Nanalyze

Investing in Disruptive Technologies

Disruptive technologies are of interest to investors because they stand to displace old innovation with new innovation and potentially change the way we live. We recently received a question from one of our readers as follows:

On top of your home page you state: Investing in Tomorrow’s Disruptive Technologies Today”. Reading many of your articles, it looks like many of these companies are in the development stage and are not publicly traded on the stock exchanges. So how does a personal investor get to invest in some of these game changing companies?

This is a great question. At the present time, 44% of the 136 companies we have highlighted are public and the other 56% are private. What good does it do for a retail investor to learn about potentially game changing companies if they are privately held? We would classify the companies we highlight as falling into three distinct categories; private, public, and over-the-counter (OTC).

Private Companies
There are a number of reasons why a retail investor should care about privately held companies. Firstly, these companies may be developing competing disruptive technologies for publicly traded companies you may already hold. Secondly, private companies are typically backed by venture capital firms that are looking for an exit. Two types of exits are acquisition by a public company or an IPO. Both of these exit options open the door for retail investors to gain exposure and therefore knowing about a private company prior to these events taking place leads to more informed investment decisions. Thirdly, you can invest in some private companies through secondary markets such as Sharespost or Secondmarket.

Public Companies
Public companies are available to retail investors both on US exchanges and foreign exchanges. International companies that are only traded on foreign exchanges can provide opportunities for lower valuations as a result of less hype, and currency exposure which provides portfolio diversification. Every retail investor should understand the importance of portfolio diversification and only invest in disruptive technology companies with money they are prepared to lose.

Over-The-Counter (OTC) Companies
In a past article, we highlighted some of the dangers that exist when investing in OTC stocks. The vast majority of OTC stocks are for speculators, not investors. Retail investors may find the value proposition of an OTC appealing and then when the pump is in full effect, interpret the strong price movements as confirmation of the business model’s validity. When they finally do capitulate and establish a “strong and long” investment position, they will inevitably find themselves holding the bag a number of years later. The only reason we feel there is to cover OTC stocks that claim to be involved in disruptive technologies is to warn retail investors of the dangers here. Often times there is very little information available for investors about OTC companies aside from promoters and stock message boards.

To Conclude
Investment banks (referred to  as the sell side) produce analyst reports for asset managers (referred to as the buy side).  Often times these reports are very extensive, not available to retail investors, and focus too much on complicated financial valuations as opposed to the merits of the underlying technology simply explained. Prior to investing in any disruptive technology, one should be able to understand the value proposition well enough to explain it in simple terms. In recent years, we have seen the emergence of platforms that allow just about anyone to publish articles about publicly traded companies that are then disseminated through many channels such as Yahoo Finance and Google Finance. Many of these articles lack objectivity and contain some inherent bias, usually brought on by a corresponding long or short position held by the author. It is our goal to provide objective, unbiased information to retail investors that will allows them to make informed investment decisions in disruptive technologies.

A few years after we published this article, we did an exhaustive exercise which isolated the 30 disruptive technologies that investors should watch. It’s a good read!

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  • Mika2

    Signed up for your digest. Would like to know your positions. Thank you.

    • Nanalyze

      Thank you for your comment. We’ve sent you an email!

  • Gilbert Yiu

    Added myslef to your newsletter. If you want to be truly objective, why dont you publish your positions on an ongoing basis?

    • Nanalyze

      Thank you for the feedback Gilbert.

      From a compliance perspective, it makes little sense to list any long positions we may have on an ongoing basis since it’s highly unlikely that the articles we publish have any effect on the share price of companies we highlight. The ability to manipulate a stock can be possible for hyped messages targeted at low float, low volume stocks which is what promoters do for a living. We believe that objective information won’t have this same effect.

      Part of this exercise is to see just how much desire there is from our readers to know what positions we take as a result of the due diligence we go through to produce the articles we publish on Nanalyze. We’ll send you our current positions and you can tell us what you think. While we always hold our long positions for at least 30 days, all of our current positions have been held for much longer than that.

  • WallyGator

    The market is long overdue for a correction and correlation will ensure any “disruptive technologies” as you put it will likely follow the direction of the overall market. I’m risk averse and my money has been placed in DRIPs and ETFs as opposed to trying to pick a winner. This strategy suits me well though my wife lets me speculate occasionally on long shots with our kids college fund. 3D printing is a growth industry that will be profitable for industrial use instead of commercial use. I’ve dabbled a bit there.

    • Nanalyze

      Thank you for the comment Wally. One of the reasons 3D Systems has been taking a hit is on speculation that they may not have as strong an industrial position as Stratasys.

  • Franz Schneider

    sute, I would like to learn about your “long positions”. Franz

    • Nanalyze

      Thank you for your comment Franz. We’ve sent you an email!

  • j hatch

    Thank you for the article.
    It is so refreshing to read intelligent, unbiased, informative pieces.
    I signed up for the newsletter.
    Would like to know your 8 long positions.
    Cheers,
    Jonathan

    • Nanalyze

      We really appreciate the positive feedback Jonathan! We’ve sent you an email with our positions and weights.

  • Mack

    Many thanks for your Digest and for revealing your positions. I always appreciate new sources of financial info.

    • Nanalyze

      You’re welcome Mack. We sent you an email.

  • Found my way here researching American Vanadium. Found your take on the company very helpful. I’d be interested in learning about your long choices. -David

    • Nanalyze

      Thank you for the feedback David. We’ve sent you an email with our 8 positions.

  • Roel

    I’m very interested to see the positions you are holding.
    Im glad I discovered this website. Great & interesting articles…

    • Nanalyze

      Thank you for the comment Roel and I’m glad you’re enjoying the articles. I have sent you an email.

  • Satvinder

    I just found this website about 3 days ago. The ruthless objectivity makes the articles a must read. The obvious commitment to objectivity certainly leaves one wanting to hear about your 8 long positions.

    • Nanalyze

      Thank you for the comment Satvinder. We only extended the disclosure of our positions for a few weeks as it becomes difficult to constantly update our holdings and distribute them. We have noted the interest in this comments section and may look to make our holdings available in the future. As mentioned in the “about us” section, we always hold long positions for 30 day and never short any stock discussed on this site.

  • retailanalyze

    Please send me your stock holding list.

    • Nanalyze

      Thank you for your interest. At this time we are not providing a list of long positions upon request. The offer made in this article was just to gauge interest. As stated in our disclaimer, we always hold long positions for at least 30 days and will never short any stock discussed on this site.

  • retailanalyze

    Today, do you have a top pick public company that is considered disruptive right now, that isn’t a penny/<$5 stock ? Thank you

  • BlueWings@777

    Recently attended a tech forum for start-ups. Most of the presenters tried juicing-up their products and services by mentioning “Ai this…Ai that…” some were somewhat misguided and jousting with the imaginary windmills hoping for big bucks and being on the cover of Forbes magazine. Oh well…
    Just like some of the folks on this thread, I would like to get your most recent positions and your respective weightings. I realize that your positions are subject to change anytime, but I just want to get a feel which companies deserve our attention. Many thanks and best wishes for your continued success.

    [Axxxxxxxx@SBCxxxxxx.Net]

    • Nanalyze

      Thank you for the note!

      There are now over 1,500 “AI startups” and some are speculating it could be the next dot-com bubble:

      http://www.nanalyze.com/2017/04/artificial-intelligence-dot-com-bubble/

      The truth is there aren’t many good investments to make in disruptive technology. We hold a few positions and are always evaluating opportunities. We’ll drop you a note with a bit on our positions but later this year that will turn into a paid report to help support our writers!

      Thank you for the comment!

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