Another door was quite firmly shut in REFR's face as Mercedes Benz announced the specifications for its new R-Class SUV/sedan hybrid. Originally known as the GST, for Grand Sports Tourer, their mention of a "panorama" roof, invoked memory of a similar term used by Daimler's Setra division, and led many to jump an automatic association of "panorama roof = SPD".
That assumption got it's answer today as Mercedes made its milestone announcement just weeks before production is slated to begin. The "panorama roof" is in, but no mention whatsoever is made of variable tinting. They do mention "privacy glass" on side and rear windows, but if there is one thing SPD is unambiguously not, it is privacy glass.
Of course, you won't find a promoter who will act like this matters one whit. All that matters is Hiatchi is working on production, and when they get there, VOOM!
And yes, I was trying to invoke the John Cleese rejoinder there.
Doubtless, they will come up with other tacks with which to keep flogging this horse, and when they do, I will be here to give them the coverage they richly deserve. However, today marks the end of the daily frequency of posts to this blog. New responsibilities figure to cut into the time I can devote to this journal, and in any event I feel the backstory of this strange, strange company has now been fairly told.
So with that, have a great Independence Day, and I'll be seeing you soon.
Friday, July 01, 2005
Thursday, June 30, 2005
Where'd the short interest go?
From mid 2001 through much of 2003, the short interest in REFR was a very large, albeit rather stable, two million shares. (For no apparent reason, promoters at the time chose to make up their own number, insisting that there was an additional half million "invisible" short interest. Today these same people will latch on to any excuse to declare the critics to be liars. Go figure.)
In theory, this represented a potential powderkeg for the shorts. If REFR were to suddenly achieve the success that had eluded them for decades, the wave of resulting buying from the short covering alone would lead to huge run-ups in the stock. But then again, we're talking REFR, so shorts were rightly unworried about that eventuality.
Nevertheless, the promoters were unperturbed that, as delay built upon delay, a golden opportunity to catch the shorts off-guard might be slipping away. Why? Because, they said, the short interest wasn't going anywhere. There was no way for the shorts to cover their positions.
It's unclear how they arrived at that conclusion, given that the claim was more sloganeering than debate. But whatever the thought process was, the shareholders were completely convinced. The shorts can't cover and that was all that needs to be said. If REFR took a month, or a year, or ten years to finally succeed, it wouldn't matter because the short interest would still be stuck where it was, waiting to be squeezed to infinity and beyond.
Today the short interest holds steady, at a bit less than one million shares.
Since we'll never get a mea culpa or other explanation from the promoters regarding how they wound up being so wrong about so many things (they're too busy asserting how they will eventually be proven right -- yeah, I know) it falls to the rest of us to piece together what happened.
Two major events appear to have made the difference. The first and easiest one was REFR's delisting from the Russell index. Index funds dumped over half a million shares, and while this weighed heavily on the stock, the stock never quite "broke". It was by and large an orderly decline, with trading volumes increasing nicely to accomodate the mandatory selling by the funds. Where were all these buyers coming from to cushion the fall? It was the short sellers, of course, capturing very nice profits from shares shorted from anywhere from $12 to more than $30.
But prior to that came a rather mysterious occurrence. During one relatively uneventful month, the short interest dropped by more than half a million shares between two reporting periods. There had been a small rise during the period in question, but one that soon fell back, and in any event there was hardly enough volume for that many shares to have been covered in the open market.
So what happened there? Apparently some entity or other had a very large "boxed" position, one hedged against a long position or something equivalent. In the most common cases, such hedging involves options, or shares of a company the shorted company is acquiring, but neither of those applies to REFR.
We may, in fact, never know exactly what happened, but some have strong suspicions. One involves REFR's financier of the time, Ailouros Ltd. While they were supposedly barred from shorting REFR stock in their agreement, it always felt odd that they seemingly had no problem with REFR continuously selling them shares even as they continued to fall. In a few cases, REFR was rather embarassingly found to have been buying the shares right back from Ailouros, at a loss to REFR. But it never seemed right that Ailouros would continue on as they had without some kind of ace in the hole. Could a short position of over half a million shares have been that ace?
Regardless, the shorts today are manifestly in superlative shape, with a relatively mild million shares to worry about covering, and with the stock hovering around 14-year lows. Those still long remain defiant, insisting that one day the shorts will get theirs.
From here, though, it looks like they already did.
In theory, this represented a potential powderkeg for the shorts. If REFR were to suddenly achieve the success that had eluded them for decades, the wave of resulting buying from the short covering alone would lead to huge run-ups in the stock. But then again, we're talking REFR, so shorts were rightly unworried about that eventuality.
Nevertheless, the promoters were unperturbed that, as delay built upon delay, a golden opportunity to catch the shorts off-guard might be slipping away. Why? Because, they said, the short interest wasn't going anywhere. There was no way for the shorts to cover their positions.
It's unclear how they arrived at that conclusion, given that the claim was more sloganeering than debate. But whatever the thought process was, the shareholders were completely convinced. The shorts can't cover and that was all that needs to be said. If REFR took a month, or a year, or ten years to finally succeed, it wouldn't matter because the short interest would still be stuck where it was, waiting to be squeezed to infinity and beyond.
Today the short interest holds steady, at a bit less than one million shares.
Since we'll never get a mea culpa or other explanation from the promoters regarding how they wound up being so wrong about so many things (they're too busy asserting how they will eventually be proven right -- yeah, I know) it falls to the rest of us to piece together what happened.
Two major events appear to have made the difference. The first and easiest one was REFR's delisting from the Russell index. Index funds dumped over half a million shares, and while this weighed heavily on the stock, the stock never quite "broke". It was by and large an orderly decline, with trading volumes increasing nicely to accomodate the mandatory selling by the funds. Where were all these buyers coming from to cushion the fall? It was the short sellers, of course, capturing very nice profits from shares shorted from anywhere from $12 to more than $30.
But prior to that came a rather mysterious occurrence. During one relatively uneventful month, the short interest dropped by more than half a million shares between two reporting periods. There had been a small rise during the period in question, but one that soon fell back, and in any event there was hardly enough volume for that many shares to have been covered in the open market.
So what happened there? Apparently some entity or other had a very large "boxed" position, one hedged against a long position or something equivalent. In the most common cases, such hedging involves options, or shares of a company the shorted company is acquiring, but neither of those applies to REFR.
We may, in fact, never know exactly what happened, but some have strong suspicions. One involves REFR's financier of the time, Ailouros Ltd. While they were supposedly barred from shorting REFR stock in their agreement, it always felt odd that they seemingly had no problem with REFR continuously selling them shares even as they continued to fall. In a few cases, REFR was rather embarassingly found to have been buying the shares right back from Ailouros, at a loss to REFR. But it never seemed right that Ailouros would continue on as they had without some kind of ace in the hole. Could a short position of over half a million shares have been that ace?
Regardless, the shorts today are manifestly in superlative shape, with a relatively mild million shares to worry about covering, and with the stock hovering around 14-year lows. Those still long remain defiant, insisting that one day the shorts will get theirs.
From here, though, it looks like they already did.
Wednesday, June 29, 2005
So how's that plan coming along?
Going back into the PR archives, I want bring out the REFR's master plan as articulated three years ago, at the 2002 shareholder's meeting.
Step one appears to be "having SPD demonstration products made in large quantities". That much they seem to have successfully accomplished. This was supposed to be a "promotional tool" to "increase awareness of SPD technology". That part doesn't seem to have worked so well. Neither the "100 station" radio show, nor the "14 million viewer" TV segment spurred enough demand to, say, keep SPD Inc. in business.
Skipping a bit ahead to founder Robert Saxe's comment: "InspecTech’s model is spectacularly attractive and should convince aircraft owners to equip their planes with SPD-Smart windows." (But didn't.) "By year-end many of the world’s hundreds of ‘Completion Centers’ in which aircraft are refurbished could have this product to show their customers." (But didn't.) "Completion Centers are already being used by InspecTech to market and install SPD aircraft windows." (Meaning, they outsourced the installation.) "I expect this to be a powerful sales promotion tool for SPD technology." (As with every other expectation Saxe has had, not so much.)
You get the basic idea. All these demonstration products served two purposes: one, to allow management to claim products were being made, and two, to make it appear to the shareholders that they were getting serious about marketing SPD.
It was enough to get the shareholders excited at the time. Three years later... the results speak for themselves.
Step one appears to be "having SPD demonstration products made in large quantities". That much they seem to have successfully accomplished. This was supposed to be a "promotional tool" to "increase awareness of SPD technology". That part doesn't seem to have worked so well. Neither the "100 station" radio show, nor the "14 million viewer" TV segment spurred enough demand to, say, keep SPD Inc. in business.
Skipping a bit ahead to founder Robert Saxe's comment: "InspecTech’s model is spectacularly attractive and should convince aircraft owners to equip their planes with SPD-Smart windows." (But didn't.) "By year-end many of the world’s hundreds of ‘Completion Centers’ in which aircraft are refurbished could have this product to show their customers." (But didn't.) "Completion Centers are already being used by InspecTech to market and install SPD aircraft windows." (Meaning, they outsourced the installation.) "I expect this to be a powerful sales promotion tool for SPD technology." (As with every other expectation Saxe has had, not so much.)
You get the basic idea. All these demonstration products served two purposes: one, to allow management to claim products were being made, and two, to make it appear to the shareholders that they were getting serious about marketing SPD.
It was enough to get the shareholders excited at the time. Three years later... the results speak for themselves.
Tuesday, June 28, 2005
To market, to market, to get a fat nothing
I was going to go back an address an aspect of the R. J. Falkner report on REFR, when I found something peculiar. As of noon Eastern, the website is gone and replaced by a "temporarily out of service" notice.
This may mean a lot of things or perhaps nothing at all, but we'll keep a watch on it.
In the meantime, we'll go out on a limb and trust N. Dixon's recounting of the Falkner report for the subject of the markets SPD is/will/hopes to someday participate in.
Flat Glass: very general and redundant with many of the specific products mentioned afterwards, so we'll set it aside for now.
Automotive rear-view mirrors: This market was captured quite thoroughly in the mid 90's by Gentex. Years later, Harary tried to downplay the defeat by declaring the market too small to be worth pursuing(!) Nevertheless, as with old licensees gone inactive, old market long since lost never get dropped from SPD's "potential".
Electrochromic mirrors: Apparently this is there to suggest that Gentex has only a very small part of the market, and that there's plenty of room for SPD to muscle in. Of course that flies in the face of Harary's "too small" declaration, but since when has consistency mattered here?
Automotive sunvisors: Never mind, apparently, that no government is going to allow material that defaults to dark on the front windshield.
Flat panel displays: This one is a real throwback, to the days when laptops largely had monocolor displays and widespread active-matrix LCD was still a pipe dream. LCD has come a long way since then. And SPD?
Eyewear (Prescription, Non-Prescription, Adjustable): They're still holding on to that one regardless of how thorough a failure the Vision-Ease experiment was.
Aircraft Windows: Covered.
The theory is that REFR only requires a very small amount of headway in any one of the above markets to be an instant success and destroy the shortsellers in its stock.
But if that were so, then what does it say about REFR's inability over the course of four decades to accomplish such a trivial-sounding task?
This may mean a lot of things or perhaps nothing at all, but we'll keep a watch on it.
In the meantime, we'll go out on a limb and trust N. Dixon's recounting of the Falkner report for the subject of the markets SPD is/will/hopes to someday participate in.
Flat Glass: very general and redundant with many of the specific products mentioned afterwards, so we'll set it aside for now.
Automotive rear-view mirrors: This market was captured quite thoroughly in the mid 90's by Gentex. Years later, Harary tried to downplay the defeat by declaring the market too small to be worth pursuing(!) Nevertheless, as with old licensees gone inactive, old market long since lost never get dropped from SPD's "potential".
Electrochromic mirrors: Apparently this is there to suggest that Gentex has only a very small part of the market, and that there's plenty of room for SPD to muscle in. Of course that flies in the face of Harary's "too small" declaration, but since when has consistency mattered here?
Automotive sunvisors: Never mind, apparently, that no government is going to allow material that defaults to dark on the front windshield.
Flat panel displays: This one is a real throwback, to the days when laptops largely had monocolor displays and widespread active-matrix LCD was still a pipe dream. LCD has come a long way since then. And SPD?
Eyewear (Prescription, Non-Prescription, Adjustable): They're still holding on to that one regardless of how thorough a failure the Vision-Ease experiment was.
Aircraft Windows: Covered.
The theory is that REFR only requires a very small amount of headway in any one of the above markets to be an instant success and destroy the shortsellers in its stock.
But if that were so, then what does it say about REFR's inability over the course of four decades to accomplish such a trivial-sounding task?
Monday, June 27, 2005
Lowlights of the summer newsletter
Thanks to N. Dixon for picking these comments out of the Summer Newsletter and making my job a lot easier.
...our licensees have received strong indications that substantial orders for several different markets will be placed ....
Nothing like using a lot of words to say absolutely nothing, eh? If nothing comes of it, it won't be REFR's fault, and it won't be the licensees fault, it'll be the customers' fault for giving false indications as to their interest. Darn them!
Notice, though, how nobody seems to have their orders in now. You'd think that if people really want this stuff there'd be a waiting list or something.
.....prospective customers in the automotive, aircraft and architectural fields for products that will require substantial volumes of SPD film.
That's about as close to mentioning Boeing as the newsletter gets. "Prospective customers", translated, means "people we'll try to sell this stuff to."
.....many successful innovations such as xerography, which is better known as photocopying, have required decades to achieve. These efforts usually require more time, effort and expense to achieve than the entrepreneurs involved originally expected. That has certainly been true in our case as well.
Ah yes, the old chestnut of comparing yourself directly to great success stories of the past. The fact that when you actually examine the details, you don't stack up favorably at all, never matters. Xerography, i.e. the technology behind copying machines of the latter half of the last century, did take a certain amount of time to go from original design to commercialization. However, a cursory look at Xerox's own history page puts paid to the notion that the developments are anything close to similar.
The time from original patent to commercial introduction was seven years, not forty. Furthermore, this was in the 1940's when innovation in general moved a lot slower. And then there was the little matter of World War II going on, which diverted resources away from this kind of development.
Xerox, or Haloid as it was then called, had a very profitable and well-established business in photographic paper going on in tandem with their xerography research. In short, the company was already successful and self-sufficient.
Probably most tellingly, Xerox depending on a single "outside" source, well-funded by Xerox, for development of xerography. Contrast that with REFR, who signs on everyone and anyone it can to be part of the group effort, resulting, at best, in much duplication of effort and competitive distrust. And that's assuming that the licensees are even motivated by the meager incentives REFR can offer to move forward.
The Xerox story is one of several Harary, like Saxe before him, likes to try to draw comparisons with REFR. Others include Microsoft, Edison's light bulb, and Henry Ford's automobile. It's a really sick display, and REFR management ought to be ashamed.
Except, I doubt "shame" is anything they're capable of.
One more:
.....I believe that you have a sound basis on which to be optimistic that a successful commercial introduction of second-generation SPD film will be forthcoming.
And a sound basis on which to dismiss failure as the result of "overoptimism". After all, who can find fault with someone for just being too optimistic?
Besides a realist, I mean.
...our licensees have received strong indications that substantial orders for several different markets will be placed ....
Nothing like using a lot of words to say absolutely nothing, eh? If nothing comes of it, it won't be REFR's fault, and it won't be the licensees fault, it'll be the customers' fault for giving false indications as to their interest. Darn them!
Notice, though, how nobody seems to have their orders in now. You'd think that if people really want this stuff there'd be a waiting list or something.
.....prospective customers in the automotive, aircraft and architectural fields for products that will require substantial volumes of SPD film.
That's about as close to mentioning Boeing as the newsletter gets. "Prospective customers", translated, means "people we'll try to sell this stuff to."
.....many successful innovations such as xerography, which is better known as photocopying, have required decades to achieve. These efforts usually require more time, effort and expense to achieve than the entrepreneurs involved originally expected. That has certainly been true in our case as well.
Ah yes, the old chestnut of comparing yourself directly to great success stories of the past. The fact that when you actually examine the details, you don't stack up favorably at all, never matters. Xerography, i.e. the technology behind copying machines of the latter half of the last century, did take a certain amount of time to go from original design to commercialization. However, a cursory look at Xerox's own history page puts paid to the notion that the developments are anything close to similar.
The time from original patent to commercial introduction was seven years, not forty. Furthermore, this was in the 1940's when innovation in general moved a lot slower. And then there was the little matter of World War II going on, which diverted resources away from this kind of development.
Xerox, or Haloid as it was then called, had a very profitable and well-established business in photographic paper going on in tandem with their xerography research. In short, the company was already successful and self-sufficient.
Probably most tellingly, Xerox depending on a single "outside" source, well-funded by Xerox, for development of xerography. Contrast that with REFR, who signs on everyone and anyone it can to be part of the group effort, resulting, at best, in much duplication of effort and competitive distrust. And that's assuming that the licensees are even motivated by the meager incentives REFR can offer to move forward.
The Xerox story is one of several Harary, like Saxe before him, likes to try to draw comparisons with REFR. Others include Microsoft, Edison's light bulb, and Henry Ford's automobile. It's a really sick display, and REFR management ought to be ashamed.
Except, I doubt "shame" is anything they're capable of.
One more:
.....I believe that you have a sound basis on which to be optimistic that a successful commercial introduction of second-generation SPD film will be forthcoming.
And a sound basis on which to dismiss failure as the result of "overoptimism". After all, who can find fault with someone for just being too optimistic?
Besides a realist, I mean.
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