Although I have ridden a few 10 and even 20-baggers in my time, I have never had the privilege of being involved in anything like a PO3. Why the privilege? Well for starters I’m making a sh-tload (at least on paper), but more importantly, I have absolutely no compulsion to sell.
Any “normal” investor would be taking some profits along the way, however PO3 is not a P&D (and doesn’t behave like one), has outstanding management – the most important and first thing I look for when investing; doesn’t depend on development of a technology and the associated risks or the turn of a drill bit. In short, PO3 has been almost totally derisked and has had DD completed by a billionaire who knows the tech space like the back of his hand and has the contacts to take PO3 in record time to where we want it to go. What I do seek though is guidance in riding this “bucking bronco” of a share.
Given that I believe this is a once in a lifetime opportunity (I have been at this caper approaching 40 years and have never unearthed a gem like PO3), I look for similar scenarios to help guide me through this uncharted territory; be it FA, TA, comparisons - whatever the heck I can find.
The FA and TA are relatively easy. Above and beyond our own analysis, we have had BP do DD for us on the fundamentals to a standard to which none of us is capable. Box ticked! Technically, we are just at the beginning of this move, with ultimate targets 900% above current levels and then 1800% above current levels. Box ticked! So this leaves us with comparisons.
There is no perfect fit on the comparison front. CLQ has some overlapping technology interest and, like PO3, a billionaire board member and major shareholder in Robert Friedland (although BP has a much better name and credentials than RF, IMHO). This keeps bringing me back to AKP – a tech stock with a very tight register, but no “rock star” billionaire board member. So I thought I’d dig a little deeper on the AKP front to see if it can give us any insights as to where PO3 may be heading.
AKP, or Global Properties Ltd. as it was then known, invested USD1m for a 41% stake in Audio Pixels. The stock had been trading around 20c earlier in 2010 and had trended up going into the acquisition. In short, the stock moved from the mid-20s to in early August ’10 to a high of around $4.65 at the end of that year.
Remember, this is 2010. 9 years later AKP still don’t have a saleable product and seem to be far behing PO3 in achieving this milestone.
In July ’11, AKP hits a high of $9.65 following an OTC listing in June and development agreement with Sony, for a market cap of approx. $200m.
AKP achieved a big rerate on the back of its OTC listing and I believe PO3 would achieve an even bigger one given that it (and Somnio) are US-based and the BP association would attract enormous interest given his pedigree. If PO3 management ever read the drivel I write on HC, I urge you to pursue this path – it’s quick (could be achieved in 1 month), cheap and would provide numerous positive benefits to both the company and us shareholders.
AKP then drifted lower into mid-2013, hitting a low of about $2.20 before running to $14.50 in mid-2014. The fact is that not much seems to have been achieved over that period, yet AKP still attracted a $373m cap. For what???
The stock corrected back to the $7 level going into 2016, when it decided to put on almost 500% between Feb. and July 2016, reaching a high of $34.80. What was the basis for this jump? A placement and some test results. Go figure. And this gave them a peak market cap of approximately $1 billion!!!
And here we are today, a share price in the low-mid 20s and still no saleable product.
Compare this to PO3. It is currently capped around $150m. It has technology that addresses MUCH BIGGER markets than AKP, is MUCH more “accessible” from an investor understanding viewpoint, and is in many respects a "MUST HAVE" technology.
AKP has been punctuated by protracted periods of consolidation – approximately 2 years. And when you read what they reported, or rather didn’t report, during those periods, you can see why. PO3 will not have the same problem; with ongoing India testing, OEM testing, field trials, potential deals etc. to consistently generate interest in the stock.
PO3 has a tighter register, better story and better management team than AKP; so if AKP could get to $1b cap with what they have (or rather don’t have), where could PO3 be capped with what it does have? At least in comparison to AKP, PO3 is dirt cheap at current levels. So we now have FA, TA and comparisons all aligning. All boxes ticked!
I’ll leave you with these words of wisdom (emphasis mine) from 2 of the greatest investors the world has ever seen – George Soros and Stanley Druckenmiller:
“Soros: . When asked about the most important lessons that Stan Druckenmiller learned from George Soros, he says: I've learned many things from him, but perhaps the most significant is that it's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong. The few times that Soros has ever criticised me was when I was really right on a market and didn't maximise the opportunity. Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is concerned, when you're right on something, you can't own enough.”
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