Harris & Harris Group

by Kris_Tuttle on January 10, 2011

Today we ini­ti­ated cov­er­age of Har­ris & Har­ris, a pub­licly traded invest­ment fund with a port­fo­lio of emerg­ing tech­nol­ogy invest­ments in semi­con­duc­tors, health­care, energy and advanced materials.

The full report (PDF) is linked below but here are the highlights:

  • Har­ris & Har­ris Group is a spe­cial­ized invest­ment firm that has built an impres­sive port­fo­lio of pri­vate com­pany equi­ties in emerg­ing growth areas, includ­ing per­son­al­ized med­i­cine, high-speed semi­con­duc­tors, LEDs, next-generation mem­ory tech­nolo­gies, clean fuels, clean water, advanced mate­ri­als and quan­tum com­put­ing.
  • The firm has exploited core exper­tise in nan­otech­nol­ogy to effec­tively ride the expan­sion of nan­otech­nol­ogy appli­ca­tions into indus­tries like semi­con­duc­tors, elec­tron­ics, trans­porta­tion, health­care, energy and even enter­tain­ment. In fact, nan­otech­nol­ogy has under­gone a “quiet explo­sion” of activ­ity in the last decade with most met­rics (patents, com­mer­cial R&D cen­ters, indus­trial uses) increas­ing ten­fold in the last decade. Large por­tions of indus­try have come to rely on nan­otech­nol­ogy as a fun­da­men­tal enabler for advanced new products.
  • The port­fo­lio of over 30 com­pa­nies is full of excit­ing emerg­ing com­pa­nies—stand­out names include Solazyme (bioen­ergy), BridgeLux (LEDs), Laser Light Engines (dig­i­tal pro­jec­tors) and Mer­sana (can­cer ther­apy.) These com­pa­nies are cre­at­ing quite a stir.
  • Recently the cap­i­tal mar­kets have offered Har­ris & Har­ris an addi­tional oppor­tu­nity to pro­vide short and medium term financ­ing to bet­ter lever­age their large cash posi­tion. This allows Har­ris & Har­ris to off­set some oper­at­ing expenses by increas­ing the returns on their cash.
  • Both the tech­nol­ogy M&A mar­ket and the IPO space have been show­ing sus­tained health and are offer­ing more oppor­tu­ni­ties for H&H to real­ize liq­uid­ity events in their port­fo­lio at val­u­a­tions in excess of cur­rent car­ry­ing val­ues.
  • In eval­u­at­ing how much H&H is worth, we can look at the his­tor­i­cal price-to–NAV ratio and the poten­tial for increases in NAV over time. In the past sev­eral years the P/NAV has ranged from as high as 8.82x to as low as .57x. On an annual basis the aver­ages have been between 1x and 4.9x. We’d say the long-term aver­age is 2x and the cur­rent P/NAV is 1x. We esti­mate that cur­rent NAV under­states the port­fo­lio value by 50%, which would imply a fully val­ued share price of $12 for TINY.

The full report is avail­able via this link: Har­ris & Har­ris: Sur­vive to Thrive (PDF).

[Dis­clo­sures: Har­ris & Har­ris is a cor­po­rate research client of Research 2.0 and some Research 2.0 employ­ees may own posi­tions in the stock at the time of this writ­ing (posi­tions that were owned prior to engag­ing with Har­ris & Har­ris.) Addi­tional infor­ma­tion about our dis­clo­sures and poli­cies can be found on our web­site on the legal page.]

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