Broke the rule again (CCEL and SPDV)
I have a personal rule, borne of bad experiences with companies like Mooney Aerospace, and of reading of the bad experiences of others with penny stocks, OTC Chinese shell companies, and the other scams of the pink sheets and over the counter market.
The rule is: Don't buy companies that aren't on the major exchanges (NYSE, NASDAQ, AMEX).
But sometimes we all break the rules, and I am no exception. I now own two companies that are traded over the counter, SpaceDev (SPDV-full writeup here), and Cryo-Cell (CCEL-full writeup here) . Both have been making waves lately, but I've held SpaceDev for while -- it's Cryo-Cell that's the new rule breaker here.
I bought CCEL yesterday at what turned out to be the closing price, $3.89. It has actually already dropped a hair below that, which is neither unusual for my investment choices nor a problem for my long-term outlook.
Just to quickly update you on SpaceDev, which I still consider to be a great investment for the long term:
They are planning a merger with Starsys, which I already wrote about.
They have now launched a genuine microsat product, available for sale to anyone who needs to get a little dishwasher-sized presence in space. Could be communications companies, or researchers in Universities ... anyone. Microsats are now for sale on the open market, and I'm sure the price is negotiable.
And perhaps more importantly, they have firmed up their plans to develop what is in effect a private space shuttle replacement in the SpaceDev Dream Chaser that's based on an old NASA design (recycling -- another way to be the low cost provider!). They have been awarded a pretty big contract from the Air Force to work at upsizing their hybrid rockets, and they are aggressively pursuing work under NASA's new plan to develop viable commercial projects that can run supply flights to the International Space Station. There's no guarantee that the Streaker will get those contracts, but I think there's a good chance given SpaceDev and Starsys' track record and great pricing.
This is all big money stuff if they can get it working, and it's all on top of what is currently their biggest project, the Missile Defense Agency microsatellite array which is in the middle stages of development. SpaceDev's plan to use government contracts to research and develop commercial space products and services that they can then sell more widely is working, and what's more, the government wants it to work -- still lots of possible bumps in the road, but I'll be enjoying watching these folks reach for the stars.
And if this growth continues apace, I think we can expect SpaceDev to list on one of the major markets in the next year or two.
But the new news is that I did indeed decide to buy Cryo-Cell, despite the fact that they're not only on the OTC market but have already been delisted from the big exchange once. That was quite a while ago, and they really seem to have their act together now and are fully planning to apply for relisting with the big boys next year.
Like SpaceDev, CCEL is profitable -- the current PE is high at around 40 or so, but with the growth potential they have I think that's pretty fair. I wrote such a long bit about them the other day that I can't imagine anyone actually read the whole thing, but suffice to say that they have the largest customer base in what might be a really huge market. Right now they are the largest cord blood bank in the US with about 100,000 customers (almost twice as big as their biggest competitor), but they believe that their addressable market is 25% of US births -- that would be one million possible customers every year. To my ears that's a pie in the sky ambition, but I'm happy to see them aiming high and who knows, maybe they'll reach it.
I listened to several CCEL presentations and executive interviews yesterday as I was making my final decision to purchase -- links are here, here and here if you'd like to hear them, management sounds aggressive, sober and capable, which can always be an act but is still nice to hear.
The company has ambitious goals, a great balance sheet and growing and predictable recurring revenue stream, and is the low cost provider as well as being the largest and the provider of the (arguably) highest quality service. Add that to a new placental stem cell preservation service that they're launching in 2006 to distinguish them further from their competitors, and I really like what I see.
If you think stem cells will be important and that medical discoveries will make people start to realize their value (they've already shown that placental stem cells may cure diabetes in mice, which is huge), then you'd have to believe that parents will begin to think it's irresponsible not to preserve the stem cells that might help their family. Add that to increased marketing, and I think we have a winner in CCEL for the decade to come.
Of course, I didn't get the price I would have gotten had I jumped aboard CCEL at my first impulse, or even as I finished my earlier writeup -- but that's OK, I think a few cents here or there will be immaterial by the time I want to sell, which hopefully will not be for a very long time.
The rule is: Don't buy companies that aren't on the major exchanges (NYSE, NASDAQ, AMEX).
But sometimes we all break the rules, and I am no exception. I now own two companies that are traded over the counter, SpaceDev (SPDV-full writeup here), and Cryo-Cell (CCEL-full writeup here) . Both have been making waves lately, but I've held SpaceDev for while -- it's Cryo-Cell that's the new rule breaker here.
I bought CCEL yesterday at what turned out to be the closing price, $3.89. It has actually already dropped a hair below that, which is neither unusual for my investment choices nor a problem for my long-term outlook.
Just to quickly update you on SpaceDev, which I still consider to be a great investment for the long term:
They are planning a merger with Starsys, which I already wrote about.
They have now launched a genuine microsat product, available for sale to anyone who needs to get a little dishwasher-sized presence in space. Could be communications companies, or researchers in Universities ... anyone. Microsats are now for sale on the open market, and I'm sure the price is negotiable.
And perhaps more importantly, they have firmed up their plans to develop what is in effect a private space shuttle replacement in the SpaceDev Dream Chaser that's based on an old NASA design (recycling -- another way to be the low cost provider!). They have been awarded a pretty big contract from the Air Force to work at upsizing their hybrid rockets, and they are aggressively pursuing work under NASA's new plan to develop viable commercial projects that can run supply flights to the International Space Station. There's no guarantee that the Streaker will get those contracts, but I think there's a good chance given SpaceDev and Starsys' track record and great pricing.
This is all big money stuff if they can get it working, and it's all on top of what is currently their biggest project, the Missile Defense Agency microsatellite array which is in the middle stages of development. SpaceDev's plan to use government contracts to research and develop commercial space products and services that they can then sell more widely is working, and what's more, the government wants it to work -- still lots of possible bumps in the road, but I'll be enjoying watching these folks reach for the stars.
And if this growth continues apace, I think we can expect SpaceDev to list on one of the major markets in the next year or two.
But the new news is that I did indeed decide to buy Cryo-Cell, despite the fact that they're not only on the OTC market but have already been delisted from the big exchange once. That was quite a while ago, and they really seem to have their act together now and are fully planning to apply for relisting with the big boys next year.
Like SpaceDev, CCEL is profitable -- the current PE is high at around 40 or so, but with the growth potential they have I think that's pretty fair. I wrote such a long bit about them the other day that I can't imagine anyone actually read the whole thing, but suffice to say that they have the largest customer base in what might be a really huge market. Right now they are the largest cord blood bank in the US with about 100,000 customers (almost twice as big as their biggest competitor), but they believe that their addressable market is 25% of US births -- that would be one million possible customers every year. To my ears that's a pie in the sky ambition, but I'm happy to see them aiming high and who knows, maybe they'll reach it.
I listened to several CCEL presentations and executive interviews yesterday as I was making my final decision to purchase -- links are here, here and here if you'd like to hear them, management sounds aggressive, sober and capable, which can always be an act but is still nice to hear.
The company has ambitious goals, a great balance sheet and growing and predictable recurring revenue stream, and is the low cost provider as well as being the largest and the provider of the (arguably) highest quality service. Add that to a new placental stem cell preservation service that they're launching in 2006 to distinguish them further from their competitors, and I really like what I see.
If you think stem cells will be important and that medical discoveries will make people start to realize their value (they've already shown that placental stem cells may cure diabetes in mice, which is huge), then you'd have to believe that parents will begin to think it's irresponsible not to preserve the stem cells that might help their family. Add that to increased marketing, and I think we have a winner in CCEL for the decade to come.
Of course, I didn't get the price I would have gotten had I jumped aboard CCEL at my first impulse, or even as I finished my earlier writeup -- but that's OK, I think a few cents here or there will be immaterial by the time I want to sell, which hopefully will not be for a very long time.
This article posted by One Guy @ 11/17/2005 02:27:00 PM 0 comments
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