After years of dodging the bullet I’ve finally got a total loss in my portfolio: Ceramic Fuel Cells (from the Stamp Collection) has gone into administration. It’s a pity given that the technology seemed at a turning point, finally getting to a point where efficiency and production are seemingly close to a sustainable product, and if it ever becomes competitive with other technologies the market for fuel cell is large.
Let’s hope someone takes over the product. The company could certainly do with some simplification, such a small outfit with listings on 3 markets, HQ in Australia, main operations in Germany, and an AIM listing — could hardly be worse! I presume the plan is to sell the German operation as a going concern — they’ve still announced going to a trade show in Hanover after the administration announcement — and lean down on the multi-listing and Australian and UK operations. At this stage it probably doesn’t deserve to be a listed entity, it’s small enough to be part of a large group or supported by private investors directly. Looking at the accounts, it did burn AUD 300M (negative retained earnings) on the way there which is financially a spectacular failure. Thankfully I got in a few months ago when the market cap was a small fraction of that. Will there be any value left for remaining shareholders? I presume not, the only case where it would is if there’s a tight competitive bid for the German operation or the technology. Though given my entry point it wouldn’t take much for getting some money back.
Was it an error? So far I don’t think it was a particularly bad decision: it was a gamble on the technology taking off, and the outcome of this is undecided. While it ran out of working capital, it also has no debt, and has some active customers, so it wasn’t an obvious train crash as some blue-sky shares who are just burning all the cash they can raise with little to show for it. The risk sizing was appropriate, and indeed the loss is less than my portfolio’s daily move on a somewhat active day — indeed I wouldn’t have noticed for it showing as delisted on the FT’s portfolio tracking tool. Funnily enough, it’s still psychologically more irritating to lose an entire holding than the same nominal loss in a price move on a large position. I had a look at recent UK listing CeresPower, to replace it with more of the same. The technology is plausible and backed by blue-chip scientists, but much further away from production so I find it’s too early. It’s also generally pretty hard to bet on the right horse in such a new technology area — in the solar industry, basically none of the horses got to the finish line, and the mainstream solar tech today is an incrementally improved silicon cell, an improved pony. So no more fuel cells in the portfolios for the time being, but perhaps worth keeping an eye as the sector seems quite unfashionable these days.