Gambling Greenie 29 October 2018


Going for a “hot” stock


IF THE GAMBLING GREENIE were into bad puns (and he is), he would say that the Adelaide-based start-up 1414 Degrees Ltd (ASX code 14D) could be one of the hottest stocks on the market.

It must have already burnt some punters.    The initial public offer of shares was priced at 35c a pop.  Two days after the shares began trading on the stock market in September, they were changing hands for 20.5c. Ouch!

Last year the executive chairman, Kevin Moriarty, was talking about raising up to $50 mln and coming to the market in the first half of this year. The initial offer was a minimum subscription of $30 mln, with a maximum of $50 mln. 

After months of delay and in the face of underwhelming enthusiasm, the company cut that back sharply to a minimum of $12.5 mln and a maximum of $25 mln.  In addition it had to add the sweetener of a free option for every four shares applied for.

In the event it raised only $16.3 mln, and so has had to trim back its plans for the next two years.

Silicon can store a great deal of energy because you can heat it up to 1,414˚C before it will melt.  (Some grades of stainless steel will melt at 1,400C˚ or less).

The company's basic idea is to use molten silicon to store energy when it is cheap and abundant, and release it when demand is high and prices are rising.

Power from a wind farm at night, for example, could be used to heat the silicon, which would then provide additional energy to meet the daytime peak demand – either directly as heating or by driving electricity generators.

The GG has been slow to warm to this idea, mainly because he once put money into CBD Energy.  CBD was going to use granite blocks, rather than silicon. For reasons that were never really clear to the Gambler, that wasn't such a winner.  CBD abandoned Australia, moved to the US, and was renamed BlueNRGY three years ago. The shares continued to sink through the floor of his portfolio, worth less than the cost of trying to sell them.

Burned by that experience, the Gambler shunned the initial 1414 float, and has few regrets. True, about a week after it was launched on the ASX there was a rush of enthusiasm for 1414 shares, which briefly pushed the price over 50c, but that cooled quickly.

You have been warned

THE GAMBLING GREENIE  is licensed by the South Australian government 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 after publication.

However, silicon does seem to have some advantages.  The company reckons its Thermal Energy Storage System (TESS) will have a working life of 20 to 30 years, and will maintain its efficiency throughout -- unlike batteries, which become less efficient with every charge/discharge cycle.  The main raw material, silicon, is plentiful and non-toxic. Unlike pumped hydro, it can be installed almost anywhere.

The first real test of the system is likely to be SA Water's installation of a 1414 TESS at its waste treatment plant at Glenelg in Adelaide. Methane from the plant will be burned to heat the silicon which can then provide heat or power as and when required.

The TESS is expected to be installed at Glenelg before the end of November.  The Gambling Greenie, if he were sensible, would wait until that has been up and running successfully for a while before investing.

Instead he has decided to jump in just ahead of the company's annual meeting -- its first as a listed company -- on Wednesday, October 31, placing an order for 4,000 14D at 25c each.  That's 3c below the market, but the stock market as a whole is looking pretty weak.

Meanwhile the Gambler’s recent plunge into wave energy has been a disaster.  Carnegie Clean Energy’s long-serving managing director Michael Ottaviano resigned at the end of September and will leave the company at the end of the year.  The deal with TAG Pacific has been renegotiated.  Carnegie will still receive TAG shares for its sale of Energy Made Clean to TAG, but it won’t be passing them on to CCE shareholders.