Ted: At the risk of having absolutely everyone here jump all over me, I would like to suggest another reason why Ballard is so hot: This is the manic phase of a long bull market, the point at which people rush into stocks that have momentum, with no regard to the fundamental value. In other words, there are a lot more people out there with money than with brains.
Ballard has benefited from a lot of favorable developments lately, so it is hot. People who don't know a fuel cell from a jail cell are probably buying it.
The probability of some car company other than Daimler wanting to get involved, in the form of a takeover, or even starting a new program to test Ballard's fuel cells out, is pretty slim, IMO. I think that Ballard is viewed as a Daimler creature now in that industry, and other car companies will focus on other technologies (of which there are many) to achieve the same goals, that would be proprietary to themselves. I somehow have trouble seeing BMW looking with relish on the idea of being beholden to Mercedes to get its engines.
In any event, the stock's enormous market cap assumes that Daimler is virtually certain of working out the huge technical and economic problems that must be solved for this invention to ever see the light of day. In fact there is a significant probability that Daimler will fail - maybe 25%, maybe 75%, I don't know - but in that event the stock goes to zero. In stock buying manias people can't imagine that anything might go wrong, just as in the bottom of bear markets it is impossible to imagine anything going right. (Most people reading this won't relate to my last sentence, since we haven't had a real bear market since 1973-74.)
I will guess that at some point between now and eight years from now when Daimler hopes the first car hits the road, there will be a bear market. And at that point people will say, hmmmm, still plenty of problems to be solved, and hmmmm, many years away from the first nickel of profit, I think I will sell.
So I might go long a bunch of Ballard in a few years or so, depending on when the next bear market comes along. I would expect to pay single digits at that time; that assumes, of course, that Daimler hasn't abandoned the project by then, in which case I wouldn't want it. |
