management has been saying and are going to be quick to attack whatever I say here, so bear with me.
When we look at SZYM, the inherent value of the company's future isn't even being realized at all. One simple test of this would be the fact that the company now carries a higher book value on its balance sheet than at its IPO & has made significantly more progress than at its IPO and yet now trades at less than half the price of the IPO. One can argue that the IPO itself may have been overvalued, but the fact the initial momentum actually carried the stock 50% higher over $18 to $27, and it's clear that market demand had a much stronger appetite upon the potential than the IPO price.
I believe that the traditional metrics of analyzing a stock fall short in development companies, especially those in the promising biotech space. One look at more promising pharma companies like ARNA & VVUS give a credence to this. Clearly if we were to use the conventional metrics for ARNA, a price-to-sales ratio of 63 and price-to-book ratio of 15 is far from warranted. But the reason such a price is here is due to the market's realization of the value inherent in the company's future regardless of the possible setbacks that could come about. I'm not arguing for a valuation that high, otherwise we'd be looking at a price of $70 for SZYM on book value alone.
Yet if we stick strictly to the numbers as your post might suggest, we lose sight of what is actually to be valued in an investment. The $44 million fails to remain representative of the company's future revenues. Only $16 million were actual product revenues, and the majority of this was related to the company's own efforts to penetrate a market from scratch. Not so going forward. Practically none of the revenues were related to actual business model that is to soon be expected.
Yet we do have some clarity as to what those revenues can look like, and we have some clarity as to what those margins could look like. We know what nameplate capacity is able to produce. We know the range of ASP's the company is aiming for. We have an approximate range of the company's cost structure. We have a defined pathway for market entry.
Simple math alone suggests that within 24-36 months, revenues attributable to the combined company could reaching levels north of $500 mil/yr alone if an ASP of $3000/mt across the board is applied and existing facilities under development are maxed out. Even before considering the reality of additional facilities, the revenue growth ramp justifies a higher multiple.
To be clear, Adam I understand your point and would never suggest for anyone to lose sight of their own portfolio diversification just as I myself maintain. It is never wise for anyone to put more than 5-10% of their portfolio into a particular equity. In the same sense it is ideal to see this investment as being speculative as it stands as a company in development without a firm grasp as to metrics which can be relied upon.
As to what I believe the stock price should be valued at, I think its safe to say that the IPO price is still my short-term target floor just on the basis of the simple test of market expectation potential stated above. I honestly believe that no one has a clear concept of valuation at this point (which you could justify as meriting a lower share price if you discredit the progress thus far proven). The analysts themselves still have PT's all over the board due to the lack of clarity as you mention even though the majority each agree with the much higher price target.
I'm sure those wanting to level me out will weigh in with their input after this. No problem on jumping the gun, newalker j/k (thanks for apology & no offense taken). Replying to comments have taken a real toll on me in terms of time, so forgive me if I don't put the amount of effort in that I used to in addressing those looking for a rebuttal.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Whether you stay or go & think this or that is really up to you. I just feel like you're wasting your time. And you're definitely wasting mine by presenting unfounded arguments. If you actually wanted to tell me something, you were free to msg me privately. But because you wanted to invoke a response, you brought it up on the forum here. So be the case, I've given my reply. Just don't expect me to invest so much time into you in the future.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
refer to my last comment entered right before you replied.
Last of all, your assumption of an answer in non-response isn't confirmation of a fact. Also, why would a company also care about independent confirmation when they're able to do it themselves?
As for the risk to Bunge, there was 50% risk to both parties. One can absorb the blow easier than the other should something go wrong, but you made it seem like they just threw out chump change & said whatever. The fact they're excited about the venture proves more than enough of their lack of ambivalence in the issue.
By the way, I know its often hard to read into someone's writing, but I really am saying this in a nice way. If I'm wasting your time with my writing, you are always free to stop reading. You are also free to not invest if you don't believe in what the company's presenting.
Now i've just spent 20 mins talking about this. Have a good day. The floor is yours.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Just in case we really do have a misunderstanding going on let me throw in one more word:
You do realize that there is reason for a contingency right? The process is still technically not yet established on a commercial scale. If the technology proves unable to scale up into a commercial scale facility that plant may be better used in another way.
But in no way does this mean that validation of the process hasn't occurred. It's just part of development. It's also a risk one takes in investing.
Anyways, thats all i'm going to say about this. Have a good day, newalker.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
The rep says nothing about validation. Rather he gives a very clear understanding of a contingency from the standpoint of someone concerned from Bunge's perspective.
On the other, you come in with this view that validation has not occurred and when the concept of a contingency comes up you presume that such a contingency is proof of non-validation.
Your own quote: "I think it is apparent that Bunge's due diligence efforts accrued to a great deal for themselves, but did not validate the SZYM process."
You're just applying your presuppositions into what the rep said. So be it if that's what you want to do, but you're really just wasting my time here.
I'm sure you'll have a response so have the last word. But i'm not here to argue this or continue this debate. Sorry.
5 Oversold Industry Leaders Trading Below Book Value [View article]
If you're referring to this, maybe you should re-check the world production column. Consumption declined due to the Recession.
Rising Cocoa Bean Prices Find An Unlikely Hero In Algae [View article]
Sorry, I don't have the energy to go into detail about what you wrote. But to keep things short:
1) They're evolving, so do you mean 2 years ago, today, or 2 years from now? If you actually ask for today, you really don't seem to care about knowing what will be reflective of their normalized operations. The company's also provided a nice graphic of how these costs have come down in the S-1 you dismissed along with the $3.44/gallon cost region they believe they can produce at in a fit-for-purpose commercial facility based on 2011 predictions when sugar was priced higher.
2) They have product revenues & product COGS - but they don't distinguish whats included. You need to be more specific as the company covers a wide spectrum of product.
3) Not all the oil has not been part of R&D projects, some were for commercial purposes. Also, no they didn't, nor would that be representative of what's to be expected.
4) The project cost $26/gallon, not the fuel itself - it included research revenues. You might also want to consider this: http://bit.ly/WESxCu
5) Somewhere between 0.3 to 0.4 is the magic # you need. You can do the math.
6) I'm not aware of too many other sugar-to-oil platforms. There are other sugar-to-specific chemical compound platforms however. You just need to look at the conversion efficiencies to do the math on those - although that probably doesn't help much unless you incorporate the worth of those compounds compared to oils.
7) Yes, they can. You also make an errant assumption that they will only have fixed prices. Read up on Dow/Solazyme
8) Some of it can be found in the patents.
9) Some of it is, yes.
I just wanted to add that your barrage of questions was a little over the top on the skepticism. If you want to dismiss the hypotheticals outright, you sure don't leave a lot of room for discussion, or for that matter, a different point of view away from your belief that the company can't succeed.
If you are only satisfied with current profitability, I would suggest you stay away from this company until it proves to become profitable on the income statement. Also, I don't want this to be read the wrong way, as I'm honestly saying all of this with the best of intentions out of respect to your inquiry. Addressing these issues are quite time consuming however, and much of this information can be found yourself with some great effort.
Rising Cocoa Bean Prices Find An Unlikely Hero In Algae [View article]
I believe anytime an industry has its major input cost rise over 300% within a decade as seen in the chart above, there's reason to be concerned going forward. The same goes for experiencing 20% price volatilities year-over-year.
This article wasn't to suggest that chocolate was doomed or that the price increases couldn't be absorbed. It was merely to point out the inefficiency of the logistics system supporting it.
Power Struggle At CommonWealth REIT Highlights Undervalued Shares [View article]
"Luxor Capital Group and its affiliates collectively control in excess of 6.7 million shares of CWH, representing greater than 8% of the current common shares outstanding. We would have liked to address our concerns regarding the RMR and CWH conflicts directly with you in a private, less hostile forum, but our request to meet with the Independent Trustees was denied on December 28, 2012 by the Company. We would have preferred to discuss our concerns regarding the Offering with management, but we were denied access to meetings by the underwriters of the proposed Offering at the behest of the Company. We are one of your three largest shareholders, yet management saw to it that we were excluded from a group lunch for the Offering. It seems to us that any shareholder with the opinion that a series of strategic decisions have benefitted RMR to the detriment of CWH is deliberately and actively ignored."
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
Solazyme's Management Presents at Morgan Stanley Technology, Media & Telecom Conference (Transcript) [View article]
Solazyme's Management Presents at Morgan Stanley Technology, Media & Telecom Conference (Transcript) [View article]
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
Kevin
Partners Embrace Win-Win Proposition In Solazyme's Tailored Oils [View article]
I agree with you that the lack of clarity on various metrics provides haziness as to the pricing of the company stock in the present. However, I am a strong supporter of the idea that until proven otherwise the company's information should also be taken at face value. The company has provided various figures that allow us to piece together a decent picture of market potential. There are many here who would be quick to discredit this as being reliable, and yet they have no reason apart from their doubts as to state why. There are many here who also disagree with me on this principle of trusting what management has been saying and are going to be quick to attack whatever I say here, so bear with me.
When we look at SZYM, the inherent value of the company's future isn't even being realized at all. One simple test of this would be the fact that the company now carries a higher book value on its balance sheet than at its IPO & has made significantly more progress than at its IPO and yet now trades at less than half the price of the IPO. One can argue that the IPO itself may have been overvalued, but the fact the initial momentum actually carried the stock 50% higher over $18 to $27, and it's clear that market demand had a much stronger appetite upon the potential than the IPO price.
I believe that the traditional metrics of analyzing a stock fall short in development companies, especially those in the promising biotech space. One look at more promising pharma companies like ARNA & VVUS give a credence to this. Clearly if we were to use the conventional metrics for ARNA, a price-to-sales ratio of 63 and price-to-book ratio of 15 is far from warranted. But the reason such a price is here is due to the market's realization of the value inherent in the company's future regardless of the possible setbacks that could come about. I'm not arguing for a valuation that high, otherwise we'd be looking at a price of $70 for SZYM on book value alone.
Yet if we stick strictly to the numbers as your post might suggest, we lose sight of what is actually to be valued in an investment. The $44 million fails to remain representative of the company's future revenues. Only $16 million were actual product revenues, and the majority of this was related to the company's own efforts to penetrate a market from scratch. Not so going forward. Practically none of the revenues were related to actual business model that is to soon be expected.
Yet we do have some clarity as to what those revenues can look like, and we have some clarity as to what those margins could look like. We know what nameplate capacity is able to produce. We know the range of ASP's the company is aiming for. We have an approximate range of the company's cost structure. We have a defined pathway for market entry.
Simple math alone suggests that within 24-36 months, revenues attributable to the combined company could reaching levels north of $500 mil/yr alone if an ASP of $3000/mt across the board is applied and existing facilities under development are maxed out. Even before considering the reality of additional facilities, the revenue growth ramp justifies a higher multiple.
To be clear, Adam I understand your point and would never suggest for anyone to lose sight of their own portfolio diversification just as I myself maintain. It is never wise for anyone to put more than 5-10% of their portfolio into a particular equity. In the same sense it is ideal to see this investment as being speculative as it stands as a company in development without a firm grasp as to metrics which can be relied upon.
As to what I believe the stock price should be valued at, I think its safe to say that the IPO price is still my short-term target floor just on the basis of the simple test of market expectation potential stated above. I honestly believe that no one has a clear concept of valuation at this point (which you could justify as meriting a lower share price if you discredit the progress thus far proven). The analysts themselves still have PT's all over the board due to the lack of clarity as you mention even though the majority each agree with the much higher price target.
I'm sure those wanting to level me out will weigh in with their input after this. No problem on jumping the gun, newalker j/k (thanks for apology & no offense taken). Replying to comments have taken a real toll on me in terms of time, so forgive me if I don't put the amount of effort in that I used to in addressing those looking for a rebuttal.
Kevin
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
Last of all, your assumption of an answer in non-response isn't confirmation of a fact. Also, why would a company also care about independent confirmation when they're able to do it themselves?
As for the risk to Bunge, there was 50% risk to both parties. One can absorb the blow easier than the other should something go wrong, but you made it seem like they just threw out chump change & said whatever. The fact they're excited about the venture proves more than enough of their lack of ambivalence in the issue.
By the way, I know its often hard to read into someone's writing, but I really am saying this in a nice way. If I'm wasting your time with my writing, you are always free to stop reading. You are also free to not invest if you don't believe in what the company's presenting.
Now i've just spent 20 mins talking about this. Have a good day. The floor is yours.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
You do realize that there is reason for a contingency right? The process is still technically not yet established on a commercial scale. If the technology proves unable to scale up into a commercial scale facility that plant may be better used in another way.
But in no way does this mean that validation of the process hasn't occurred. It's just part of development. It's also a risk one takes in investing.
Anyways, thats all i'm going to say about this. Have a good day, newalker.
Solazyme Partners With Mitsui - An Interview With Solazyme's Business Development Director (Part 1) [View article]
On the other, you come in with this view that validation has not occurred and when the concept of a contingency comes up you presume that such a contingency is proof of non-validation.
Your own quote:
"I think it is apparent that Bunge's due diligence efforts accrued to a great deal for themselves, but did not validate the SZYM process."
You're just applying your presuppositions into what the rep said. So be it if that's what you want to do, but you're really just wasting my time here.
I'm sure you'll have a response so have the last word. But i'm not here to argue this or continue this debate. Sorry.