Leonardo Da Vinci said it best,
Simplicity is the ultimate sophistication.
Last week I visited a Tesla Motors showroom for the first time in La Jolla, CA. What an experience. I was stunned by the simplicity and elegance of the Tesla Model S. Within minutes I understood Tesla's hype, valuation, and saw a future of electric vehicles for personal transportation. If you have not visited a Tesla showroom I urge you to do it soon.
Another electric vehicle, EV, company that has intrigued me for several years is Kandi Technologies Group KNDI. It's a China-based EV manufacturer that is evolving a new intra-city personal transportation system in the world's largest consumer market. KNDI has a market cap of less than a billion, about one-fortieth of TSLA. However, KNDI is perfectly positioned, skillfully managed, and poised to achieve worldwide leadership in the production and sale of EVs.
Kandi's elegant car-share business model simply works. Battery type doesn't matter - lithium-ion, graphene, fuel cell, or whatever comes next. The best energy solution will prevail. Plug-in or battery swap? Kandi does both. Do you need two seats, four, seven, a van or a box truck? Kandi has them all. Do you need the car for a couple hours, days, months, longer? Any time period you need is available. Kandi takes care of battery charging and maintenance, the transaction can be done in person, by phone, or app, and be paid for by Alipay. Do you prefer to drive or a self-driven car? Someday it's your choice. Kandi's transportation system is designed for life in urban China today and the future.
To date Kandi lacks analyst coverage and has been beleaguered by shorts since its inception as a U.S. traded public company simply because it became public as a reverse merger. The most notable short has been Mark Cuban and his sharesleuth.com. On several occasions Cuban told me KNDI is a fraud and its management crooks. Meanwhile, earlier this month the SEC issued a no action letter to KNDI regarding an investigation begun in November 2013, I suspect prompted by Cuban or his henchman.
SEC investigations are significant. They are costly and time-consuming and almost always used by shorts to create disinformation, misinformation, or even mendacity to move the price of a stock lower. It's the practice known as short and distort, and for reasons beyond my simple comprehension it's commonly practiced with impunity. On November 1, 2013 KNDI short interest was 4 million shares. A year later its short interest stood at 7.9 million shares, almost double. At the end of last month it was 7.2 million shares, roughly 24% of the float.
SEC no action letters are significant too. An SEC investigation typically requires an examination of all the Company's filings, especially registration statements. A search of KNDI EDGAR filings at sec.gov reveals seven S-3 Registration Statements beginning November 19, 2009. Additionally, since inception as a public company, KNDI has filed seven Annual Reports on Form 10-K and twenty-one Quarterly Reports on Form 10-Q. Simply put, that's a prodigious amount of scrutiny to yield an SEC no action letter.
Granted, there are few people like Elon Musk of Tesla, SpaceX, PayPal, Zip2, and Chairman of Solar City. Kandi Chairman and CEO, Xiaoming Hu, may lack the charisma and entrepreneurial flair of Musk but he does not lack the scientific and engineering brilliance, business acumen, and intense focus to execute his vision of creating the most elegant personal transportation system for his fellow citizens. A personal transportation system so elegant that I believe can only be surpassed someday by "Beam me up, Scotty."
Xiaoming Hu said it best too regarding the SEC's no action letter, "… Kandi's management's primary interests have always been twofold -- shareholder protection and building a solid foundation for the continued long term growth of the Company. We will continue to pursue those goals with transparency and in compliance with all applicable laws and regulations."
Simply well said.
Disclosure: The author is long KNDI.