NIA already owns a large position in its new stock suggestion. We normally don't publicly suggest a stock that we already own a large position in, but this stock is currently trading for well below our purchase price and we consider it to be one of the biggest steals in the market today. Please see our disclaimer at the bottom of this email for information on the amount of shares we own, our purchase price, and when we intend to sell our shares.
Ocean Power Technologies (OPTT)
OPTT is currently one of our largest positions and yesterday it declined 12% to a new 52-week low on very low volume. We have been accumulating OPTT for many weeks and would have accumulated even more yesterday if we weren't traveling on flights for the entire day.
OPTT, in our opinion, is the biggest steal and most undervalued stock fundamentally today based on its balance sheet. NIA believes that the stock market in general today is the most undervalued it has ever been in world history. We are aware of countless stocks that we believe are extremely undervalued. However, there is always a chance the market could decline lower and we are focused on investing into companies that we believe will rise substantially in price regardless of what the rest of the market does.
The best way to become wealthy is to buy stocks when the investment community is fearful and sell when they become greedy. Investors today have trillions of dollars on the sidelines and we are seeing a temporary surge in the U.S. dollar with U.S. Treasuries skyrocketing to record highs while yields decline to record lows. This is a temporary phenomenon caused by the Federal Reserve's actions to manipulate long-term interest rates downward. In reality, the Fed's actions will create tremendous monetary inflation and will result in a loss of confidence in the U.S. dollar. The U.S. Treasury dollar bubble is now at a new peak. NIA considers the recent move in Treasuries to be a headfake that will soon reverse and turn into a rapid downward spiral with Treasury prices collapsing and yields rising faster than ever before in history.
NIA believes the safest way to make massive profits in stocks between now and the end of 2011 is to take advantage of the recent temporary short-term U.S. Treasury rally. We have been researching nearly all U.S. stocks with strong balances sheets and analyzing companies trading for below the total combined value of their cash on hand and U.S. Treasury holdings.
OPTT is a company that ended the first quarter of fiscal year 2012 with $20,512,779 in U.S. Treasuries that mature within 3 to 12 months. OPTT also has $7,608,930 in U.S. Treasuries that mature after one year. OPTT also has $3,806,808 in U.S. dollar certificates of deposit, $773,326 in Australian dollarcertificates of deposit, and $10,489,890 in U.S. dollar cash.
OPTT's Treasuries and certificates of deposit are basically just as good as cash, so all together OPTT is now sitting on an enormous amount of cash totaling $43,191,773. OPTT only has a very small amount of debt equaling $500,000. This means OPTT's net cash position equals $42,691,773.
OPTT ended the first quarter with total shares outstanding of 10,394,720. Therefore, OPTT's total net cash position including their Treasuries and CDs is currently worth $4.11 per share. That is 73% above OPTT's current share price of $2.38.
OPTT's decline in recent weeks has been on very low volume and we are very confident this stock will rise soon to back above its net cash position of $4.11 per share. We believe OPTT is down mainly due to a lack of liquidity in the overall market. Very few people are aware of OPTT and how much cash they have. With investors fearful in general right now to own stocks, there is a lack of buying in OPTT. At the same time, we believe those who bought OPTT on margin are being forced to liquidate.
OPTT is a marginable stock and once a marginable stock declines to below $3, the margin requirements change. Instead of needing to maintain equity of 30% to avoid a margin call, when a stock declines below $3 you must then maintain at least $1.50 per share in equity, which at $2.38 per share means one must maintain 63% in equity. This means the equity requirements for OPTT shareholders have more than doubled in the past couple of weeks, which has created forced liquidations in this stock.
Our educated, brilliant, and smart NIA members are always on the hunt for once-in-a-lifetime opportunities and OPTT is certainly one of the biggest opportunities in the market today.
There are many other reasons that we like OPTT besides its balance sheet. A tsunami recently destroyed a large part of Japan and caused one of the largest nuclear disasters in world history. When you think of the strength of the tsunami that struck Japan, think about all of the energy that is contained in the ocean's waves. Now imagine if a company was able to develop technology that can harness energy from the ocean's waves and use that energy to either power people's homes across the world or power devices in the middle of the ocean where no power is available, such as tsunami warning systems or homeland security devices. Energy from the ocean is completely clean with no health dangers like with nuclear.
OPTT has patented PowerBuoy technology that cost effectively harnesses clean energy from the ocean's waves. OPTT has a PowerBuoy called the PB150 that moves up and down in the middle of the ocean as it gets hit by waves and transfers that energy to the power grid on shore. One PB150 can power 150 homes and OPTT is currently developing its next generation PB500 that is scheduled to launch in 2013 and could make OPTT's technology even more cost effective than wind and solar.
OPTT has another type of PowerBuoy that is Autonomous. Right now, if the U.S. Navy wants to power a homeland security device in the middle of the ocean, it must use diesel generators, which need frequent maintenance and fuel replenishment. OPTT's Autonomous PowerBuoys provide continuous power to any type of device located in the middle of the ocean. OPTT recently deployed a brand new Autonomous PowerBuoy for the U.S. Navy's maritime security program. OPTT integrated it with radar network and communications infrastructure for a sophisticated vessel detection and tracking system, enabling maritime surveillance in the near coast, harbors and littoral zones worldwide. OPTT's Autonomous PowerBuoy stores energy so that it works in zero wave conditions and it won't require any maintenance for three years.
OPTT is now collaborating with Lockheed Martin Corp. (LMT) on a commercial-scale wave power generation project at Reedsport, Oregon. LMT is a $23.7 billion company and with their support we believe OPTT is on track to become one of the world's largest providers of alternative energy! LMT clearly sees huge potential for ocean power technology, but they can't enter the business without working with OPTT because OPTT holds all of the vital patents covering the harnessing of energy from the ocean's waves.
All together OPTT holds 41 patents protecting their technology, with their latest patent covering a PowerBuoy that provides cell phone service in the middle of the ocean where no cell phone towers exist. To see a list of all of OPTT's patents from the U.S. Patent and Trademark Office's web site, go to:http://patft.uspto.gov/
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We believe OPTT's patents are easily worth a few dollars per share above OPTT's $4.11 per share net cash position. Then when you look at OPTT's actual business that saw revenues grow last quarter by 39% and you also consider how closely OPTT has been working with the U.S. Department of Defense, OPTT's business itself could potentially be worth a few dollars more on top of the value of OPTT's cash and patents. We are calling a bottom right now on OPTT and we will be absolutely shocked if this stock doesn't make massive gains from its current price of $2.38.
Disclaimer: NIA owns 177,000 shares of OPTT that it purchased at an average price of $3.267 per share. NIA intends to sell its shares after OPTT rises back above $3.267 per share.
NIA is not an investment advisor. This email is not a solicitation or recommendation to buy, sell, or hold securities. Never make investment decisions based on anything NIA says. This email is meant for informational and educational purposes only and does not provide investment advice. NIA's co-founders have previously disseminated information about OPTT in other media outlets.
Additional legal disclaimer information:http://inflation.us/