Gambling Greenie.   17 September 2019

Saving the planet . . .   

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. . .  or just going soft?

THE GAMBLING GREENIE  never rushes to put his hand in his pocket when a company passes the hat around its shareholders asking for more money. Why would he?

All too often companies invite shareholders to buy more shares, usually at a discount, and always free of brokers’ commission, but by the time the offer closes, the company’s shares have fallen below the offer price.

Why would anyone buy “discount” shares direct from the company when they could buy them for less on the stock market?

The only reason for doing that is to help the company. That may be commendable, but it’s a charitable donation, not a rational investment decision.

For the GG, the emotional reason to take up the offer of new shares in Carnegie Clean Energy is strong. The notion of producing both energy and desalinated water, with zero emissions and no need for power-hungry electric pumps, is very appealing. Plus there is always the fact that he was probably wrong to buy Carnegie shares in 2011 and even more wronger to buy more a year ago, and no one likes to admit that they have dropped a clanger. Twice.

You have been warned . . .

THE GAMBLING GREENIE  is licensed by the South Australian government only to drive a moter vehicle. He is not an adviser and has no links to the financial services industry. If he finds a guaranteed way of making serious money on the stock market, he won’t tell anyone.

He may at times own shares mentioned in the column, but does not trade in any such shares for at least two working days before or after publication

The GG has left his decision almost to the last second. At the time of writing the Carnegie offer is due to close in little more than 24 hours, at 5pm on September 18, Western Australia time.

Investors and state and federal governments, convinced of the potential for Carnegie’s technology, have pumped tens of millions of dollars into the company over more than a decade, building ever larger and more sophisticated prototypes, and presumably generating some valuable intellectual property.

The company is about to send out its first invoice for supplying solar power to the Department of Defence on Garden Island, off the WA coast. Fine, but lots of people do solar these days. Carnegie is supposed to be all about wave energy.  In 2015, it announced that it was installing three of its CETO buoys off Garden Island to produce both power and water for the HMAS Stirling naval base. They have produced some desalinated water, but not the promised electricity.

A plus for the shares is that recent advances in battery technology probably improve the viability of wave power. It is said to be more constant than wind or solar, but its output still varies.

The share offer had to be extended for an extra two weeks, which is not a good look. If it does succeed in raising the minimum $5.5 mln Carnegie needs, the shares should resume trading around the 26th of September. (The company’s ASX code is CCE).

The GG doesn’t expect them to trade for much more than the offer price of only one tenth of a share each. The company did make a comprehensive, clear-the-slate loss in the last financial year of $63.4 mln. Its total assets are just $19.9 mln, but $15 mln of that is little more than an educated guess of what its intangibles, mainly its patents, might be worth.

At that price, even if he takes up his entitlement to 18,750 new shares, his total holding will be worth only $93.75. That is  far below the $300 - $500 minimum usually regarded by the stock market as a “marketable parcel”. The GG is resigned to being locked in for years.                                                                              

The company intends to stop hands-on engineering and instead concentrate for at least the next two years on computer modelling to design the perfect buoy. It will then set about finding the money to build the thing.

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Carnegie’s high hopes in 2015 for Garden Island, off the WA coast

The Gambling Greenie really, really hopes they succeed. 

His full entitlement (18,750 shares) will cost him only $18.75. 

Call him a sentimental fool, and he is certainly a gambler, but $18.75 is not much. He is writing it off as another donation to the cause of clean energy.

Who knows, in ten or 15 years, he might be glad to be the owner of 93,750 CCE shares.

A serious profit and a giant gamble

Does “green” investment really pay off?

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