Knobias ClipReport (8-15-2007)

Submitted from Knobias ClipReport

Volatility was the name of the game again as reports circulated of liquidity problems surrounding Sentinel Management Group. Weak reports from Wal-Mart and Home Depot also caused concern regarding consumer health.

One of the only positives of the day was the IPO of VMware Inc. which saw the software spinoff climb more than 75% during the day. The IPO saw the gains spread to many in the technology sector.

One name in the small cap space that has received attention over the past few months was Octillion Corp. (OCTL). The Company is a technology incubator focused on the identification, acquisition, development and eventual commercialization of emerging technologies. Through relationships with universities, hospitals and government agencies, the Company attempts to identify technologies and business opportunities on the leading edge of innovation that have the potential of serving significant and unmet market needs.

With much of the buzz surrounding the alternate energy sectors, the Company recently decided to focus Octillion's financial and managerial resources on the development of leading edge solar energy technologies. Their proprietary technology that they are attempting to develop is a first of its kind transparent glass window capable of generating electricity.

In an 8-K from July, the Company noted that they created an early lab scale model of Octillion’s transparent photovoltaic ‘NanoPower Window’. Scientists successfully engineered and assembled a mechanically stable, see-through developmental prototype, which achieved optically active down-conversion and displayed good electrical properties with no electrical shorts.

Also in the filing, Octillion noted the key development of the NanoPower Windows was a proprietary spray coating of a silicon nanoparticle film, which is fluorescent and able to convert the sun’s energy into electricity. The process of producing these silicon nanoparticles is supported by 10 issued US patents, 7 pending US patents, 2 issued foreign counterpart patents and 19 pending foreign counterpart patents.

The process for spraying the silicon nanoparticles onto glass surfaces is unique to Octillion, and is among the Company’s major research achievements. Earlier this year, researchers developed a protocol for reliably depositing nanoparticles onto glass surfaces using a proprietary electro spray system able to produce nanofilms of controllable thickness. Importantly, the silicon nanoparticles retained their high efficiency of down conversion of UV light to the visible after being sprayed.

With the speculative nature that surrounds buzz sectors, investing in these types of names is very risky evident by ethanol seeing its premium valuations eroding over the past year.

But the name has one aspect to it that many others in the alternate energy do not; an investment from a leading conservationist. David Gelbaum made a mark on the hedge fund landscape years ago. His career lasted 3 decades in this highly volatile industry which saw him become a key ingredient in the first market neutral hedge fund. Gelbaum was one of the first math researchers hired by the fund to track and exploit the price discrepancies between a company's stocks and its options, warrants and convertible bonds. The fund never had a losing quarter and increased investors' money more than 13-fold over 1970 through 1989. The fund, named Princeton-Newport Partners, was dissolved in 1989 after being sidetracked by illegal activities when brokers in New Jersey were convicted of scheming tax losses. Gelbaum was never implicated in the discrepancy and went on to found Sierra Enterprises Group where he eventually retired.

Needless to say, Gelbaum is in the hedge fund hall of fame and probably the California Conservationist hall of fame. With his amassed fortune, Gelbaum became California’s greatest conservationist. According to an LA Times article in 2001, Gelbaum had donated in the neighborhood of $250 million dollars to education and conservation programs.

Now he and wife, Monica Chavez Gelbaum, are involved in a trust named, The Quercus Trust. Quercus which is the Latin term for oak tree seems to be a logical name and symbol for the investments the trust holds. Included in its holdings are other alternate energy names such as Beacon Power Corp (BCON), Emcore Corp (EMKR), Open Energy Corp. (OEGY), Worldwater & Power Corp (WWAT) and now Octillion.

On August 10th, the trust filed a Schedule 13D displaying a 6.7% stake had been acquired in Octillion Corp. The acquisition, which began in late June, has 3,444,700 shares at a cost basis of $2.45. But even with the tidy 67% profit, past acts of conservation and donation would suggest the investment was made for the long term.

In any event, speculative names that reside in buzz sectors and have limited funding, (the company only had $1.07 million in cash according to their latest 10-Q), no revenues, and speculative products cause many wise investors to tread carefully in these name, but with what would seem to be an authority on stocks and conservation efforts directly involved invested in the Company, the name could gain attention over the coming months. Investors would be wise to watch.


Visit 1800blogger to see all of our industry leading blogs