calichebahada.com TOP PICK Calyx Bio Venture -CYX.v

 

 

“You are only as good as your last pick”.  I’ve been hearing this since I started as a broker way back in 1990.  It is as true now as it was then.  I have moved past being a broker, as much of the world has moved past people having brokers.  The digital era has changed many things with online commerce gaining ground and online trading taking volume away from traditional brokers.  What has not changed is that anyone in the investment business is still only as good as their last pick.

 

Our last pick was Newstrike Capital NES on the TSX venture.  They are proving out a resource estimated to be greater than 3 million ounces of gold with only 2 years of drilling, 125 holes, and only $20 million spent.  There is a high probability this company will be bought by a major mining company for multiples of its current trading range.

 

As Newstrike continues to prove up ounces, growing their deposit towards a buyout I find myself looking for my next pick.  We have had very nice gains with the last 3 doing very well indeed.  Our last 3 picks have returned an average 18 times our original investment with NES still in the running for even more.

 

The table below highlights theoretical gains, investing $10,000 in each stock at 10% higher than our first recommendation and selling 20% lower than the high.

Name	Symb	Buy	High	Sold	Gain
Oromin	OLE	0.14	4.18	3.34	$228,571
Torex	TXG	0.08	2.43	1.97	$236,250
Newstrike*	NES	0.3	3.37	2.7	$80,000
					$544,821

 

 

*We still hold NES for continued gains

 

 

It turns out I didn’t have to look very far to find our next pick.  The stock we feel has the best probability of returning multiples of your original investment is a company called Calyx Bio Venture CYX.v  http://www.calyxbio.com/  Calyx has a director in common with Newstrike, NES’s CEO Richard Whittall.

 

Calyx owns an approximate 30% interest in a company called Agrisoma Biosciences http://www.agrisoma.com

 

Agrisoma Biosciences is a Canadian-based agricultural biotechnology company that has commercialized Resonance™ Energy Feedstock , a sustainable feedstock crop solution for the biofuels industry.

 

Agrisoma uses a species of Ethiopian mustard (related to canola) called Carinata.  It is a non-food oilseed that is sustainable, with value chain economics that are scalable to support the biofuels industry.  When pressed and lightly refined, Carinata produces a “drop-in” bio fuel solution that takes advantage of the power of agriculture to achieve scale and quality in the emerging Bio Fuel space.

 

Resonance™ Energy Feedstock provides an optimized oil for advanced biofuel manufacturing technologies with significant benefits in fuel manufacturing efficiencies and economics.

 

What all that means is Calyx owns 30% of a company that quite literally grows jet fuel!  It may seem too much to be believed.  I have had people literally think I was crazy.  I got the same reaction when I told people about fuel cells months before Ballard Power IPO’d.   Agrisoma has had 11 years of development partly funded by The Business Development Bank of Canada (also a shareholder) as well as grants from the National Research Council and Agriculture Canada (see the partners page on the Agrisoma website for others).  This is no startup, Agrisoma is on the verge of commercializing Resonance.  They have already invested between $100 and $200 million in development and have 60 to 70 patents on the technology.  The fuel created from Carinata has been flight tested using up to 60% bio fuel in the NRC’s Falcon-20 twin engine jet.  Early results indicate a complete success.  Everyone involved was excited and pleased, so much so that now a second flight test is scheduled to use 100% bio fuel, a first in aviation history!  Here is the headline from the latest news:

 

 

Applied Research Associates (ARA) and Chevron Lummus Global (CLG) are partnering with the National Research Council of Canada (NRC), the U.S. Air Force Research Laboratory (AFRL), and Agrisoma Biosciences Inc., a Canadian firm with a growing presence in the biofuel feedstock market, to evaluate CLG and ARA’s 100% drop-in ReadiJet™ Fuel

 

The only semi comparable listed company is called Ceres.  They are growing a sweet sorghum (grass) and converting it to ethanol.  Ceres IPO’d at $13, a market cap at IPO of 318 million dollars.  Compare that to the implied value of Agrisoma today of just over 14 million.  Ceres has fallen to a MC of 177 million given market conditions over the last months and concerns with ethanol as a fuel additive.

 

 

Any company that has a technological or competitive advantage especially in a new or upcoming field will outperform the markets by a wide margin.  Agrisoma is the most exciting company that no one has ever heard of.  I will admit I had never considered any other type of bio fuel other than ethanol, not to mention bio jet fuel.  With QE to infinity announced last week oil prices will continue to rise.  The scaling simplicity of Readijet suggests future prices will be more competitive with traditional fuel and will vastly undercut the current price paid for a gallon of bio jet fuel, while maintaining margins.

 

Calyx represents a unique opportunity to participate in a company on the verge of commercial success without waiting the decade to develop the technology.

 

We have a position in Calyx and are buyers as money permits.

 

 

 

 

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September 21st, 2012
Categories: Uncategorized . Author: caliche