I think this is it.
I have been buying a few ULBI shares to add to my big VLNC position, which I expanded substantially on the last price excursion below 5. I'm trying to hold a basket to participate in the sector.
The Lehman earnings estimate in a way confirms some of the earnings projected on this thread for VLNC. Given the money ULBI just raised, about $28M, they should be able to build capacity roughly similar to VLNC, but probably still smaller. So the $2.00 a share Lehman has, given the 10.5M shares ULBI has out, leads to an annual profit of $21M per year. This could be similiar to what Valence could earn in calendar 99, given the capacity ramp lead time Valence has. Dividing this profit by the current Valence shares of about 24M, and I get about 90 cents a share. And I believe that Valence should be able to out earn ULBI, so I think this number is low. Given this, VLNC shares look like they are priced ridiculously low.
Finally, the recent purchase of $3.2M worth of VLNC stock at $5.06 by Lev Dawson, using a promissary note, is very bullish IMO. He has to pay interest at 5.25%, due at the end of each calendar year (this December he will have to pay about $170,000). He also would take all the loss, if the stock price craters. He didn't have to exercise these non-qualified options now. The only reason I can think of for him to assume the risk at this time, is to avoid paying the tax due, if he was to exercise these options when the stock is at a higher price. In summary, I think he is expecting a large stock run-up this year.
These are both speculative stocks, and each person should evaluate the risk/reward carefully. But given the Mitsubishi and Samsung announcements, there is a large market for these batteries, and both VLNC and ULBI should begin shipping in volume this year. A great sector investment opportunity, IMO.
Paul |
