Nanalyze

The TINY returns of Harris and Harris Group

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In 2004 nanotechnology was buzzing. Much of this hype was surrounding companies that were private and most retail investors could not participate. At that time Harris and Harris (NASDAQ:TINY) was a venture capital company that focused predominantly on investing in private nanotechnology companies. At it’s peak in 2004, TINY closed at an all time high of 22.53. Today the stock trades at just around 3 dollars a share. To put that into perspective, if you would have invested your money in TINY exactly 10 years ago you would have lost just over 49% of your investment. If you would have invested in TINY 1 year ago you would have lost just over 23% of your investment. As of today’s market open, TINY trades at 3.15 which is 12 cents off it’s 52-week low.

In the 2012 letter to shareholders, TINY noted a decrease in NAV from $4.78 at September 30, 2012, to $4.13 as of December 31, 2012. The  below statement was made regarding this decrease in NAV:

Our two public companies, NeoPhotonics and Solazyme were responsible for $7.4 million of the $19.2 million decrease. This decrease of $7.4 million as of December 31, 2012, was a result of decreases in the public market prices of the shares we owned of Solazyme and NeoPhotonics. We monetized $3.1 million of our investments in Solazyme and NeoPhotonics during the fourth quarter of 2012.

TINY states that they monetized their position in NeoPhotonics (NYSE:NPTN) in the fourth quarter of 2012. Here’s what the share price has done since that time:

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In the past three months the share price of Neophotonics has increased by over 74%. Given that TINY should have had an intimate knowledge of Neophotonics business it is surprising to see that they offloaded their position just 10 months before this sizable increase in share price. We aren’t given a breakdown of the 3.1 million dollar monetization so it’s difficult to say how big of a position they actually had.

Regardless of the recent decrease in NAV, TINY still trades at a discount of 75% of NAV. There may be value to be had here but given the large number of investments they have made it would be difficult for any one investment to drive the share price higher given the effects of diversification.

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