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The Green River Intrinsic Value fund is a relatively concentrated, long/short equity strategy. The fund seeks long-term absolute returns investing in deeply mispriced securities which are identified through a careful process of methodical fundamental research and due diligence.
  • UniPixel Bright Future Clouded By Shoddy Research  3 comments
    Jan 11, 2013 11:38 AM | about stocks: UNXL


    I found your article "Uni-Pixel: Bright Future Promised By Clouding The Gruesome Reality For The Less Informed" (link here) to be highly deceptive.

    You start off by claiming "The true market opportunity is much smaller." Then you precede to tell us you will present "overwhelming" evidence to support this notion. I found your analysis to be underwhelming and misleading. As your primary argument you noted a company presentation where they had shown the market opportunity as less than $800mn in 2016. You and I both know that the slide you showed referred only to the mobile market. In fact, if you look at the same presentation on page 12, you see an estimate of $10bn for the sensors in 2016. Note that this is old info, and the market has grown much faster than expected so these numbers are actually low. Look at Display Search for their recent estimate and you'll see that the number for 2016 is now $17bn.

    Next you cite research from Nanomarkets. I read Nanomarkets research in my due diligence as well. To tell you the truth, I found the little Glen Allen, Virginia based firm to be out of touch with what was going on in the market. My discussions with scientists and engineers in the market confirmed this suspicion. Nanomarket's seemingly positive bias toward the nanomaterial ito-replacement technologies could be influenced by the fact that their clients are all/most nano industry participants! Silver nanowire is for real. Cambrios is a good firm with good prospects. But Cambrios's manufacturing processes rely on much of the high cost infrastructure that got us into problems in the first place.

    Nanomarkets can talk about the market opportunity for "alternatives" being 100 million dollars until it is blue in the face, but that won't change the fact that UniPixel has a signed order for almost $1bn worth of product. Dell must not have gotten Nanomarkets message that the market was supposed to be so tiny!

    Your Google search of uniboss nanomarkets and unipixel nanomarkets was useless. UniBoss doesn't use nano materials. That's why Nanomarkets has no need to pump it!

    You claim that in-cell calls into question the existence of UniPixel's market. How so? In-cell is a nice technology, but it still; 1) uses expensive indium and expensive processes; 2)is plagued with yield issues (see recent production problems at Apple); 3) cannot scale to larger screen sizes; 4) cannot extend beyond the display. UniBoss provides every bit as much functionality as in-cell, but it costs less. That's why one of the largest PC OEMs globally decided to use UniBoss on its new laptop lines and not in-cell.

    You state that "many of these firms are in a much more advanced stage in their product development and production compared to UniPixel. I would like to direct my readers' attention to two great examples, Cambrios and 3M. " But the materials you link to are simply marketing materials. How can you claim that they are in more advanced stages based on such flimsy evidence when they don't have large orders like UniPixel? Every single expert with whom I've spoken mentions Cambrios and UniPixel, but not 3M. I think there's a reason why they focus on EMI in their material, they are probably not competitive yet for display applications.

    You claim that Cambrios with 73 patents filed or approved makes UniPixel's claim on patent strength laughable. Really? UniPixel has at least 62 pending or approved patents according to the company. MDB rated the strength of UniPixel's portfolio an 8 out of 10. That doesn't bring laughter to mind in my book.

    You claim that UniBoss technology is unproven, yet it is the ONLY ito-replacement technology to have a massive commitment from a large, global PC OEM. Cambrios is producing, and so is Atmel, but neither can claim such a large order, nor can they claim that the partner actually ponied up money to help them buy the equipment to secure their capacity. This is an outstanding validation and it completely blows your thesis out of the water.

    You claim that copper's color makes it a non-starter for a display. This is simply not true. UniPixel blackens its copper and it is laid in such fine line widths that it is invisible. I have a sample in front of me and I can tell you that this is certain.

    You also link to the demonstration by Dan VanOstrand and say that "there's observable coppery color with its prototype." This is so blatantly deceptive it borders on criminality and you should be ashamed. The copper you refer to is along the bezel. It is the circuitry the company printed to lead to the controller. And you call this due diligence?

    You claim that the 5 micron "looks rough, suggesting it will easily be broken." Yet UniPixel has proven that the sensors are highly flexible, and, in fact, can be bent thousands of time with no damage to the circuitry.

    You cite that "all the smart money is going to silver nanowire-based solutions." Again, I think your perspective was colored by talking to NanoMarkets. First of all, there's a tremendous amount of "smart money" in UniPixel. Not only do some very large funds own the name, but I've also heard that the analysts at these funds hold the name in their personal accounts - a true sign that they are excited by it. But you imply that silver nanowire has an edge on UniBoss and this is simply not the case. I speak with an engineer at one of the largest touch controller manufacturing companies in the world. He is a huge fan of Cambrios and has done a lot of work with them. Yet he admits that the specs on UniBoss are equally as good, and the cost for UniBoss will be lower. Both of these firms will do well, but to suggest that Cambrios somehow keeps UniBoss from succeeding is highly deceptive.

    You cite work from Professor Ben Wiley at Duke saying that the color of copper is likely an important limiting factor for Uniboss. I spoke with Ben last week. He is a very nice guy and a good researcher. I've enjoyed reading his stuff. But when it came to UniBoss, he was not up-to-speed. I sent him some information that he found incremental. He has no qualms with UniBoss.

    You question UniPixel's plating process, but you know very little about how they accomplish their electroless plating. Let me ask you this, do you think that one of the largest PC OEMs in the world would have signed up and invested in a process that simply doesn't work? Would you imagine that they would do some of their own due diligence on UniBoss before dedicating four laptop lines to the process? Do you know UniBoss's plating process well enough to tell us that they can't use Chromium? Do you know the concentration of CR in solution? Do you even know that it is used in plating?

    You claim that "the lack of market validation for UniBoss technology over the past two and half years is the biggest tell-tell sign." First of all, I'd suggest that you use the spell check feature before you publish. Second of all, you ought to reconsider your thesis if this is the biggest "tell-tell" sign. There is not another ITO-replacement technology on the market with the amount of validation that UniBoss can claim. You might also note that over the last two-and-a-half years, UniPixel made enormous improvements in the technology to make line widths thinner, make UniBoss double sided, deposit materials in a single pass - so the product wasn't ready for prime-time a couple years ago. Were they a little too excited a little early, yes. Have you ever heard of an early-stage tech company that wasn't?

    You claim that management has "misplaced incentives," but I'm a large shareholder and I like where their incentives have been placed very much. In fact, I am glad they own all of those options because without them their ownership is just not substantial enough.

    You state "it's hugely concerning the fashion in which executives of UniPixel presented the company, including its emphasis on size of market opportunity and lack of clarity on competitive position." Management has never denied to me the existence of close competitors. They do note that most of these competitors use an expensive, subtractive process. And your claims about their statements on market size are just bogus.

    In short, if anyone is "hugely concerning" here it is you. I would hope for your sake that you are not using your publication of this article as an opportunity to cover your short, because if that's the case, I would think the SEC might have a good reason to take a close look at your "article."

    You have obviously experienced some pain with your short position, but I'm afraid it is only the beginning.

    Disclosure: I am long UNXL.

    Stocks: UNXL
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Comments (3)
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  • jsIRA
    , contributor
    Comments (4532) | Send Message
    Near term trend is down. Day trader's heaven.
    11 Jan 2013, 03:28 PM Reply Like
  • Transcend Asset
    , contributor
    Comments (1622) | Send Message
    This "PC OEM" business is really not good enough for me. Management can makeup statements. In the face of all the fraud of the last few years, I find them hard to believe in and of themselves. I was not aware of all the potential pitfalls to investing in this item when I started. Xuhua might have some old info but he's making me more cautious and also aware that there are LOTS of competitors. History says that having the BEST product does not mean you get all the customers (think Sony and Betamax). Until some OEM actually steps up to the plate and says they bought something from UNXL, I will just continue to monitor this company with my small holding. Preference is to just buy DELL or HP. They'll tell me who their clients are when they sign a big deal (ie. defense, etc). A company like Bombardier will announce when they have a contract and with whom. Every time a new contract is secured, the stock goes up. Waiting for confirmation on UNXL. I need a name of the other party. Huawei, Lenovo, Dell, HP, or what have you. Then I can grade this as less than a speculative play.
    14 Jan 2013, 07:28 AM Reply Like
  • Chimin Sang
    , contributor
    Comments (294) | Send Message
    Green River, Welcome to the hedge fund business. It is only the beginning of lessons for you.
    15 Jan 2013, 03:32 PM Reply Like
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