KiOR (NASDAQ:KIOR)

CAPS Rating: 1 out of 5

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Player Avatar TSIF (99.96) Submitted: 7/10/2011 8:43:24 PM : Underperform Start Price: $15.00 KIOR Score: +2.92

Kior is a developmental stage company proporting to convert non-food biomass to fuel. ( pulp logs, sorghum or algae). The majority of these ideas don't work as the cost of conversion is high. (Including energy, transporation, inputs, etc). I'd be happy to give Kior the benefit of the doubt, but not after they "bought" theirselves a $1.6 BILLION Market cap with thier recent IPO.

Kior planned on "going out" with 10 Million shares at $20 each, but appears to be lucky they got $15. The low float, however could make the share price volitile, but it's also more likely that the directors and original investors who are worth hundreds of millions of dollars each, (on paper, anyway), will chose to "diversify" some of their holdings. Instant millionaires, but more shares in the float.

The original price would have put them at a $2.3 Billion Market cap and while three of the top names in IPOs are all sharing in this one, (GS, CS, and UBS), please pardon me if I doubt their collective wisdom.

Kior has about 100 employees and posted a loss of $53 Million last year with no revenue. It's hard to say how far the IPO money will carry them at that burn rate and I haven't read up on how close they might be to revenue, but does have a feedstock committment from a subsidary of of Chevron Corp. (CVX) and Weyerhaeuser Co. (WY) and a refiner commitment. This does differentiate KIOR from the other four company's which also IPO'd in the last 18 months on the biofuel parade, but at this burn rate, this valuation, and the technology unproven, leaves this IPO bloated.

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Member Avatar brokerbroke (< 20) Submitted: 6/15/2012 3:21:38 PM
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Feel sorry for all who got in on over 10 on the dream--debt included, which lowers price. I'm in @ $8.77 May, 2012 and still sad I didn't examine one important thing.

Member Avatar TSIF (99.96) Submitted: 6/15/2012 6:18:48 PM
Recs: 0

Biomass Fuels have not done well in general. They "sound" good, but typically can't capitalize. Yes, KIOR should have paid down debt, but the IPO was clearly for insiders. I had closed this pick for "space" a while back and "forgot" to get back in on the downthumb before the IPO lockup expiration which dropped it hard to $10. Insiders continue to sell. Low float, but the large investment holding may sell to from time to time keeping a cap on this one. Good luck.

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