Can Nanotech Make A Comeback For Investors? (ALTI, IBM, TINY, NSPH, PXN)

How long has it been since nanotechnology was on the tip of everyone’s tongue as the next great speculative investment frontier?  It seems like ancient history.  But we have seen news from Altair Nanotechnologies Inc. (NASDAQ: ALTI), IBM (NYSE: IBM), Harris & Harris Company, Inc. (NASDAQ: TINY), and Nanosphere, Inc. (NASDAQ: NSPH) this week.  We have even seen a bit of a move in the PowerShares Lux Nanotech (NYSE: PXN) ETF that tracks nanotech this week.

This week was actually more nanotech-related news than we have for some time even if there is still no clear direction on which way the political environment will treat nanotech in the months and years ahead.

Altair Nanotechnologies Inc. (NASDAQ: ALTI) entered into a placement agent agreement with Lazard Capital Markets LLC for the placement of up to $14 million in a direct placement of up to 11,994,469 units.  Each unit is one share of stock and one warrant to purchase 0.55 of a Common Share at an exercise price of $1.00 per share.  Earlier this week, Altair and Amperex Technology announced a pact to accelerate the commercialization of next-generation lithium-titanate batteries.

It seems that IBM (NYSE: IBM) is not waiting to see what the new regime’s treatment will be for nanotech.  It signed a partnership with the Bulgarian Government to support the creation of the first Bulgarian nanotechnology center.  Yep, Bulgaria.  The former Iron Curtain country in Eastern Europe.

A fresh letter to shareholders of Harris & Harris Company, Inc. (NASDAQ: TINY) went out on its website this week.  It said that the companies in its investment portfolio saw a 22% revenue gain in 2008 over 2007 to a level of $242 million.  H&H is a publicly traded venture capital company that invests in nanotechnology and microsystems.

Nanosphere, Inc. (NASDAQ: NSPH) is part of the Lux ETF saw a sharp rise on Friday.  Shares were up 20% at $3.60 late in the day on almost 600,000 shares.  That is almost 15-times normal trading volume.  This one develops, manufactures, and markets a molecular diagnostics platform, the Verigene System that enables genomic and protein testing on a single platform.  It looks like there were 3 very large block volume trades at 11:36 AM EST according to NASDAQ.

There is actually an ETF which tracks the nanotech sector called the PowerShares Lux Nanotech (NYSE: PXN).  This one is very thinly traded and it currently trades at $7.98 and the 52-week trading range is $5.25 to $15.00.  This ETF has been public since late-2005, and it briefly challenged the $20.00 mark in the first half of 2006.  An average daily volume is between 15,000 and 20,000 shares per day, and it has not had a single day of over 100,000 shares since November 2008.  Their full holdings in the ETF are listed here.

Lux Research noted that roughly $147 billion worth of products incorporating nanotechnology were sold globally in 2007, and the group believes that the global marketplace for nanotechnology-enabled products could reach as much as $3.1 trillion by the year 2015.

At the National Academy of Sciences in April, President Barack Obama announced the President’s Council of Advisors on Science and Technology and named Chad Mirkin of Northwestern University to the panel, and he is in the field of nanotechnology.  How nanotech and related fields will be treated on Pennsylvania Avenue in Washington D.C. in the months and years ahead is still an unknown.

JON C. OGG
MAY 22, 2009