Tag Archives: industrial

Investment in Cambridge after ARM Holdings plc

For £24.3 billion, ARM, a Cambridge-based chip design company, has been sold to SoftBank, a Japanese conglomerate, which has vowed to double the staff in ARM in five years among other specified strategies.

Within this activity, at least £380 million was returned to local ARM employees in the period from September 19 – 24 2016. These monies have hit accounts.

As suggested by Emily Mackay, a local fintech and analysis entrepreneur, this is likely to be reinvested to some extent in products and services locally, and another part of it may be invested in early stage through larger listed companies and other assets locally and elsewhere.

This is certainly my case, having been an investor in ARM. I will be spending the unexpected returns mainly locally and partly investing locally. I have already begun to invest not only in listed companies but also in a high local growth scale-up that has been raising millions through crowdfunding.

The 42% premium might have been a much higher premium, given the huge potential of the relevant markets. It appears that the relevant senior ARM staff did not negotiate too hard. I was looking to invest in IoT and ARM for the longer run, and with a much higher upside in that longer run. ARM investors lost part of that upside with this deal.

Leaving that aside, as an investor up that event, and one who would like to continue to invest, I am faced with what to do with the monies returned as they merge with my overall portfolio of assets.

I was a Deutsche Bank securities analyst in the 1990s prior to returning to Cambridge to do a Judge MBA in 2000. There, I had responsibilities to understand and practice portfolio (optimisation) theory, especially around international government bonds and money markets. I am also conscious of the value investing approach of Warren Buffett and have read his books and some of the very old citations within it, such as the classic “Stock Operator” books.

These two ideas somewhat push against each other.

On the one hand, portfolio theory tells us that we should spread out our assets into holdings that are as uncorrelated as possible: diversification. We then are able to use the theory to optimise the balance of the portfolio so that it offers the highest possible return for a given risk level.

On the other hand, Warren Buffett prefers to keep a small number of investment assets which he has gotten to know and has understood and has perhaps been able to establish that they are “undervalued” as measured say against “book value” or some other financial ratio. He will believe in the business model and invest at higher levels than perhaps standard portfolio theory might recommend. He is a risk taker. Well, it worked: after of course many decades, this value investor is in the handful of richest people in the world.

In thinking of diversification, one can go to different asset classes, such as property, equities (stocks in companies), fixed income (bonds), commodities (e.g. gold), alternative finance (lending). One can do all this in different currencies and geographies around the world. There may be influences from taxation policy when one is balancing the portfolio. Within stocks, there are listed public companies (e.g. FTSE 100, AIM listed) right down to small unlisted private companies taking angel and VC investment. Investment can be for a decade or more, or just for a few days.

Another asset class is one’s own business or income potential at work: “human capital”. One needs to balance potential at work with what can be achieved through focus on investments. This is entirely personal and depends on many factors. Normally, that business is a dominant factor.

Now, brainstorming: what are the possible asset classes that might be interesting now. I’ve given some of them as examples above.

Technology.

Some hot and potentially “exponential” sectors, and ones which have representations in Cambridge, are:

  • IOT, IIOT
  • wireless communications
  • healthcare, healthcare services, research tools for academics
  • wearables for mental health and health monitoring etc
  • smart factories
  • payment technologies & fintech
  • software for all the above
  • software for network visualisation
  • 2d & nanomaterials
  • digital printing and 3d printing

We can expect a premium for all classes of company in these areas, but they can still grow and be great investments. ARM of course was one such company. What is the next ARM in Cambridge in terms of growth and development?

P2P Lending: this is a burgeoning, lower risk, lower volatility, lower downside type of investment class than stocks.

Crowdfunding: A recent study showed that the class as a whole has been providing a 14.4% ROI for investors. This is actually comparable with some of the P2P lending returns but at higher risk. If willing to invest in several examples that are uncorrelated, and work with an uncertain medium to long run exit, with very high potential upside (an advantage over P2P) if a “unicorn” is found, then this is an exciting class of assets for part of the portfolio.

Indian equities: this developing country is set to grow among the fastest in the world for the foreseeable future. There are funds for this available from the UK. This would be high risk if investing for only a year or two.

Property in Cambridge has been a great investment – the market has risen on average at just under 6% CAGR for the last 25 years.

The equity value in the property can also supplement funds to invest – if you have the risk-appetite for that. You are likely to be paying “secured loan” rates well under 5% with the bank or building society. You can of course obtain rates from 8% to above 10% in P2P lending (but yes, you cannot defer tax as in shares until sale. You must pay tax each year on gains, even if extracting the monies for the tax bill goes against the investment idea). So there is possible arbitrage, but with risks, of course.

Sometimes investors are thought of as not helping society. Well, your investments are clearly helping people pay less interest and achieve their dreams in P2P lending. Your investments are creating improved properties for you and others to live in. Your investments are enabling entrepreneurs and their teams to have a job and the chance to build great products and services that we all can then enjoy and improve our lives with…in principle!

More investment when you are very successful does not yield less of the good things I’ve just mentioned. And the more you have the more you will deploy effectively to others in society unless you put most of the funds under a mattress.

One of the surprising statistics for Cambridge is that its “Cambridge Index”, created and monitored by the local investment bank N W Brown Group, shows that those Cambridge companies have greatly outperformed the AIM index as a whole. In fact, the Cambridge Index has grown at a rate of over 18% CAGR for two decades, while the AIM index as a whole has languished.

There are many great technology companies in the Cambridge cluster ranging from those wanting angel investment, to those maturing into venture capital and post-angel crowdfunding etc, to those smaller listed growth companies to public companies like Abcam that have reached over £1.6 billion in market valuation and are growing at a faster-than-their-market rate. Are such companies in Cambridge as Abcam, or other generally unknown scaleable tech companies, to emulate the success of ARM?

I look forward to the investment conversations!

Disclaimer: The author was a certified & regulated Securities and Futures Analyst with the FSA (now the FCA) in the 1990s but is not registered to give advice and this blog and all other comments by the author are not investment advice either generally or for any specific security or general class of assets.

HVM Graphene Conference Cambridge 2013 Programme Lineup!

HVMG13 Information | Bookings

Programme for 5 November 2013 HVMG Conference

 

Opening Session – Introduction & Graphene Basics: Functional Materials
10:00 Mike McCreary, Director, CIR Strategy
- Conference introduction
10:05 Professor Peter Dobson, Oxford University Nanomaterials – Chairman’s Introduction
10:20 Prof Andrea Ferrari, Cambridge University 
& Head, Cambridge Graphene Centre
Overview of the Applications of Graphene
10:35 Dr Patrick Frantz, CEO, Cambridge Graphene Platform
Low Cost Graphene & 2D Layered Material Inks for Printed Electronics
10:50 Dr Steve Thomas, CIT Ltd
Conductive materials – market uses & experiences
11:05 Panel with speakers & moderator & Prof Johnny Coleman Trinity College Dublin
11:30 Coffee break
Session 2 – Additive manufacturing, electronics, photonics
11:50 Dr Mike Banach, VP, Plastic Logic
Shaping the next industrial revolution
12:05 Dr David Brown, CTO, Canatu
Scaling of Carbon NanoBud film production for commercial apps in touch and display devices
12:20 Dr Richard van Rijn, CTO, Applied Nanolayers
High volume quality manufacture of graphene
12:30 Dr Kate Stone, Novalia
Creative printed electronics
12:35 Peter Towler, Director, BritonEMS part of OSI Electronics – What to expect from an EMS Supplier

12:40 Panel with Moderator Professor Ferrari & Dr Rob Harvey, AtomJet

13:05 Lunch and Exhibitions
Session 3 – Commercialisation Cases & other materials & applications
14:05 Dr Krzysztof Koziol, Chief Scientist, Cambridge Nanosystems Ltd
14:15 Professor Jonathan Coleman,
Layered materials: from tiny things to advanced applications
14:30 Professor Richard Palmer, Founder, Nanoscale Labs, Birmingham University
Prospects for massive scale-up from nano research in biochips & catalysis
14:50 Dr Nathan Hill, Strategy Director, National Graphene Institute – Commercialisation strategies

15:10 Panel with Moderator Del Stark CEO, Nanopro

15:30 Tea break
Final Session – Strategy for UK HVM & Graphene
16:00 Dr Jani Kivioja, Head, Nokia Research Center
Graphene – What is the commercial viability of short term applications?
16:30 Nick Coutts MA; Former IBM VP, CIR Strategy
Routes to Value for Graphene
16:40 Dr Martin Kemp, NanoKTN
Graphene commercialisation – Summary of industry consultation workshops
16:55 Professor Sir Michael Gregory CBE, Head, IfM
High Value Manufacturing Roadmaps
17:05 Panel with Professor Sir Mike Gregory CBE; Chairman’s Summary
17:30 Networking & Drinks Reception

Please contact 01223 303500 to speak to the organiser of HVMG13 directly.

 

Graphene: what is the reality?

The HVM Conference Series was founded in 2002, after a market research report led to an early definition of high value manufacturing.

The HVM & Graphene Conference is anchored to the large end markets such as materials, electronics, photonics, energy and biotech and tries to connect these & related markets with graphenes & related functional materials, technologies & processes.

The HVM Conference will run an edition on Graphene (HVMG13) and related functional materials on 5 November 2013 in Cambridge. The Nobel Prize has been awarded in 2010 to Geim and Novoselov for work on Graphene. The conference is interested in commercial applications of the materials. There is no interest at this long-running & grounded UK conference series in hyping the market growth derived from the materials. The interest is in the uses, availability, manufacture, timing of graphene, related materials and their market growth. The wide range of potential applications below of graphene fits well with the range of processes & end-product markets that the HVM Conference has covered over the years, such as additive manufacture & printed electronics.

This conference of the brightest, best and most experienced will take on board the below, and ask & discuss the full suite of commercialisation & opportunity prioritisation questions. The conference is sponsored by the NanoKTN, Plastic Logic & OSI Electronics. There is also participation from Cambridge University, the IfM, Cambridge Graphene Centre, the National Graphene Institute, Manchester University, Oxford University, Birmingham University, Lancaster University, Imperial College, Cambridge Graphene Platform, Cambridge Nanosystems, Applied Nanolayers, CIT, Novalia, KPMG, Heraeus Noblelight, and a number of key commercial, larger players such as Nokia Research.

Here are some of the statements and comments made by academics at a selection of learned institutions in recent years:

Graphene is a sheet of carbon atoms arrayed in a honeycomb pattern, just a single atom thick. It could be a better semiconductor than silicon.
Stanford

 

Graphene is a material with outstanding properties that make it an excellent candidate for advanced applications in future electronics and photonics.

…graphene field-effect transistors, FETs, and …graphene monolithically integrated circuits (ICs). These graphene transistors and ICs could become essential elements in the blossoming fields of wireless communications, sensing, and imaging.

…impressive photonic properties of graphene. The light–graphene interaction can be adjusted using an electric field or chemical dopant, making graphene-based photonic devices tunable. (Applications such as)…fast photodetectors, optical modulators, far-infrared filters, polarizers, and electromagnetic wave shields. These graphene photonic devices could find various applications in optical communications, infrared imaging, and national security.

IBM Watson Research Center

 

Graphene is the thinnest known material in the universe and the strongest ever measured. Graphene can sustain current densities six orders of magnitude higher than that of copper…record thermal conductivity and stiffness, is impermeable to gases, and reconciles such conflicting qualities as brittleness and ductility.

Manchester

 

Recent discoveries have provided simple methods for preparing lab-scale samples to study graphene. A number of techniques have emerged that show promise for producing large-scale samples with the ultimate goal of developing devices that take advantage of graphene’s unusual properties. As large samples become available, the possibility grows for applications of this material in solar cell technology (as flexible, transparent electrodes), in composites material development, and in electronic devices.

Columbia

 

…those properties (of graphene/graphene oxides) can be exploited in several applications such as photo-catalysts (degradation of pollutants)…

Nokia Research

 

(We study) thermal transport properties of graphene…applications of controlling heat at nanoscale.

The thermal conductivity can be tuned dramatically by the graphene filler concentration.

Graphene-based composites are potentially promising as thermal interface materials (for) modern heat management in many industrial applications.

Purdue

 

The HVM Graphene 2013 Conference is co-located with the ARM sponsored Smart Homes & Cleanpower 2013 Conference, in its 8th year, which takes in Heat, Water and Connected devices/IoT Sessions for an excellent set of crossovers around energy, heat, storage, electronics, and data. Delegates of  one conference may move freely between both conference rooms for a rich, inspiring and productive experience on the day.

To attend HVM Graphene 2013, simply email (graphene@hvm-uk.com) with your name, affiliation & contact details, and the organisers will do the necessary (pricing is on the webpage linked above).

This blog entry was researched and compiled by Dr Justin Hayward MBA and Conference Director.