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David Stevenson: Low Carbon Accelerator Thursday 13 November, 2008 With much fanfare (cue Blackadderish trumpets) may I introduce you to the first member of the Dr Strangelove portfolio - the Low Carbon Accelerator. To kick off, let me list some highly relevant statistics I’ve just received from the company. A share price of 17.5p compares rather favorably to net asset value of 87.1p which in turn consists of net cash of 23.4p (with no debts in Low Carbon Accelerator or in its investee companies although some companies do have credit lines that have been withdrawn). LCA’s core business is new energy venture capital. It’s fairly early stage stuff although LCA is expecting to see some tangible results from a number of its companies over the next two years, with the possibility of cash returns as early as the next six months on some of its holdings. You would expect a fairly chunky discount to net asset value during these rather distressed times but not quite the cavernous discount currently on offer, equating to close to 80 per cent. I’d certainly expect the next set of results to disclose maybe a two to ten per cent revaluation downwards but I can’t imagine it would be any worse than this and certainly not the likely 20 to 40 per cent revaluation’s that I’m expecting from some emerging markets closed end funds in the property space. Also the change in the real world economy and the preceding credit crunch have probably not had too much affect on the underlying technology prospects for the portfolio companies - even lower oil prices will, I suspect be mitigated by the heavy wave of investment likely to come from the US post Obama. So, a tough environment with very little chance of IPOs boosting short term values but not quite the Armageddon built into the current share price. And there’s that small matter of the net cash - more than the share price. I’m not basing all my argument on this handy mountain because over time this is likely to diminish - its certainly been falling over the last year and I wouldn’t expect the cash to last much more than 2 to 3 years as LCA continues to invest in its best companies. Nevertheless I’d suggest there is something of an anomaly here especially when you consider the depth of experience on offer from the management team - I also like the look of some of the portfolio companies and especially Sterling Planet which looks like a real potential gem. Is this company about to go out of business? Absolutely not. Will it move in price over the next few months? Unlikely - this is one of the stocks you probably have to buy and lock away for a two to five years before you see the real returns. I like the look of it so its going into the Dr Strangelove portfolio and I might even snap up a few for my own portfolio later in the week! David Stevenson is also one of the Four Wise Monkeys at the online TV investment programme www.4wm.co.uk Copyright The Financial Times Limited 2008
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