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Good company, bad stock
FWIW, AMAVF has broken the technical t around the 18 level. One can only hope that at some point the ever improving fundamentals will be noticed by the market.
Counting what he already owns and what he will get by options that is only a smallish percentage of his holdings. Assuming that Arcam is most of his wealth , any financial planner would tell him to diversify. Because once he has a few tens of millions of dollars he has enough to hide some way overseas, enough to make him secure for life.
These kind of sales don't bother me, there are lots of reasons to sell stocks- divorce,illness, etc. If all the board was selling large amounts in a concentrated time span I would probably worry some.
It should be noted that some companies chose the BOD to be as ignorant of the business and as dumb as possible so the CEO and a few others can more easily loot the company but there is no evidence of that here.
Any tech company (and many non tech companies) run the risk of becoming obsolete very quickly and the CEO becomes redundant. Or he can lose his job via an insider revolt. Being a CEO is not the same as working for the Post Office . Even some of them have lost their jobs.
I wonder if it was Avio who customized the printer or whether Arcam is able and willing to do so. Increased insulation seems like a relatively easy fix. It's something that works both ways, allowing higher box temps with less energy input, but also slowing down the cooling process. Which generally produces a better. more stress relieved metal product. But it also adds to the production time.
I also note that Avio used an "old" A2 not the newer machines they presumably have.
I am looking forward to the introduction of new Arcam machines. The next generation should begin to integrate some of the technology of fastEBM. But since it normally takes 5 to 8 years to go from lab to production it will be a while before most of these improvements show up. Management stating that a 5X improvement is "easy" sticks in my mind..Especially since that estimate from management did not include the other research projects (all paid for by somebody else) under way but not completed yet.
I see AMAVF as having the potential of a 10 bagger over the next decade. But I t have no idea whether the price of the stock will be lower before it goes higher. At today's P/E it still hasn't reached bargain basement prices. It is languishing deep in the "valley of despair" . Linked to all the other 3DP stocks.
Charlie, your posts have been great, finding lots of links that I missed. So thank you too.
http://c.ymcdn.com/sites/www.titanium.org/resource/resmgr/2010_2014_papers/Ackelid_Ulf_2010_PowderMetal.pdf
look at the illustration just before the conclusion. It shows a fatigue crack. This ties in nicely with the work done at Oak Ridge. EBM is the only process where the micro structure of the metal can be altered during the process. So at fatigue prone locations the metal can be altered , just in that area, to be less brittle, less prone to crack, while retaining different desired metal qualities in other areas of the part. This ability is still in the early lab stage and will take years to show up in production machines.
I can't think of any other company that has gotten so much free( to them) research. All positive results flow to Arcam. Meaning that those sponsoring the research, who no doubt know a lot more than I do about EBM, regard it as critical to the aerospace industry of the future.
I remember the British Comet jet. Many crashed due to the simple (in retrospect) flaw of designing the windows rectangular with sharp corners rather than rounded corners, resulting in fatigue cracks that rapidly spread from the corners of the window.A fiction book by Nevil Schute (an aeronautical engineer too) described a very similar scenario before the real one happened.
https://www.atimetals.com/markets/aerospace/Documents/Aeromat%202013-Contemporary%20Titanium%20Aluminides.pdf
over my head
http://c.ymcdn.com/sites/www.titanium.org/resource/resmgr/2010_2014_papers/Ackelid_Ulf_2010_PowderMetal.pdf
specifics on EBM and gamma titanium aluminide
3D geometries (turbine blades) fabricated with proven process stability • HIP eliminates residual porosity?• Complies with chemical spec. after 1% Al addition to powder?• Fine grain duplex microstructure after proper heat treatment
• Tensile properties equal to GE reference data?• HCF properties exceed GE reference data?• EBM serial production of ?-TiAl to be launched at AvioProp in Italy
This free to Arcam research could hurt Arcam only if it improves other forms of making titanium parts more than it improves EBM., But if it's any form of titanium I think laser sintering is out.By the time any results are available I expect that younger engineers will have started to realize the benefits of free complexity of design made possible by 3DP
Meanwhile the stock price continues to languish despite all the good news. It seems AMAVF is forever tarred with the same brush as DDD even though the business prospects are completely different. Today's price is on technical support. If that breaks the price action could be nasty. I am holding for 5 year outlook.
link to translated version of that under the dome video documentary. It is very informative
http://seekingalpha.com/article/2985906-chinas-stunning-environmental-under-the-dome-documentary-hits-kandi-technologies-sweet-spot
that printer
http://3dprintingindustry.com/2014/01/03/mitsubishi-enters-american-3d-printing-market-metal-3d-printer-platform-matsuura-machinery/
is a laser sintering 3DP , not an EBM machine. It also combines milling operations. I am not sure what advantage that would have. The Germans seem to have an edge in laser based 3DP but I wonder how long it will last...
I have been hoping Arcam would do some sort of licensing, because I think the opportunity is too large for one small company at the periphery of the EU to fully exploit. Furthermore licensing would bring competition of a sort t oEBM, and competition speeds improvements. I think the Arcam patents and trade secrets amount to a huge moat, maybe too big for full development.
Apple is busy making stock buy backs and paying dividends. All because they can't find any corporate use for all that cash.
Perhaps an investment in Tesla, some joint projects, makes a lot more sense than trying to buy Tesla. Because while Apple has run out of big ideas to transform the future, Tesla hasn't. And it will need more capital in the future. Present capital has been almost free (far cheaper than Big Auto capital) but as time passes they will need more capital. and probably have to pay more for it.
So Tesla has what Apple needs (big transformative ideas) and Apple has what Teslas needs (capital)
The companies ate located close together and share many common traits.
My take on Arcam is that the EU is willing to spend millions of euros on research . All to benefit a small obscure company located on the periphery of the EU. A company with no known political connections. A company whose tech is well protected by patents and trade secrets. So the benefit of this research can only flow directly to Arcam. Unless all those RU scientists are useless, something substantial is going to result.
The underlying idea must be to promote EU aerospace industry indirectly. Because the EU and the US totally dominate commercial and military aircraft production. And the EU must keep up , so apparently they regard EBM as a core technology for the next generation of aircraft and jet engines .
The potential increase in EBM from the results of only the first project are mind boggling.
Fast EBM is completed but it will take several years to go from lab to mass production. The other two projects will show future benefits too.
The design of electron optical systems has evolved over the past decades through a process of optimisation and development of best design practice. It is anticipated that with adoption of the techniques described in this paper characteristics will be quantitatively assessed and designs evolution will be accelerated to rates at least an order of magnitude greater.
One of the key advantages of electron optics analysis software is that it allows electron trajectories and fields to be visualised in way that could never be directly observed on a gun design. This also carries with it the risk that the designer does not verify the model predictions with the observed performance,
http://www.twi-global.com/technical-knowledge/published-papers/effective-design-of-electron-beam-processing-systems-by-trending/ june 2012
note that “order of Magnitude better “
There are not many investments where we get a chance at that level of improvement.
The fact that EBM lends itself well to computer modeling is a real plus too. Because computers and software are also improving at a rapid rate. Arcam is not dependent on trial and error and thanks to the EU the underlying science is being figured out .SAt no cost to Arcam.
I think Arcam is in the second inning of the metal 3DP game.
But the market is mostly ignoring it. Almost all the analyst and boards I see link it with 3DP of plastics, whereas I think there is little real world linkage.
see also the pdf of that report with a very interesting graph not in the report itself
http://cordis.europa.eu/docs/results/286/286695/final1-final-report-fastebm-figures.pdf
from that link
The key objective of the FastEBM project was to increase the build rate of components to allow parts to be produced at a competitive price. The sensitivity of the viable price to build rate is shown in the diagram above – and it can be seen that by bringing the build rate up from the present achievable rate (for large components) of 0.1kg/hour to above 0.5kg/hour for a 3kg component allows the addressable market share to increase from 0.1% to some 70%. At a build rate of 0.5kg/hr the EBM process is price competitive with machined components with a BTF ratio between 5 and 10. If the build rate can be increased to 1.5kg/hour, the components produced by EBM will be competitive with machined product with a BTF ratio of 5 or higher – this represents 99.9% of the parts produced for the airframe building industry.
And a special thank you to the contributing members this board.
I look for Arcam related materials a lot and you have found many i have missed. Bravo
Arcam is my highest conviction stock
The main thing I worry about is if laser based machines overcome the problem of non dense builds. The irrational market linkage of Arcam to plastic 3DP companies will be broken eventually. and meanwhile gives us the chance to get shares cheaper.
from that link
in order to ensure the technological breakthrough, future aero-engines will have higher overall pressure ratios (OPR) to increase thermal efficiency and will have higher bypass ratios (BPR) to increase propulsive efficiency. These lead to smaller and hotter high pressure cores.
SP5 : Lightweight material to preserve from a significant mass increase. The work will focus on the development of the TiAl intermetallic alloys for low pressure component application. The use of TiAl in the engine is a major breakthrough in engine weight reduction. Technical gaps hindering the use of TiAl need to be assessed.
http://www.e-break.eu/mission/
more free research money for Arcam, the TIAL specialist
from that link
P/E ratio
2013 286
2014 240
2015 E 74
2016 E 50
So it seems that good reason that price of AMAVF isn't following earnings is that the P/E is shrinking
their 2015 estimated earnings = $2.41
2016 estimated earnings= $3.48
If indeed there turns out to be a 40% growth rate, , the stock deserves a high P/E.
Arcam is still in at's infancy, it could grow in the 30% or better range for many years, in double digits for at least a decade.
from the 12/18/14 patent (one I hadn't seen before)
reducing the pressure in the vacuum chamber from a first pressure level to a second pressure level between the providing of said first powder layer and said second powder layer, preheating the powder bed at least partially with said first pressure level, wherein a mean pressure level during the preheating is higher than a mean pressure level during the fusion of the selected locations.
The invention is not limited to the above-described embodiments and many modifications are possible within the scope of the following claims. Such modifications may, for example, involve using a different source of energy beam than the exemplified electron beam such as laser beam. Other materials than metallic powder may be used such as powder of polymers or powder of ceramics.
The control unit may control the vacuum pump(s) and one or a plurality of gas supply valves. A supplementary gas may be let into the vacuum chamber during preheating. Said supplementary gas may for instance be a gas which is capable of providing ions when irradiated by the electron beam during said preheating. Said supplementary gas may be Helium, Argon, Carbon dioxide, Nitrogen, Neon, Krypton, Xenon, Radon.
note that some of the recently posted papers show a problem with oxides in the melt/\. Presumably due to traces of eater or air left after the vacuum pump out. adding non reactive gases then pumping most of them out should purge the system of oxygen, and provide ions to alloy the metal. And as the recent patents has done, these apply to any energy beam, not just electrons. And to polymers and ceramics, not just metal.
Most analysts don't seem to realize the huge patent moat around Arcam.
Not only are they doing it with Arcam equipment, but they are doing it at no cost to Arcam. In many cases it seems that any patents developed will also flow to Arcam. I can't think of any other company whose research has been so well funded by taxpayer money
Looking at the roughness of EBM products, it seems the only place this really matters is on the exterior surface, and I am trying to conceptualize a way that EBM could be combined with laser smelting for that outer surface.,Basically do 99% of vote product with EBM, then finish with laser on the same powder bed? Also I wonder if granularity wouldn't be helped with smaller metal particle size as one of the papers suggest.
Thanks to those finding these great papers.
Even at today's high P/E an investor doesn't get many chances to find a leading patent protected infant company in an infant industry.
HISTORICAL SURPRISES
Sales and Profit Figures in Swedish Krona (SEK)
Earnings and Dividend Figures in Swedish Krona (SEK)
Estimates vs Actual
Estimate
Actual
Difference
Surprise %
SALES (in millions)
Quarter Ending Sep-14
77.10
90.80
13.70
17.77
Quarter Ending Jun-14
81.28
46.10
35.18
43.28
Quarter Ending Mar-14
55.15
64.90
9.75
17.68
Quarter Ending Dec-13
67.70
66.90
0.80
1.18
Quarter Ending Sep-13
36.35
40.40
4.05
11.14
Earnings (per share)
Quarter Ending Sep-14
0.44
2.07
1.63
370.45
Quarter Ending Jun-14
0.74
0.35
0.39
52.49
Quarter Ending Mar-14
0.17
0.51
0.34
200.00
Quarter Ending Dec-13
0.72
0.79
0.07
9.34
Quarter Ending Sep-13
0.05
0.01
0.04
72.73
http://www.reuters.com/finance/stocks/analyst?symbol=ARCM.ST
Sorry about the formatting
these forecasts are often ludicrously wrong. The last 4 averaged 83 % error rate. Obviously analysts have no idea what is really going on with Arcam
considering that they cost several million dollars each, I doubt if there ever was any metal 3DP hobbyists.. Especially for EBM.
In addition, the manufacturer is investigating the possibility of using ALM swirlers in the engines, but Szolwinski stresses that no final decision has been made.
definition swirler from a patent
a swirl stabilizer (e.g., one or more swirlers) may be provided. The role of the swirl stabilizer is to generate turbulent flows within the combustor to better atomize the fuel for the combustion process. In implementations, a swirler may be part of the combustor that passes through the dome of a jet engine. The primary air flows through it as it enters in before the combustion zone. The duty of the swirler is to create turbulence in the airflow to readily mix the fuel within the air.
Anybody who can accurately predict future oil prices is wasting their time fooling around with TSLA.
Those CMC (Ceramic Matrix Components) sound like they could be a good investing field too.
http://www.compositesworld.com/articles/ceramic-matrix-composites-heat-up
But apparently most of the companies involved seem to be too big for a CMC bonanza to help their bottom line much. Any patent protection? Apparently not because GE is building it's own CMC factory
----------
The EU would't be spending 2,344,400 euros on yet another EBM research project before the previous 2 EU research projects were even implemented if they didn't have a strong belief that EBM would be big eventually, that the underlying science was good.
Arcam is clearly identified as the beneficiary.
One company. Not an industry. Physically located on the fringes of the EU. And it's only a tiny employer at this time , not a political favorite like Airbus.
The news is so incredibly bullish long term I have trouble understanding why Arcam stock is struggling not far off the recent bottom. Especially since it's the only 3DP stock that is consistently making money. Even at this early almost embryonic stage of development of the technology. I won't complain, low AMAVF prices mean more chances to pick up extra shares.
Not Monkeybuilt but the low ADR volume does suggest there is not a lot of retail interest in Arcam in the US. But big money and institutions trade overseas all the time, so they probably trade on the Swedish exchange.
I have looked at another company, German, that has an ADR but almost nil volume. Does anybody know of a broker that allows overseas trades in an IRA ? Scottrade and Ameritrade don't.
http://www.ft.com/intl/cms/s/925e49e0-7ce6-11e4-b944-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F3%2F925e49e0-7ce6-11e4-b944-00144feabdc0.html%3Fsiteedition%3Dintl&siteedition=intl&_i_referer=http%3A%2F%2Fboards.fool.com%2Fdid-business-insider-kill-3dp-investing-31571716.aspx#axzz3OFPWu7fM
3D printers still not printing money
The "low barriers to entry" of plastic 3DP certainly does not apply to EBM, or even laser metal printing . But Arcam takes a hit anyway.
Either I am missing something here or we are seeing a great example of market inneficiency. Because Arcam is printing money.
Perhaps what we are seeing here is how much the sector can effect the individual stocks in that sector. It has long been known that individual stock picking is less important than sector picking, which in turn is less important than determining the general market direction.
Institutions often sector pick because they are too big to invest in smaller companies without driving their price up. But these industry cycles fluctuate, 3DP will eventually become fashionable again.
Arcam is my highest conviction stock. Still it is painful to see AMAVF going nowhere but down in a roaring bull market. The P/E is now getting close to reasonable if not cheap.
It will be interesting to see if the lows near present levels hold. I am invested up to my prudent limit now. If prices fall substantially and the good fundamental news hold them I can buy more.
At this point EBM is making mission critical parts, and while price of these parts may be important, quality and durability is probably more so.
I think the long term here is more like 5 or 6 years. It takes a long time from lab of FastEBM to work into production machines.
I noted the comments about carrying a ladder nearby, messing up the machines. Almost all the ladders I know are either wood, fiberglass or aluminum. Which are all non magnetic. Not to mention that the electromagnetic field decreases with the squares of the distance. 12 inches is 144 times less magnetism than one inch. There is no way this could interfere with an EBM machine unless maybe they jumped up and down hard enough with the ladder to shake the floor..
Other parts of the article are off too. Are these guys really experts or mostly journalists? The latter are always ready to opinionated no matter their state of knowledge .
From an investors viewpoint there is a difference between "Peak Oil" and "Peak Cheap Oil". Neither require a sharp pointed peak, a rounded or flat one is OK too, it just takes longer to start the down slope. The down slope isn't needed to make profitable investments, just a tad less supply than demand.
New oil in general is expensive to produce. I understand that even land based oil wells in the Bakken cost close to $9 million each to drill and complete. Deep water wells are even more expensive. These costly wells require expensive oil to be economic. Many areas lack infrastructure, it will be a long time before they produce and market significant amounts of oil. I am dubious about claimed reserves for new fields. There are few typical oil fields, especially not the new ones , which are made feasible by a combination of new technology and high prices. You need both to make them work.
http://stockchartist.blogspot.com/2011/01/investor-sentiment-and-market-direction.html
http://www.bespokeinvest.com/thinkbig/2011/1/6/bullish-sentiment-down-but-still-lofty.html
a problem is that a peak can only be determined in retrospect. How high is high?
It should be kept in mind that sentiment indicators are more useful at picking bear extremes than bull extremes. Fear responses are hard wired into humans- the fight /flight response is physical as well as mental. Greed is far less powerful.
I'm more inclined in the short term to use momentum for timing. Even though signals always lag they are clear cut.
The only part of America experiencing runaway hyperinflation 1861-1865 was the Confederacy. The North did a lot better though it probably was enough to destroy many depending on a fixed income.
http://www.tax.org/Museum/1861-1865.htm
>>> the overall northern inflation rate reached only 80 percent, comparable with the domestic rates during World Wars I and II.<<<
This seems to have little to do directly with Biotech Values so maybe it doesn't belong on this board. But I doubt if severe inflation will be good for stock prices- everybody will be running to commodities. Or even buying refrigerators, anything tangible.
Perhaps some insight can be gained by looking at other duopolies in the past. Coke-Pepsi, GM- Ford come to mind , I'm sure there are several others. In none of the cases I'm aware of was there cut throat competition based only on price. The involved companies wound up with an unspoken arrangement and split the market. I don't know why it should be a lot different with drugs, but probably some detective work can be done there.
Large companies with high overhead accustomed to selling high margin products in general are ill equipped to fight it out in a commodity market. They would be better off using the cash to find new high margin products or buying out companies likely to have one.Wherever possible , commodity markets are avoided by astute managers.
That's a real find Tinker and it fits with my experiences of drug pricing. From the article (on my computer the text was partly covered with ads)
<<To concur with Grabowski and Vernon's results, Frank and Salkever (1997) found that brand name prices increased more quickly than in markets without generic entry. Their explanation was that as the price-sensitive consumers switch to generic drugs, demand for the original brand-name drug declines and becomes less sensitive to price. Thus, the price of a brand name drug can theoretically rise more quickly over time than it would have without generic competition.>>
Personally, the only reason I use generics is cost based. If I could easily afford it I wouldn't take generics. Using generics involves a lot of faith (hope?) that penny pinching generic drug makers aren't fudging somewhere in the process, and that generic tablets dissolve well in the GI tract. The market for "brand drugs "in a market with generics isn't big but it must be highly profitable.
Investing in MNTA is very tricky, even more unanswered questions than usual. After getting through the FDA once for our investment to do well we have to await a second FDA decision. I do think it's a bit easier to predict which applications the FDA will likely turn down than to successfully predict the ones it will approve.
Is this enough WOW to justify buying at this price? Maybe, but prudence suggests a relatively small position.
Thanks to those who sent me private messages re MNTA stock price. I'm not yet a Premium Member so can't reply privately.
Thanks also to those who post here. This is really an exceptional board, one of the best I've ever read.
I did decide to dip my toes back in the water in the low 17's. With anything involving the FDA I need at least a potential double to make it worth the risk.
I suspect that generics will rapidly capture the majority of this market.
The behavior and pricing policies of Sanofi might be predicted based on their pricing of Ambien. This drug for insomnia was nearly unique with little competition. Then after many years they got competitors, and a generic Ambien. The pricing (at Drugstore.com) of branded Ambien 10mg is $594.788 per 100, for 100 of the generic it's $51.08. So I don't think that Sanofi is going to fight a price war. A smaller market share wih huge profits per use is better for them. They need to devote few resources to it, probably most of the machinery is either shared or long since depreciated.
a post showing the chemical structure of lovenox.http://store.businessmonitor.com/article/370474
Despite the IBD article, this drug seems to be a complex type of sugar not a protein.
In the end it may come down to the willingness of the FDA to say that "nearly, almost, close enough" rather than "identical" biologically is all that is needed. IMHO,the probabilities are that the FDA will not be willing to make that jump. If this ruling is indeed setting a precedent, is that the precedent the FDA wants to set, one where every similar application becomes one of how close is close enough?
Another thing to consider is that slight variability in one generic to another usually don't matter that much. If you get 5% or 10% more or less biological effect with an antibiotic it won't make much difference to the patient. That maybe less true with an anti clotting agent. This could be an extra cause of FDA concern.
I sold almost all my MNTA shortly after the good news. But now I'm thinking seriously about reentry. Past prices don't matter- is MNTA a buy at 18? Is FUD presently more powerful than optimism? It seems that the market doesn't believe that MNTA will have the only approved generic form of Lovenex. But working backwards from a price to discover the whys of that price is a bit like trying to reconstruct the recipe and cooking procedures from a piece of chocolate cake.
DD thanks for the great MNTA writeup. I know you mostly presented the "best case" But I think it unlikely that doctors will switch to bio identical quickly. They will write "do not substitute " initially. Doctors are conservative by nature and training . Since the whole idea of bio identical is so new they won't trust it in the beginning -they will wait for somebody else to screw up first. If that doesn't happen in a couple of years they will start writing prescriptions allowing for substitution.
Doctors aren't paying for it, lawyers are everywhere. Physicians have little to gain by writing for bio identical.
However even a price of $50 or so is a lot higher than today's prices.