A Serious Problem With ClearSign's Story [View article]
Lou,
“I'm not discouraging transparency and open debate. Re-hashed arguments get tiresome, though.”
That’s funny. Re-hash? A little known fact by most is that your promotional piece came out three times. 1) You said it was originally a research report sent to your subscribers. 2) Then you explained in a message to me that it had been plagiarized by Mobile Guru in an article published on SA. 3) That was then deleted from SA and republished under your own name the very next day ‒ giving your promotional piece two full pops at yahoo! syndication.
Every contributor knows that you get the most readers on the first day of yahoo! syndication, and that as the article link recedes into the past, the readers dwindle off. So you get two days in a row of top-listed Yahoo! Syndication and the stock price was pumped up, the consequence of which now appears to be a whole lot of bag-holders ‒ who I don’t think are completely aware of what took place. How many took your advice? The price soared from about $7 to $8.5 as the investors poured in for about 4 days and who are now getting burned. (And not a single word in your article about the end of lock-up coming this next Monday?)
Interesting, the plagiarized SA article mentioned Hartwick. It is pulled and your text re-appears under your name but makes no mention of Dr. Hartwick. Either that was an isolated portion of the article that was not plagiarized or it was in your original newsletter and you decided to take it out.
Either way, you tout a technology without addressing the serious lack of credibility in the inventors. What happened to Mr. Goodson and Dr. Hartwick?
But there is also a basic problem to your objection ‒ “rehashing.” It all depends upon the situation. Sometimes repetition is necessary.
Teacher: Class, What does 2 + 2 equal? Billy: 5! Sue: No, it’s 4. Billy: It’s 6! Sue: No, it’s 4. Billy: 203!!! Sue: No, it’s 4. Teacher: Sue, it’s tiresome hearing you re-hash the same thing over and over again. Can’t you add a little to the dialogue? Use your imagination. Look at Billy, he’s not only giving us variety he’s increasingly optimistic with each answer. And try to be a little more cheerful: you’re disappointing everyone with your smaller numbers.
ECC Technology is missing a credible inventor. You can add all the other facts and people that you want, but until this is addressed, we will need to return to this critical failure in the story.
“What matters most is a company's ability to commercialize a technology.”
A technology 60 years old and counting … Why wasn’t this mentioned to investors?
“Countless examples of this exist in the real world. Like Steve Jobs and the mouse. And Thomas Edison with the light bulb. He didn't discover the science. He commercialized it. By your logic we should ignore those successes, though, because Jobs and Edison didn’t discover/develop the original technology. As an investor, that makes no sense.”
As an investor I pay attention to survivors’ and hindsight bias. Going forward, your chances of picking out the survivor, among all the competitors, is very slim. We too easily ignore this when looking backward.
Also, Edison was a great inventor, with over a thousand patents. A small portion of those patents paid off. If you lived in his time period and rushed to an investor and said, “Edison invented this. Buy it!” you most likely wouldn’t have been doing that investor a favor. Despite his greatness as an inventor, the basic odds are against any given invention working out … as an investment. That is nothing against Edison. This is just to say that Edison serves as a model for inventors, not investors.
“Clearsign has a credible engineer on board, Joe Colannino, to help commercialize ECC. Yet, you keep ignoring his existence. Or worse, you try to dismiss him because he wasn’t on board when the original science was articulated. Again, that’s inconsequential.”
No, it is not inconsequential and I haven’t ignored him. Eliminating a possibility is not the same as ignoring that possibility. Re-read the article. If there are no original and credible inventors for “ECC Technology,” then that strongly suggests a fake-it-till-you-make-it scam. Re-read the article. If there is a critical failure in the story, then the issue of management’s integrity comes into full view. If this is a scam, then the greater the intelligence and skills the later team has, the greater the culpability of that team and the greater the damage done to investors. Re-read the article.
“Extending your lumberjack analogy, it doesn’t matter who cut down the log in the first place. I'm interested in who pulls it out of the water and sells it to someone to build a house, thereby creating real world value for the first time.”
It matters if a lie took place ‒ and it matters a lot. If management lacks credibility, how can you lean on their information?
A Serious Problem With ClearSign's Story [View article]
“Matt, I have read both of your articles, and understand that you have spent alot of time on this.”
I didn’t take this lightly. And I wouldn’t be speaking up if I hadn’t found the critical failures outlined in my reports.
“You then say we need to ignore everyone that has joined the company since that first patent.”
1. The logical elimination of a possibility is not the same thing as ignoring that possibility. 2. Not ignore, but understand that humans don’t time travel, and that the lack of a credible inventor for ECC Technology has a direct bearing on the credibility of management.
“[Dr. Hartwick] joined SSTP AFTER all the research was done and the fraud was commited.”
…. And while it was being prosecuted.
Re-read the article. “After the fraud” ‒ is what my article was referring to. His intelligence and experience should have told him that something was wrong. Either 1) He was smart and experienced enough to know that the SSTP process was not commercially viable and that a pump and dump was going on, suggesting that he lacks integrity or 2) He wasn’t smart enough, suggesting a lack of ability. Neither would be a very good thing for his involvement with CLIR.
The smarter you make Dr. Hartwick out to be, the more room for “scienter” you give him.
Re-read the article. And have you written off David Goodson? Why won’t anyone talk about the “original inventor” anymore?
No, if you “discredit Dr. Hartwick,” then the integrity of management is under direct scrutiny. If management lacks integrity, then the lights are out on the rest of the story.
Two kinds of credibility in a scientist: intelligence and integrity. Please re-read the article. You’ve missed this point.
There was a Mr. John Rivera who was deeply involved with two companies ‒ U.S. Sustainable Energy Corp (USSE) and Sustainable Power Corp. (SSTP). Also involved was a "technology" sometimes called the "Rivera Process" or the "SSTP process" and which claimed a bio-fuel called "Vertroleum." (Source Documents.)
According to court documents, in a Summary Judgment on July 2011, (Case 5:08-cv-00245-DCB-JMR)
"The central fraud alleged involves claims by Rivera that USSE could produce viable commercial biofuel and fertilizer products." (Page 2.) (USSE = US Sustainable Energy Corp.)
"Rivera was also the principal shareholder of SSTP. According to the Commission, Rivera used SSTP for misconduct similar to that alleged in this case." (Page 3, Note 2)(SSTP = Sustainable Power Corp)
"The defendants also argue that two purported contracts filed with their response demonstrate that USSE (or, later, SSTP) was commercially viable." (Page 20)
As you can see from the court documents, the case was so strong that it did not need to go to trial: John Rivera received a summary judgment from a federal judge. (The story gets a little weird at this point: Mr. Rivera was said to have died just before sentencing and his credibility was so low that many thought he might have faked his own death, but that was apparently not the case).
In the middle of the SEC suit, Dr. Hartwick, with his credentials, is presented to investors by SSTP. Hartwick's job appears to have been twofold, first, to communicate the science to the average investor:
"'As we received consistent, encouraging information from the university that conducted testing at our Baytown facility, we felt it wise to retain someone of Dr. Hartwick's stature and reputation to help disseminate in layman's terms how effective and efficient the SSTP process is,' stated Chairman, President and Chief Executive Officer, M. Richard Cutler." ~ Sustainable Power Corp. Appoints Dr. Thomas S. Hartwick as Scientific and Technical Advisor to the Company
And second, to validate the "SSTP Process," which had been subject to doubt, given recent scrutiny,
"'When I was approached to review the SSTP process and the utilization of the proprietary catalyst, I spent nearly five weeks reviewing the technical data before I agreed to accept the position as scientific and technical advisor. Only after I became convinced that the technology was based on sound scientific principles would I accept this position,' stated Dr. Thomas Hartwick." ~ Sustainable Power Corp. Appoints Dr. Thomas S. Hartwick as Scientific and Technical Advisor to the Company
A Serious Problem With ClearSign's Story [View article]
The “author” … my name’s “Matt.”
“1. This article re-hashes the main objections to CLIR the author made less than one month ago, …”
No. The previous article was a broad 17 page report. This article focuses specifically on the critical failure in ClearSign’s ECC story.
And on the contrary, your article “re-hashed” the official company line, as if no problems had been exposed by my earlier article. You did not mention a single word about the serious fractures brought up. In fact, your article about ECC Technology failed to mention the man said to be the “original inventor of ECC.” Serious questions had just recently been raised about ClearSign's false and inflated disclosures regarding his history. Why wouldn’t you mention David Goodson, the Chief Science Officer, largest shareholder, director, and co-founder? Despite requests in the comment section for you to explain the omission, you offered none. Do you think he is phony? Without him and Dr. Hartwick, how could we have the April 2009 articulation of “ECC Technology”? Can we have an invention without an inventor?
Who put ECC Technology together? Why can’t you talk about them?
“… without mentioning a word about the company's two latest developments since then. (1M Btu/hr and applicability to turbine systems)”
Read the article again. I don’t short science companies. I short scams. ClearSign needs to reveal credible inventors for ECC Technology. Where are they? Without that, CLIR would just be another fake-it-till-you-make-it gamble.
“2. The lock-up period expires on Oct. 22”
It is good for you to underline the fact. A fully informed retail investor has a better chance that way (some of whom may be your subscribers).
“3. The author has a short position in the stock”
Of course, after researching the company in depth, I have taken a short position.
On the other hand, after touting the stock as a pick for others, have you finally shared the risks of your readers and bought some shares? Are you still recommending the company? I put my own money at risk ‒ on my own research. Have you?
“4. The author's been actively re-publishing his opinions on Yahoo! message boards, known hangouts for promoters and market manipulators.”
Exactly, and they are pumping up the stock price with “copy and paste” material (some of it yours) and I am there to counter it with the heretofore missing information. Investors have a better chance when the opinions of both sides are heard, especially when the only information available so far has been the company’s own guided tour.
“ (In the author's mind, "guilt by association" must somehow only be relevant to Dr. Breidenthal.)”
No. I refer to involvement and intelligent awareness of what is happening (scienter).
“Bottom line: It's hard to believe this research was published for purely altruistic reasons.”
This is a free market economy, where multiple interests advocate their positions and in vigorous debate, as a tendency, prices settle at the value of the underlying assets and cash flows. It’s the stock market, not Sunday School. Altruistic? Is this your standard for assessing a stock pick? If not, why would you hold me to it? If yes, how altruistic is it to promote a stock that you do not take a chance on yourself? (Or, did you finally pick some up? It’s getting cheaper.)
“Like with any stock, there's a bull and bear case. They've both been presented. It's time to let the market and the marketplace bear out who's ultimately right.”
Of course you do not expect that the company will go silent now. This is a market and it will be an ongoing debate and the more information that gets out there the better the chances retail investors will have. I always work very hard to take the side of the market that benefits the most from increased transparency. You don’t do your readers a favor by reducing information and resisting debate. The side that begs to contain the information and dim the lights is usually the wrong side. More debate … if you don’t want that, you need to ask yourself why not. Following the guided tour is not research.
Clearsign: A Potential World Changer Of A Stock [View article]
"First, Matt seems to be hung up on scientists"
Not exactly. Actually, I am hung up on my inability to find a credible scientist responsible for CLIR's declared ECC.
If you read my article carefully, you will see that I am trying the answer the question: Is this a science scam? ... an attempt to deceive investors? I believe it is.
If after reading the article, you think the answer is "Yes, this is a scam and scientific posturing, not a sincere attempt at scientific discovery," then everything downstream of that scam (ie, after April 2009) is on a shoddy foundation. If a scam, you would have to question the engineer’s skill or integrity. Neither fairs well in the evaluation. Nonetheless, I would not risk my money trying to find an engineer so skilled he could resurrect a living result from a dead scam.
If you think the answer is “No, there is a credible scientist who formulated a unique ECC technology April 2009 or before,” then please produce his name.
Clearsign: A Potential World Changer Of A Stock [View article]
Johnny,
“Why would you ever write an article like that, and publish it no less, and use that as the first contact with management. “
I never invest in a situation where I have to trust others more than the underlying facts. In fact, I invest precisely and exclusively in the gap between the prevailing message and the underlying facts: when that gap is extreme, as when the prevailing story suffers a critical failure, I invest ‒ long or short. (Note how wide your profit margin gets with this investment style.) On the short end, when I’ve found such a critical failure, I have also usually precluded either the financial statements or the business model ‒ or as in this case, the science. At this point, discussion with management is not only a waste of time; it is a contradiction of my own methodology.
Another part of my investing style is to invest on that side of trade where additional transparency is my ally. So I write reports to provide what management is hiding. That, as a rule, is my only contact with management.
“You also cherry pick the facts. “
There are two styles of cherry picking: one is to avoid the essential point and the other is to take it. With my short positions, I focus on critical failures in a company’s story. Everything downstream of such a critical failure is no longer necessary. This is an essential part of my investment style. Everything gets easier after you find the first “big lie.” So for example, with China-biotics when Kerrisdale and Citron got the company to reveal a list of addresses for the “retail outlets,” that then enabled photographers to take photos of those locations. Everyone who read the reports was able to know with common sense certainly that the whole thing was a sham ‒ since those photos revealed parking lots, apartment buildings, etc … and since we could go online and find independent photos of some of the locations (a supermarket website for example) and verify for ourselves that the company was lying. At that point, the only reason to go through a CHBT 10-K was to further the short case and increase transparency. The PR about future prospects and the numbers in the financial statements themselves were otherwise worthless.
Everything downstream of the big lie can be forgotten. Everything gets simpler. You still have to debate those who can’t get it, so you still have to dig … but the problems are simpler to solve now.
Let's look at CLIR. ClearSign’s ECC technology was first expressed in the patent Applications. That took place in April 2009. There are five inventors listed on this application.
1) The “chief science officer” and “original inventor of ECC” was David Goodson ‒ the one who CLIR claims collaborated with Nobel Prize winners and attributed patents to him that were not so. He is also involved with several other companies which I believe are promoting crackpot science.
2) The first-named inventor was Hartwick ‒ CLIR has not disclosed his relationship with SSTP, which was deeply involved with USSE and John Rivera, accused and convicted of fraud in a classic pump and dump.
3,4,5) Rutkowski and Osler are businessmen, not combustion Scientists. Wiklof is the patent agent.
Who else is there that can account for the experimentation and articulation of ECC technology? Not Colannino or the UW professors. They arrive later.
Everything is simpler, because ECC takes place upstream of April 2009 ‒ the patent application with its listed inventors.
“You are having no conversation with anyone at the company now. “
I guarantee it: management has read my report. This is a dialogue and it is facilitating transparency. You have to decide which of side of the market you are on: the one that transparency helps or hurts?
“you seem to be fairly active posting articles, but the total lack of responsibility for content and follow up is very disconcerting.”
Point out an error. I carefully research my material and then I put my money on my own opinion.
“BTW - glowing article on the strengths of Mr Rutkowski published in Forbes magazine. “
I have deliberately avoided too much detail on Rutkowski, because he is otherwise irrelevant to the critical failure. But you are insisting on making him relevant.
Just as every commercial institution is well advised to perform credit checks on their customers, and just as credit ratings depend upon the history of debtors in order to make assessments of risk, why aren’t investors informed of a CEO’s “credit history” with investor owned funds?
When Mr. Rutkowski left Microvision, Inc:
“The Company has sued its former CEO and President Richard Rutkowski and his spouse to collect $1,733,000 in outstanding loans from the Company that were due in January 2007 and remain unpaid. Counterclaims were filed by Mr. Rutkowski and his spouse, seeking to recover damages in an amount in excess of $15,000,000.” (Microvision, Inc. SEC 2007 10-K)
“In January 2006, one officer left the Company and his outstanding loans became due in January 2007. In May 2007, we foreclosed on 50,000 shares of Lumera common stock pledged as collateral for the loans. In October 2009, we entered into a settlement agreement with the former officer.
“We have received total proceeds of $237,000 to date, and the officer has committed to make additional payments of $30,000 over the next two years.”
“Pursuant to the settlement agreement, all claims and counterclaims filed in the collection lawsuit, including the previously disclosed claim by the former officer against us for $15 million have been dismissed.” (Microvision, Inc. SEC 2009 10-K)
But really, first things first: The only thing Rutkowski needs to explain is why he is listed as an inventor on CLIR’s patent application.
Clearsign: A Potential World Changer Of A Stock [View article]
LOU:
“And sorry. No executive in the world would consider a post on a random site that they never check as an invitation for a "open and transparent" dialogue.”
Hmm. MDB Capital responded. I guarantee you, management has read my article. Also, I always take the side of the market where additional transparency is an advantage. We’ll see how many people and organizations we can get together on this ‒ out in the open.
“Why not publish you're research first before going short? Because you're not concerned about the dialogue. You're concerned about your investment. “
What? Of course I’m concerned about my investment. I’m an investor. You would be too, if you ate your own cooking. (Are you going to invest in CLIR or not? After all, you’re recommending it to others.)
Why would I spend 6 weeks, full time ‒ some 80 hours a week ‒ researching CLIR … and NOT add to my position as I became more and more confident? (It’s not that much labor actually; I really enjoy the research. It’s like going fishing every day.) Then after reaching near certainty in regards to the reality underlying the claims, and being fully invested, why would I not then take part in the two sides of the debate? ‒ or do you think that only one side of the debate has a say, and that shorts, after investing, must then go silent and can never speak again until they’ve exited? Or, are you saying that you yourself can never say another word about your long investments, after you’ve invested? What? Should we go so far then as tell Warren Buffett not to drink Cherry Coke in public?
Everyone should do their OWN due diligence before investing. Everyone. In my opinion, no one should regard a newsletter as a substitute for due diligence. If an investor can’t do his own due diligence he shouldn’t be picking stocks; he should be invested in a mutual fund with a professional manager. If he does his own due diligence, he’s less likely to be surprised by the facts that are ALREADY out there in the open. Everything I have presented, by your admission, is publically available: I do not, as a rule, contact management.
The one who works the hardest has an advantage here. That’s how it should be. Why should Warren Buffet give up all the work and sacrifice he’s done by first disclosing, stepping aside and then letting others run up his position before he gets in? … Especially knowing that all the information is out there already? Those who work the hardest, don’t just deserve to get there first; they are already there first. Likewise, I am a full-time, private investor; the only advantage I have is to work harder than the other side of my trade.
“Case in point: You only publish research on Seeking Alpha on companies you are short (http://bit.ly/Uo2pEM).
Not true. But MOST of my posts are shorts, so that’s good enough.
“I can't think of a clearer indication of a conflict of interest.”
A “conflict of interest” is a blade without a handle. The stronger you grip, the deeper it cuts. So careful with that one. We ALL have incentives, including you. On the one hand, Warren Buffet researches, takes a position and then later discloses. On the other hand, a newsletter editor/writer can recommend a stock (like CLIR) without eating his own cooking. Which one is more conflicted? Personally I would pay more attention to someone who shared my risks and rewards. The newsletter editor is motivated to gather more subscribers, which is not always the same thing as the incentive to uncover the underlying reality to a company’s claims ‒ which is very often a disappointing exercise.
You try to pretend that you are unbiased because you “don’t talk your book,” but as you gain or lose subscribers for your business, you gain or lose money or prestige accordingly. You are motivated to please your readers. What does everyone want to hear? 2 + 2 = 5, for many, is more optimistic than 2 + 2 = 4. If information arrives to contradict your previous recommendation, what do you do? Confess and disappoint? Or double down and repost?
In this case, frankly, if you have no interests here, what are you defending … and why?
You STILL have not dealt with the key question: how can one write an article on ECC technology, and not address the problems with the “Original inventor of ECC” ‒ David Goodson? These problems are very serious. Instead of addressing them, you’ve ignored the issue and continue to recommend the stock. How can there be an ECC technology without Goodson? (Not to mention Hartwick.)
“You think the prospects are null and void because someone else noticed a scientific reaction years ago.“
No I don’t. I think it’s about the absence of any credible scientists behind ClearSign’s supposed science. Again you dodge the issue. Your article is about ECC technology ‒ Why did you not mention the “Original inventor of ECC” and deal with the serious problem of his credibility?
Clearsign: A Potential World Changer Of A Stock [View article]
" I am reasonably confident there are competing technologies readily in production on "
I had the same suspicion. (And for those interested in CLIR's IP strategy, note that these are patents, many expired. They are not just patent applications.)
Clearsign: A Potential World Changer Of A Stock [View article]
Nice try. Again, you dodge the point. I am not the issue. The facts I present are. The existence or non-existence of credible scientists on CLIR's team is a crucial question. Where are they? If you haven't noticed, this unanswered question in CLIR's story precludes discussion of the science itself. So far it appears that old technology has been taken and presented as if it were something new, and as if belonging exclusively to CLIR -- part of this thinking is due to the fact that I can't find a credible scientist on CLIR's team during the relevant time period. This needs to be addressed.
The question of any science to ClearSign is downstream the existence of a credible scientist. If it were otherwise, I would not be here. So this is a case about the credibility of the management and the scientists, first and foremost. After thorough research, full time, I believe they are not trustworthy and that they have not been sincerely pursuing this science.
Again, Colannino and the UW Professors appear AFTER ECC is expressed.
Re-read my article and show me a CREDIBLE scientist on CLIR's team, April 2009 or before. And why were the businessmen, Rutkowski and Osler listed as inventors? Why wasn't Hartwick's involvement with SSTP disclosed to investors? As for Goodson, (we must ask the author) why was he not mentioned in the above article?
A Serious Problem With ClearSign's Story [View article]
“I'm not discouraging transparency and open debate. Re-hashed arguments get tiresome, though.”
That’s funny. Re-hash? A little known fact by most is that your promotional piece came out three times. 1) You said it was originally a research report sent to your subscribers. 2) Then you explained in a message to me that it had been plagiarized by Mobile Guru in an article published on SA. 3) That was then deleted from SA and republished under your own name the very next day ‒ giving your promotional piece two full pops at yahoo! syndication.
Every contributor knows that you get the most readers on the first day of yahoo! syndication, and that as the article link recedes into the past, the readers dwindle off. So you get two days in a row of top-listed Yahoo! Syndication and the stock price was pumped up, the consequence of which now appears to be a whole lot of bag-holders ‒ who I don’t think are completely aware of what took place. How many took your advice? The price soared from about $7 to $8.5 as the investors poured in for about 4 days and who are now getting burned. (And not a single word in your article about the end of lock-up coming this next Monday?)
Interesting, the plagiarized SA article mentioned Hartwick. It is pulled and your text re-appears under your name but makes no mention of Dr. Hartwick. Either that was an isolated portion of the article that was not plagiarized or it was in your original newsletter and you decided to take it out.
Either way, you tout a technology without addressing the serious lack of credibility in the inventors. What happened to Mr. Goodson and Dr. Hartwick?
But there is also a basic problem to your objection ‒ “rehashing.” It all depends upon the situation. Sometimes repetition is necessary.
Teacher: Class, What does 2 + 2 equal?
Billy: 5!
Sue: No, it’s 4.
Billy: It’s 6!
Sue: No, it’s 4.
Billy: 203!!!
Sue: No, it’s 4.
Teacher: Sue, it’s tiresome hearing you re-hash the same thing over and over again. Can’t you add a little to the dialogue? Use your imagination. Look at Billy, he’s not only giving us variety he’s increasingly optimistic with each answer. And try to be a little more cheerful: you’re disappointing everyone with your smaller numbers.
ECC Technology is missing a credible inventor. You can add all the other facts and people that you want, but until this is addressed, we will need to return to this critical failure in the story.
“What matters most is a company's ability to commercialize a technology.”
A technology 60 years old and counting … Why wasn’t this mentioned to investors?
“Countless examples of this exist in the real world. Like Steve Jobs and the mouse. And Thomas Edison with the light bulb. He didn't discover the science. He commercialized it. By your logic we should ignore those successes, though, because Jobs and Edison didn’t discover/develop the original technology. As an investor, that makes no sense.”
As an investor I pay attention to survivors’ and hindsight bias. Going forward, your chances of picking out the survivor, among all the competitors, is very slim. We too easily ignore this when looking backward.
Also, Edison was a great inventor, with over a thousand patents. A small portion of those patents paid off. If you lived in his time period and rushed to an investor and said, “Edison invented this. Buy it!” you most likely wouldn’t have been doing that investor a favor. Despite his greatness as an inventor, the basic odds are against any given invention working out … as an investment. That is nothing against Edison. This is just to say that Edison serves as a model for inventors, not investors.
“Clearsign has a credible engineer on board, Joe Colannino, to help commercialize ECC. Yet, you keep ignoring his existence. Or worse, you try to dismiss him because he wasn’t on board when the original science was articulated. Again, that’s inconsequential.”
No, it is not inconsequential and I haven’t ignored him. Eliminating a possibility is not the same as ignoring that possibility. Re-read the article. If there are no original and credible inventors for “ECC Technology,” then that strongly suggests a fake-it-till-you-make-it scam. Re-read the article. If there is a critical failure in the story, then the issue of management’s integrity comes into full view. If this is a scam, then the greater the intelligence and skills the later team has, the greater the culpability of that team and the greater the damage done to investors. Re-read the article.
“Extending your lumberjack analogy, it doesn’t matter who cut down the log in the first place. I'm interested in who pulls it out of the water and sells it to someone to build a house, thereby creating real world value for the first time.”
It matters if a lie took place ‒ and it matters a lot. If management lacks credibility, how can you lean on their information?
A Serious Problem With ClearSign's Story [View article]
I didn’t take this lightly. And I wouldn’t be speaking up if I hadn’t found the critical failures outlined in my reports.
“You then say we need to ignore everyone that has joined the company since that first patent.”
1. The logical elimination of a possibility is not the same thing as ignoring that possibility.
2. Not ignore, but understand that humans don’t time travel, and that the lack of a credible inventor for ECC Technology has a direct bearing on the credibility of management.
“[Dr. Hartwick] joined SSTP AFTER all the research was done and the fraud was commited.”
…. And while it was being prosecuted.
Re-read the article. “After the fraud” ‒ is what my article was referring to. His intelligence and experience should have told him that something was wrong. Either 1) He was smart and experienced enough to know that the SSTP process was not commercially viable and that a pump and dump was going on, suggesting that he lacks integrity or 2) He wasn’t smart enough, suggesting a lack of ability. Neither would be a very good thing for his involvement with CLIR.
The smarter you make Dr. Hartwick out to be, the more room for “scienter” you give him.
Re-read the article. And have you written off David Goodson? Why won’t anyone talk about the “original inventor” anymore?
No, if you “discredit Dr. Hartwick,” then the integrity of management is under direct scrutiny. If management lacks integrity, then the lights are out on the rest of the story.
Two kinds of credibility in a scientist: intelligence and integrity. Please re-read the article. You’ve missed this point.
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Text from the previous article: http://bit.ly/UFnuVu
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source documents: http://bit.ly/RboW2q
There was a Mr. John Rivera who was deeply involved with two companies ‒ U.S. Sustainable Energy Corp (USSE) and Sustainable Power Corp. (SSTP). Also involved was a "technology" sometimes called the "Rivera Process" or the "SSTP process" and which claimed a bio-fuel called "Vertroleum." (Source Documents.)
According to court documents, in a Summary Judgment on July 2011, (Case 5:08-cv-00245-DCB-JMR)
"The central fraud alleged involves claims by Rivera that USSE could produce viable commercial biofuel and fertilizer products." (Page 2.) (USSE = US Sustainable Energy Corp.)
"Rivera was also the principal shareholder of SSTP. According to the Commission, Rivera used SSTP for misconduct similar to that alleged in this case." (Page 3, Note 2)(SSTP = Sustainable Power Corp)
"The defendants also argue that two purported contracts filed with their response demonstrate that USSE (or, later, SSTP) was commercially viable." (Page 20)
As you can see from the court documents, the case was so strong that it did not need to go to trial: John Rivera received a summary judgment from a federal judge. (The story gets a little weird at this point: Mr. Rivera was said to have died just before sentencing and his credibility was so low that many thought he might have faked his own death, but that was apparently not the case).
In the middle of the SEC suit, Dr. Hartwick, with his credentials, is presented to investors by SSTP. Hartwick's job appears to have been twofold, first, to communicate the science to the average investor:
"'As we received consistent, encouraging information from the university that conducted testing at our Baytown facility, we felt it wise to retain someone of Dr. Hartwick's stature and reputation to help disseminate in layman's terms how effective and efficient the SSTP process is,' stated Chairman, President and Chief Executive Officer, M. Richard Cutler." ~ Sustainable Power Corp. Appoints Dr. Thomas S. Hartwick as Scientific and Technical Advisor to the Company
And second, to validate the "SSTP Process," which had been subject to doubt, given recent scrutiny,
"'When I was approached to review the SSTP process and the utilization of the proprietary catalyst, I spent nearly five weeks reviewing the technical data before I agreed to accept the position as scientific and technical advisor. Only after I became convinced that the technology was based on sound scientific principles would I accept this position,' stated Dr. Thomas Hartwick." ~ Sustainable Power Corp. Appoints Dr. Thomas S. Hartwick as Scientific and Technical Advisor to the Company
A Serious Problem With ClearSign's Story [View article]
“1. This article re-hashes the main objections to CLIR the author made less than one month ago, …”
No. The previous article was a broad 17 page report. This article focuses specifically on the critical failure in ClearSign’s ECC story.
And on the contrary, your article “re-hashed” the official company line, as if no problems had been exposed by my earlier article. You did not mention a single word about the serious fractures brought up. In fact, your article about ECC Technology failed to mention the man said to be the “original inventor of ECC.” Serious questions had just recently been raised about ClearSign's false and inflated disclosures regarding his history. Why wouldn’t you mention David Goodson, the Chief Science Officer, largest shareholder, director, and co-founder? Despite requests in the comment section for you to explain the omission, you offered none. Do you think he is phony? Without him and Dr. Hartwick, how could we have the April 2009 articulation of “ECC Technology”? Can we have an invention without an inventor?
Who put ECC Technology together? Why can’t you talk about them?
“… without mentioning a word about the company's two latest developments since then. (1M Btu/hr and applicability to turbine systems)”
Read the article again. I don’t short science companies. I short scams. ClearSign needs to reveal credible inventors for ECC Technology. Where are they? Without that, CLIR would just be another fake-it-till-you-make-it gamble.
“2. The lock-up period expires on Oct. 22”
It is good for you to underline the fact. A fully informed retail investor has a better chance that way (some of whom may be your subscribers).
“3. The author has a short position in the stock”
Of course, after researching the company in depth, I have taken a short position.
On the other hand, after touting the stock as a pick for others, have you finally shared the risks of your readers and bought some shares? Are you still recommending the company? I put my own money at risk ‒ on my own research. Have you?
“4. The author's been actively re-publishing his opinions on Yahoo! message boards, known hangouts for promoters and market manipulators.”
Exactly, and they are pumping up the stock price with “copy and paste” material (some of it yours) and I am there to counter it with the heretofore missing information. Investors have a better chance when the opinions of both sides are heard, especially when the only information available so far has been the company’s own guided tour.
“ (In the author's mind, "guilt by association" must somehow only be relevant to Dr. Breidenthal.)”
No. I refer to involvement and intelligent awareness of what is happening (scienter).
“Bottom line: It's hard to believe this research was published for purely altruistic reasons.”
This is a free market economy, where multiple interests advocate their positions and in vigorous debate, as a tendency, prices settle at the value of the underlying assets and cash flows. It’s the stock market, not Sunday School. Altruistic? Is this your standard for assessing a stock pick? If not, why would you hold me to it? If yes, how altruistic is it to promote a stock that you do not take a chance on yourself? (Or, did you finally pick some up? It’s getting cheaper.)
“Like with any stock, there's a bull and bear case. They've both been presented. It's time to let the market and the marketplace bear out who's ultimately right.”
Of course you do not expect that the company will go silent now. This is a market and it will be an ongoing debate and the more information that gets out there the better the chances retail investors will have. I always work very hard to take the side of the market that benefits the most from increased transparency. You don’t do your readers a favor by reducing information and resisting debate. The side that begs to contain the information and dim the lights is usually the wrong side. More debate … if you don’t want that, you need to ask yourself why not. Following the guided tour is not research.
Clearsign: A Potential World Changer Of A Stock [View article]
http://bit.ly/sLxJRA
Clearsign: The Reinvention Of Fire Or...? [View article]
"Lockup Expiration : 10/22/2012" - See http://bit.ly/RVDsg3 or http://bit.ly/sLxJRA
Clearsign: The Reinvention Of Fire Or...? [View article]
Clearsign: A Potential World Changer Of A Stock [View article]
Not exactly. Actually, I am hung up on my inability to find a credible scientist responsible for CLIR's declared ECC.
If you read my article carefully, you will see that I am trying the answer the question: Is this a science scam? ... an attempt to deceive investors? I believe it is.
Please read: http://bit.ly/UFnuVu
If after reading the article, you think the answer is "Yes, this is a scam and scientific posturing, not a sincere attempt at scientific discovery," then everything downstream of that scam (ie, after April 2009) is on a shoddy foundation. If a scam, you would have to question the engineer’s skill or integrity. Neither fairs well in the evaluation. Nonetheless, I would not risk my money trying to find an engineer so skilled he could resurrect a living result from a dead scam.
If you think the answer is “No, there is a credible scientist who formulated a unique ECC technology April 2009 or before,” then please produce his name.
Please read http://bit.ly/UFnuVu for the facts.
Clearsign: A Potential World Changer Of A Stock [View article]
“Why would you ever write an article like that, and publish it no less, and use that as the first contact with management. “
I never invest in a situation where I have to trust others more than the underlying facts. In fact, I invest precisely and exclusively in the gap between the prevailing message and the underlying facts: when that gap is extreme, as when the prevailing story suffers a critical failure, I invest ‒ long or short. (Note how wide your profit margin gets with this investment style.) On the short end, when I’ve found such a critical failure, I have also usually precluded either the financial statements or the business model ‒ or as in this case, the science. At this point, discussion with management is not only a waste of time; it is a contradiction of my own methodology.
Another part of my investing style is to invest on that side of trade where additional transparency is my ally. So I write reports to provide what management is hiding. That, as a rule, is my only contact with management.
“You also cherry pick the facts. “
There are two styles of cherry picking: one is to avoid the essential point and the other is to take it. With my short positions, I focus on critical failures in a company’s story. Everything downstream of such a critical failure is no longer necessary. This is an essential part of my investment style. Everything gets easier after you find the first “big lie.” So for example, with China-biotics when Kerrisdale and Citron got the company to reveal a list of addresses for the “retail outlets,” that then enabled photographers to take photos of those locations. Everyone who read the reports was able to know with common sense certainly that the whole thing was a sham ‒ since those photos revealed parking lots, apartment buildings, etc … and since we could go online and find independent photos of some of the locations (a supermarket website for example) and verify for ourselves that the company was lying. At that point, the only reason to go through a CHBT 10-K was to further the short case and increase transparency. The PR about future prospects and the numbers in the financial statements themselves were otherwise worthless.
Everything downstream of the big lie can be forgotten. Everything gets simpler. You still have to debate those who can’t get it, so you still have to dig … but the problems are simpler to solve now.
Let's look at CLIR. ClearSign’s ECC technology was first expressed in the patent Applications. That took place in April 2009. There are five inventors listed on this application.
1) The “chief science officer” and “original inventor of ECC” was David Goodson ‒ the one who CLIR claims collaborated with Nobel Prize winners and attributed patents to him that were not so. He is also involved with several other companies which I believe are promoting crackpot science.
2) The first-named inventor was Hartwick ‒ CLIR has not disclosed his relationship with SSTP, which was deeply involved with USSE and John Rivera, accused and convicted of fraud in a classic pump and dump.
3,4,5) Rutkowski and Osler are businessmen, not combustion Scientists. Wiklof is the patent agent.
Who else is there that can account for the experimentation and articulation of ECC technology? Not Colannino or the UW professors. They arrive later.
Everything is simpler, because ECC takes place upstream of April 2009 ‒ the patent application with its listed inventors.
“You are having no conversation with anyone at the company now. “
I guarantee it: management has read my report. This is a dialogue and it is facilitating transparency. You have to decide which of side of the market you are on: the one that transparency helps or hurts?
“you seem to be fairly active posting articles, but the total lack of responsibility for content and follow up is very disconcerting.”
Point out an error. I carefully research my material and then I put my money on my own opinion.
“BTW - glowing article on the strengths of Mr Rutkowski published in Forbes magazine. “
I have deliberately avoided too much detail on Rutkowski, because he is otherwise irrelevant to the critical failure. But you are insisting on making him relevant.
Just as every commercial institution is well advised to perform credit checks on their customers, and just as credit ratings depend upon the history of debtors in order to make assessments of risk, why aren’t investors informed of a CEO’s “credit history” with investor owned funds?
When Mr. Rutkowski left Microvision, Inc:
“The Company has sued its former CEO and President Richard Rutkowski and his spouse to collect $1,733,000 in outstanding loans from the Company that were due in January 2007 and remain unpaid. Counterclaims were filed by Mr. Rutkowski and his spouse, seeking to recover damages in an amount in excess of $15,000,000.” (Microvision, Inc. SEC 2007 10-K)
“In January 2006, one officer left the Company and his outstanding loans became due in January 2007. In May 2007, we foreclosed on 50,000 shares of Lumera common stock pledged as collateral for the loans. In October 2009, we entered into a settlement agreement with the former officer.
“We have received total proceeds of $237,000 to date, and the officer has committed to make additional payments of $30,000 over the next two years.”
“Pursuant to the settlement agreement, all claims and counterclaims filed in the collection lawsuit, including the previously disclosed claim by the former officer against us for $15 million have been dismissed.” (Microvision, Inc. SEC 2009 10-K)
But really, first things first: The only thing Rutkowski needs to explain is why he is listed as an inventor on CLIR’s patent application.
Clearsign: A Potential World Changer Of A Stock [View article]
“And sorry. No executive in the world would consider a post on a random site that they never check as an invitation for a "open and transparent" dialogue.”
Hmm. MDB Capital responded. I guarantee you, management has read my article. Also, I always take the side of the market where additional transparency is an advantage. We’ll see how many people and organizations we can get together on this ‒ out in the open.
“Why not publish you're research first before going short? Because you're not concerned about the dialogue. You're concerned about your investment. “
What? Of course I’m concerned about my investment. I’m an investor. You would be too, if you ate your own cooking. (Are you going to invest in CLIR or not? After all, you’re recommending it to others.)
Why would I spend 6 weeks, full time ‒ some 80 hours a week ‒ researching CLIR … and NOT add to my position as I became more and more confident? (It’s not that much labor actually; I really enjoy the research. It’s like going fishing every day.) Then after reaching near certainty in regards to the reality underlying the claims, and being fully invested, why would I not then take part in the two sides of the debate? ‒ or do you think that only one side of the debate has a say, and that shorts, after investing, must then go silent and can never speak again until they’ve exited? Or, are you saying that you yourself can never say another word about your long investments, after you’ve invested? What? Should we go so far then as tell Warren Buffett not to drink Cherry Coke in public?
Everyone should do their OWN due diligence before investing. Everyone. In my opinion, no one should regard a newsletter as a substitute for due diligence. If an investor can’t do his own due diligence he shouldn’t be picking stocks; he should be invested in a mutual fund with a professional manager. If he does his own due diligence, he’s less likely to be surprised by the facts that are ALREADY out there in the open. Everything I have presented, by your admission, is publically available: I do not, as a rule, contact management.
The one who works the hardest has an advantage here. That’s how it should be. Why should Warren Buffet give up all the work and sacrifice he’s done by first disclosing, stepping aside and then letting others run up his position before he gets in? … Especially knowing that all the information is out there already? Those who work the hardest, don’t just deserve to get there first; they are already there first. Likewise, I am a full-time, private investor; the only advantage I have is to work harder than the other side of my trade.
“Case in point: You only publish research on Seeking Alpha on companies you are short (http://bit.ly/Uo2pEM).
Not true. But MOST of my posts are shorts, so that’s good enough.
“I can't think of a clearer indication of a conflict of interest.”
A “conflict of interest” is a blade without a handle. The stronger you grip, the deeper it cuts. So careful with that one. We ALL have incentives, including you. On the one hand, Warren Buffet researches, takes a position and then later discloses. On the other hand, a newsletter editor/writer can recommend a stock (like CLIR) without eating his own cooking. Which one is more conflicted? Personally I would pay more attention to someone who shared my risks and rewards. The newsletter editor is motivated to gather more subscribers, which is not always the same thing as the incentive to uncover the underlying reality to a company’s claims ‒ which is very often a disappointing exercise.
You try to pretend that you are unbiased because you “don’t talk your book,” but as you gain or lose subscribers for your business, you gain or lose money or prestige accordingly. You are motivated to please your readers. What does everyone want to hear? 2 + 2 = 5, for many, is more optimistic than 2 + 2 = 4. If information arrives to contradict your previous recommendation, what do you do? Confess and disappoint? Or double down and repost?
In this case, frankly, if you have no interests here, what are you defending … and why?
You STILL have not dealt with the key question: how can one write an article on ECC technology, and not address the problems with the “Original inventor of ECC” ‒ David Goodson? These problems are very serious. Instead of addressing them, you’ve ignored the issue and continue to recommend the stock. How can there be an ECC technology without Goodson? (Not to mention Hartwick.)
“You think the prospects are null and void because someone else noticed a scientific reaction years ago.“
No I don’t. I think it’s about the absence of any credible scientists behind ClearSign’s supposed science. Again you dodge the issue. Your article is about ECC technology ‒ Why did you not mention the “Original inventor of ECC” and deal with the serious problem of his credibility?
Clearsign: A Potential World Changer Of A Stock [View article]
Where did I suggest that Lou's article dealt with MDB?
" It was only brought up in a follow on comment from Off The Radar which is an excerpt from a past Forbes Article on CLIR."
And in turn I am following up with the "follow on" comment from Radar. Radar's topic, and an interesting one.
Clearsign: A Potential World Changer Of A Stock [View article]
If he is not credible, then who put the technology together? And if he didn't put the computer algorithms together, then who did?
Clearsign: A Potential World Changer Of A Stock [View article]
I had the same suspicion. (And for those interested in CLIR's IP strategy, note that these are patents, many expired. They are not just patent applications.)
Some Patents with Electric Fields and Combustion
1952 http://tinyurl.com/9p8...
1968 http://tinyurl.com/9bn...
1978 http://tinyurl.com/8cf...
1978 http://tinyurl.com/93j...
2006 http://tinyurl.com/8mu...
2007 http://tinyurl.com/9j6...
2010 http://tinyurl.com/938...
Many serious research papers on the topic, See the annual European Combustion Meetings.
Also, top research now is working with electric fields PRE-combustion.
(People have even been having fun with this stuff and posting their videos on Youtube: http://tinyurl.com/8wu... )
Clearsign: A Potential World Changer Of A Stock [View article]
The question of any science to ClearSign is downstream the existence of a credible scientist. If it were otherwise, I would not be here. So this is a case about the credibility of the management and the scientists, first and foremost. After thorough research, full time, I believe they are not trustworthy and that they have not been sincerely pursuing this science.
Again, Colannino and the UW Professors appear AFTER ECC is expressed.
Re-read my article and show me a CREDIBLE scientist on CLIR's team, April 2009 or before. And why were the businessmen, Rutkowski and Osler listed as inventors? Why wasn't Hartwick's involvement with SSTP disclosed to investors? As for Goodson, (we must ask the author) why was he not mentioned in the above article?
Clearsign: A Potential World Changer Of A Stock [View article]
There is an ECC technology and it was declared and articulated in April 2009. Where is the scientist who invented it?
You keep dodging the key question: why did you not mention the Chief Science Officer and "original inventor of ECC" in a article about ECC?
Clearsign: A Potential World Changer Of A Stock [View article]
Again, it ignores the fundamental question and the underlying reality: Where are the scientists who put together ECC technology? Do they exist?