It is becoming increasingly clear that stock market speculators are going to be treating clean (green) tech as the next internet.  Parallel to what was seen in the late 90s, a very true thesis (the internet will change the world) will be taken to extremes.  Back then when a company announced a website launch, stocks would rush up 10-15% on the open.  It sounds silly but we are seeing the same things now - lately some solar stocks are annoucning US plants and that alone pushed them up 10% on a session.  For an industry that has been suffering from wicked over production, no less.  But humans are humans - the behavior never changes; just change the thesis/theme/bubble/hype.  (heck we even had clean tech stocks back in 99, Ballard Power anyone?)  So it can be played until the music stops - just be careful of buying into the themes behind the hoopla.  Yes, just as the thesis of the internet as a huge them was correct, green tech will be a game changer but sorry, just as in 1999 there won't be 100s of winners in this space .... just as there were very few [eventual] winners from the Internet revolution. (Lycos? Excite? AtHome Networks? Exodus?)   There will be survivors and eventual winners [Yahoo, Amazon, Ebay] - bur pretending to know who they are, this far in advance, is pretentious. Just as then, I expect many of the companies being talked up by the speculator set, to be out of business when we look back in 2019. [I say this with a twinkle in my eye as the merger of the century between AOL and Time Warner - just spit AOL back on the public market, as an IPO... so funny]

So with all that said, let us speculate....

A123 Systems (AONE) [don't dare look at the valuation] was one of the year's most hyped IPO's. [Sep 24, 2009: A123 Systems - Hope or Hype?] Thus far it has been a disaster for anyone who did not sell in the first week, but after crumbling through late November, it's turned back around of late.  Today's news of a joint venture with (drumroll) a Chinese company is all anyone needs to hear - time to rocket that stock, and lo and behold it just jumped over the 50 day moving average. 

Details:

  • A123 Systems Inc. and General Motors Co. partner SAIC Motor Corp. said Thursday they plan a joint venture in China to supply batteries for electric and hybrid vehicles.  State-owned SAIC will hold a 51 percent stake in the joint venture, which will focus on developing battery systems for electric and hybrid cars, trucks and buses, A123 said in a statement.  (as always, there must be a joint venture to have access to China; in return - they will eventually get your technology.  In 10+ years - they won't need you)
  • It gave no financial details.  (no need for financial details, just run the stock up)
  • The venture would make complete vehicle traction battery systems for hybrid electric and pure electric passenger vehicles and heavy-duty truck and bus applications.

So who will be the big winner down the road in China?  A123? China BAK Battery (BAK)? BYD (BYDDF) - backed by Warren Buffet? Any number of smaller, or private companies I have never heard of?  Who knows.  Let's just not fall for the market opportunity is so huge, countless winners will emerge.  I've heard that in just about every emerging technology - I have yet to see any industry where countless companies thrive over the long run. 

But again - don't worry about the details (wouldn't it be funny if A123 agreed to take only 2% of future profits of the JV?) just buy, buy buy.  Everyone is doing it.

No position