Dec. 31, 2003 — A handful of nanotech stocks rose dramatically early this week after Zack’s Investment Research issued a news release commenting favorably on two of them. While the rally might have signified nothing for the companies concerned, the episode does suggest that nanotech investors possess plenty of appetite for speculation.
null
The release was issued last Friday. On Monday, the two companies it cited — Harris & Harris Group Inc., a publicly traded venture capital firm that invests in nanotech and other small technologies, and Nanogen Inc., a provider of microfluidics-based diagnostic tools — both closed up approximately 20 percent while their volumes skyrocketed. Other firms with “nano” in their names, including Nanophase Technologies Corp. and Nanometrics Inc., followed suit.
 |
null
“I believe nanotech will be one of the few hot sectors (in 2004),” said Kenneth Reid, the Santa Fe, N.M.-based editor of the Spear’s Security Industry analyst whose work was the basis for Zack’s news release. The release noted that Spear had put Harris & Harris and Nanogen on its A-list of stocks to buy.
null
What’s really impressive about all this is the amount of faith investors will put in a press release and an online story. The stocks’ surge might not have been entirely due to the release, Reid noted. However, there was no other nano news that day, at least none related to nanotech stocks. The surge caught the attention of Dow Jones Newswires and other news services that scattered reports on the uptick to publications around the world.
null
The last time nano stocks popped in tandem, President Bush had just signed the Nanotechnology Research and Development Act in early December.
null
On Tuesday, Harris & Harris announced it had completed its follow-on offering of 2.3 million additional shares. The price? Eight bucks.
null
It’s a sign of a shift in the way average investors think about nanotech. Over the past two years, nanotechnology’s promoters have warned against the rise of speculative activity in attempts to save the “nano” label from becoming a “dot-com”-style flavor-of-the-decade. As entrepreneurs have attempted to garner money from skeptical private backers, hype appeared to be out and real markets in.
null
Will retail investors demand the same? Probably not. And the situation will likely change even more as a new breed of analyst enters the field — one that hasn’t been as personally or financially invested in nanotech’s success as, say, Lux Capital’s Josh Wolfe or CMP Cientifica‘s Tim Harper, who look at nanotech companies as more than merely stocks to buy and sell.
null
So, if a single news release on a holiday week can generate a 20 percent spike, then what could happen when a dozen firms are issuing reports every other week?
null
“The nano space,” Reid said, “is a speculative space similar to the dot-coms.”
null
And it is in this space that nanotechnology enters the year 2004.