Cadiz, Inc. (NASDAQ:CDZI)

TSIF (99.96) Submitted: 8/2/2012 5:16:11 PM : Start Price: $10.18 CDZI Score: +33.58

Cadiz, INC's 50% share price increase was very impressive after it announced that it finally had received final approval on it's Final Environmental Impact Report ("Final EIR") for the Cadiz Valley Water Conservation, Recovery and Storage Project (“Project”). Eighteen months of review resulted in multiple share price swings from $7 to $10 and back down. This allows them to begin buildout of a water supply from their ground water aquaducts to up to 100,000 Southern California homes where reliable water sources are scarce.

Cardiz, Inc averages a mere 60,000 shares traded per day and I typically find it best to avoid anything trading under 300,000 shares as the price can waiver away from valuation for periods of time. A float of sub 10 Million shares can also have "unusual" activity. With 1 million shares trading yesterday, I was "off my game" slightly on the downthumb as over 1 Million shares needed to cover and I missed peak of $10.80. That there would be decline off the 50% gain was based on overall valuaiton of Cadiz, Inc, even with approval. It will take a great deal of time and infrastructure work to begin delivery to the area. Cadiz Inc is currently priced at full success with a net negative book value and a $150 Million market cap. The cash burn is well in excess of cash flow even in this permitting stage. Burn rate was over $9 Million per year with no buildout and only $7 Million in the coffers. Getting financing will be much easier at this step, but it will be required and it will be dilutive.

Overall, this is a great idea, a great win for the area. Shorts should stay away after the price equilizes and shareholders who were in early "may do okay". Overall, however, investors are NOT patient and I see a price realignment to sub $8 at a minimum until financing is arranged.