What I Sold: Dynamotive Energy Systems (OTC:DYMTF)
This entry continues a series on companies I sold as part of a portfolio
cleanup prompted by the mess on Wall Street. In the first entry I described
I plan to do with the cash, followed by the reasons why I sold Carmanah
Technologies and Pacific Ethanol. UQM
Technologies was one I didn't sell.
I have not mentioned Dynamotive Energy Systems (DYMTF) before. I have mixed feelings about the company. They use fast pyrolysis to make cellulosic biofuels, which I believe will prove to be one of the more economic pathways to cellulosic biofuels. However, I believe that cellulosic biofuels are not usually the best use of limited biomass. Rather, I have argued that cellulosic biomass can be more profitably used to displace coal in electricity generation, or to displace corn in feed for livestock. Nevertheless, there is a strong regulatory and popular push towards cellulosic biofuels, which led to my speculation on Dynamotive last year.
According to the company's Q2 2008 financial statements, they had $1.3M in current assets, $9.5M in current liabilities, and a three month operating cash flow of -$341K. They've been funding their deficit with short term loans and new share issues, a process which I expect will become much more difficult in the current financial environment, with negative implications for the share price.
DISCLOSURE: No position.
DISCLAIMER: The information and trades provided
here are for informational purposes only and are not a solicitation to buy or
sell any of these securities. Investing involves substantial risk and you should
evaluate your own risk levels before you make any investment. Past results are
not an indication of future performance. Please take the time to read the full