In the investment community, traders are always talking about “liquidity” and “share structure” and how the two correlate with a stock being tradable. Some investors do not touch stocks that have very low volume due to the illiquidity, making it more difficult to get in or out of the stock as quickly as desired without substantially effecting the price per share. Other investors will take the volume and share structure with a grain of salt as it is indeed an “investment” that they intend to hold for years and years, so entry and/or exit strategies are not a primary concern.
Oakland, New Jersey-based Dewey Electronics, a leading provider of military diesel power generation systems, at this point is certainly one that falls into the extremely low float and illiquid category as the stock only has 1.3 million shares outstanding with insiders holding more than 50 percent; bringing the total amount of tradable shares down to less than 600,000. As a result, the three-month daily average volume for the stock is a meager 147 shares per day. Quite suffice it to say, this company does not receive a lot of attention in the trading community, but today they did release some substantial news that qualifies Dewey as worthy of a moment in the sun.
Dewey announced that Altex Technologies Corp., a privately held company in Sunnyvale, California that specializes in fuel processing and fuel cell, combustion and combined heat and power, heat management and alternative fuel production, received a three-year subcontract to integrate a JP-8 fueled, fuel cell based, 10 kilowatt Auxiliary Power Unit (APU) for military ground combat vehicles. While the prime contract was awarded by the U.S. Army’s Tank Automotive Research, Development and Engineering Center (TARDEC) to Altex for a base total of $5.2 million with potential contract options totaling an additional $7.9 million, the deal directly impacts Dewey through a subcontract with Altex as part of a partner program.
Dewey Electronics has been awarded a “not to exceed” subcontract with an approximate value of $1.1 million by Altex Technologies, which could rise to as much as $4.3 million if the U.S. Government exercises all contract options. Dewey is part of the team comprised of Altex Technologies Corp., SerEnergy, and Pennsylvania State University. Per the subcontract, Dewey will design, develop, and package the control system electronics, the power electronics, and will integrate the SerEnergy fuel cell technology with Altex Technologies’ JP-8/diesel fuel reformer technology into the APU by September 2013, followed by ground combat vehicle integration and testing under the contract options.
Commenting on the new contract, John Dewey, President and CEO of Dewey Electronics, stated, “This is an exciting project where we continue to leverage our experience with highly reliable, rugged, power management and generation systems, military grade electronics controls, and advanced alternative energy technologies.” Mr. Dewey continued, “The Altex Technologies subcontract is an example of how we have aligned ourselves with strong partners in order to compete for a wider variety of contracts to fully utilize our expertise. This includes capitalizing on our decades of design and manufacturing expertise in power generation, control electronics, and in-depth understanding of military requirements.”
Obviously, Dewey is a small, tightly-held corporation, but what is particularly interesting is its military connections and tiny market cap of only $3.4 million. Many companies fly “under the radar” of investors and this low-key presence in the publicly-traded space is of no consequence to them as they simply go about their business with day-to-day operations. A few more deals that could represent $1.5 million per year, or nearly half of the DEWY market cap, however, and some more eyes may fall upon this quiet, little company.
More on Dewey Electronics Corporation can be found on the Company’s website at www.deweyelectronics.com