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Tag: Harris-and-Harris

Peter Lynch once said that sometimes the best stock to buy is the one you already have. That’s certainly what it looks like for me. Over the last few months, my portfolio along with the entire sectors I’ve been investing in have taken a beating. Nearly everything in it is really undervalued from my point of view, but there are a couple of truly amazing bargains I see in the bin of what I’ve already got:

TINY

Harris and Harris (TINY) is down to only 1.1 times its NAV. Wow. On top of this, the company, which has millions in the bank, recently sold some of its shares, even at their currently depressed prices. Understandably, some have found this to be a disturbing move. I, on the other hand, suspect that means they have found something they want to buy NOW. With the current business climate so inhospitable to IPOs, it may be a long time before Harris and Harris and its portfolio of nano-tech companies makes a move. When it does, though, I expect it will have been well worth the wait.

SNDA

Shanda’s stock has taken a tumble since their last earnings report, in which they posted a 47% gain in revenue, and a 39% increase in operating profits. Earnings per diluted American depositary share (ADS) didn’t match those of last year, but this was entirely due to the fact that Shanda took a huge gain last year after selling its stake in SINA. How they could be expected to match that artificially bloated number is beyond me.

GIGM

I’ve seen nothing but good news about Gigamedia (GIGM) over the last several months. Even if the US doesn’t change its online gaming rules and Gigamedia’s new Majiang game flops in China, their earnings should still be more than enough to justify the current stock price.

Honorable Mentions

Everything else in the portfolio. Seriously. I don’t have any money to buy anything more now, but the gears are sure turning.

Be sure to see the disclaimer!

Harris & Harris (Nasdaq: TINY) is a publicly traded venture capital firm. Normally, I would prefer to invest directly in individual companies, rather than a venture capital firm, but this case is special. From everything I’ve been reading, I’m convinced that nano-technology is on the verge of profitability on many fronts. There are both short term opportunities such as building materials with altered characteristics, and long term opportunities that are currently in the realm of science fiction only.

There are some public companies investing in nano-tech right now, but the problem is they don’t offer a pure play. Sure, part of IBM’s great research team is working in nano-tech, but the company is so large that only a tiny fraction of its earnings are likely to come from nano-tech, even if their research goes well. Of the companies out there that are primarily focused on nano-tech, I haven’t been able to find any that are publicly traded. That’s where Harris & Harris comes in. Being a venture capital firm, they are investing in several of those little “pure” nano-tech companies- over 30 to date.

The Upside

There are exciting things coming out of several of the companies Harris & Harris is investing in. Molecular Imprints is already working with Motorola, Nanosys is working with Intel, and Xradia is designing and manufacturing ultra-high resolution imaging systems. The most exciting company in the Harris & Harris portfolio, though, is D-Wave a Canadian-based start-up that’s building quantum computers. That’s right. Quantum computers. Earlier this year, they provided the first-ever commercial demonstration of adiabatic quantum computing. It employed superconducting magnetic flux qubits, to solve simple sudoku puzzles. It was only a 16-qubit processor, but they plan to have a 512-qubit processor built by early next year, and a 1024-qubit processor before the end of next year. D-Wave believes that as their computers become more powerful, there will be a $9 billion market for its services. Considering the advantages quantum computing has to offer encryption, bio-informatics, and other tasks which would require exponentially more (non-quantum) computing resources as they scale up in size, $9 billion is a figure I have little difficulty believing.

The Risks

I could make a very, very long list. The main risks I see are as follows:

  1. None of the companies in Harris & Harris’s portfolio are profitable yet
  2. There are no guarantees when it comes to theoretical research
  3. Even if the research is fruitful, it may be other companies that benefit

Other Thoughts

The companies in the Harris & Harris portfolio have made a great deal of progress over the last year, but the stock price hasn’t changed much. Also I’ve noticed insider buying recently. That’s always a good thing. I’ve wanted to buy this stock for quite a while, but I just haven’t had the money to do so. Since I sold my Amgen shares that I’ve owned since way back, I was able to make this purchase without taking on more margin debt than I am comfortable with.

I bought 250 shares.

Disclaimer

Everything in this entry is true to the best of my knowledge, but I don’t make any guarantees. Don’t make your investment choices based upon mine. Only you can be responsible for your own financial decisions.