Every now and then there’s a new nanotech investment story that gets circulated around, and the latest comes from a publication called the Street Authority.
It starts out on target by pointing out that 10 years ago after the Internet bubble burst investors were clamoring for a new investment vehicle when along came nanotechnology. This is a point I made myself three years ago, so I am open to accepting this line of thinking.
But the article goes all a bit fuzzy after that with an odd collection of “nanotech” stocks that reminds one of the rather odd practice of creating nanotechnology stock indices. Unfortunately many of the indices I cited three years ago are long since gone, so no more giggles, I’m afraid.
Anyway in this latest abbreviated index we see FEI Company paired up with Altair Nanotech. Really? Now I am well aware that FEI likes to market itself on occasion as the “Nanotech Company”, but the huge microscopy company has remained largely in the semiconductor business.
But even if you didn’t know that, you could just look at the table the reporter has provided and see something is amiss. While FEI currently has a market cap of $668 million, it had revenues of $577 million last year and probably has loads of cash. And in the same table, we get Altair with a market cap of $63 million and 2009 sales of $4.4 million.
Now I am no investment expert like the reporter, but it would seem the Price to Sales ratio is more than a little different between these two companies. My point is that they can’t really both represent speculative stock investments.
But the entire enterprise of providing stock investment advice on so-called nanotech companies is just cruel to small time investors and misses the real reason of why nanotechnology has not been further commercialized than it is.
The real obstacle keeping nanotechnology from having greater success is not because of a lack of mom-and-pop investors in the handful of nanotech penny stocks. Rather the problem preventing nanotechnology from being further commercialized is that private equity (i.e. angel investors, venture capitalists, sovereign funds and banks) just is not investing money outside of high-gain investments like derivatives and the like. And I think we all know where that landed the world economy, never mind nanotechnology.
Dexter Johnson is a contributing editor at IEEE Spectrum, with a focus on nanotechnology.