Diversa Corp. (DVSA)

All Comments on DVSA

  • commenter
    SeekingAlpha
    Editors
    Apr 06 05:18 AM
    My Website
    General Discussion on DVSA
    Is this a buy or a sell? Reply
  • commenter
    Dave
    Huntsman
    Mar 13 10:38 AM
    Diversa Corp: T. Rowe Price Opposes Celunol Merger Agreement [view article]
    Interesting. I think they have some good points; and some wrong points.

    Clearly, they prefer the safe (or, safer) approach DVSA was previously on. There is definitely something to be said for that (one of the reasons I liked it when the company changed direction under a new CEO in 2005). There is no question, in my mind, it was finally on a path to be profitable sooner, rather than later; and was in a position to be an industrial enzyme supplier to everyone: corn-based ethanol producers; waste-based ethanol producers; cellulosic ethanol producers; as well as the other industries they were supplying (feedstocks, nutrition, industrial processing, etc).

    The T.Rowe assessment is wrong to imply that going the Celunol route automatically means lower returns. It could, if the whole thing failed. But, in focusing on cellulosic ethanol, they were/are aiming for a long-term home run. Back in the early days of Microsoft, for example, only an idiot believed it was 'safe' to focus solely on providing software for such a stupid thing as desktop computers. But there were people at the time who went further to say that there would be no returns in it, even if it succeeded. That was going to far; it was wrong by a few light years, in fact, since that single-minded focus on a new future yielded the greatest fortune in human history.

    So for T.Rowe to go the next step - beyond safety, into also implying automatic lower returns - is just a dumb thing to say; since if the DVSA transfer to Celunol were successful, it would hardly be true.

    While I understand why accountants would consider cellulosic ethanol 'immature' - or too immature to bet on - I disagree. Going away from oil is a given; increased biofuels is a given. Corn-based biofuels - just using the grain - simply can't go beyond providing 15% of current USA fuel use, even if every single grain of corn in the US were to go into the gas tank (which can't and won't happen). Also, cellulosic ethanol is one of the few areas where even this Administration is serious; putting several hundred million dollars into it just in the past two weeks alone. (Though the question remains unanswered: why didn't DVSA/Celunol get one of these awards, as well, if they were so advanced? I've written the company asking for clarification; they've refused to answer this shareholder, something that disturbs me greatly).

    I do agree that the terms of the deal are rich, in Celunol's favor; something current management hasn't explained. It gives the impression - I hope falsely - that there's something else going on behind the scenes. An investigation might be called for unless the company is more forthcoming. The deal appears to have the aspect of paying Celunol to take over a company that has been years, hundreds of millions of $$, and hundreds of patents in the making. In fact, they want to borrow money to pay Celunol to take the very real asset that is DVSA. The question is, why?

    I do agree with DVSA management that, if the company is to become a vertically integrated celulosic operations company, they current DVSA management aren't the ones to run it. T.Rowe says the Celunol guys aren't the ones to run it, either. Yet the only two serious cellulosic pilot plants in the world - in Japan, and the US - are Celunol's. So again, T. Rowe may - may - be overstating this part, just to make a point.

    One thing that did bother me in terms of the 'merger' of the two (or, more correctly, the handover of DVSA to Celunol), was the price; which was not determined by an honest assessment of value, but through 'negotiation'. Maybe that should have tipped me that something is funny; that there was more going on behind the scenes than meets the eye.

    T.Rowe is technically wrong in their assessment of cellulosic ethanol. They are right in what is the 'safer' approach; they are wrong in what has at least the potential for truly out-sized returns in the future; and they are right in questioning the terms of the agreement, whereby DVSA goes into debt to give itself to someone else.

    I'm glad this discussion is happening, though.

    Dave Huntsman
    DVSA shareowner     Reply
  • commenter
    Dan Largent
    Feb 15 12:57 PM
    Diversa, Celunol Merger Creates Cellulosic Ethanol Powerhouse [view article]
    You wrote:
    ...leaving Novozymes as the only major independent producer of enzymes for the cellulosic ethanol industry.

    What about Genencor????     Reply
  • commenter
    Track Xyj
    Jan 14 08:53 PM
    A Quick Guide to Ethanol Energy Stocks [view article]
    news.enquirer.com/apps...

    The nation's thirst for ethanol, to supplement pricey imported oil, is helping spur the growth of a century-old Oakley company.

    Richard J. Blum, CECO's president and chief operating officer, says, "We've supplied more oxidizers for ethanol plants than anybody else in the United States.''     Reply

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