Trader Talk

Nanotechnology: What About Investing In It?

One of the most fascinating things to watch as a Wall Street reporter is the emergence of new technologies, and attempts to fund them. Biotech was the big one a decade ago, but now there are others: robotics, genetics, artificial intelligence, and now nanotechnology.

These technologies can and will be enabling--that is, they will assist companies to improve existing products and offer (startlingly) new products in the near future, but they will also likely be disruptive of many business plans.

A new research firm started up last week. iNano Capital Advisors is a registered investment advisor in Florida focusing exclusively on nanotechnology. Nanotechnology attempts to manipulate structures at the atomic level, and it has the potential to change whole industries. A nanometer is a billionth of a meter, about the size of six carbon atoms in a row.

The firm is run by Arthur Pacheco, a former president of the Securities Traders Association with a long history in the securities industry. The firm is partnering with research institutes and universities like the Smalley Institute at Rice University, which is the oldest and most respected research institute in the nanotech field, as well as the Alliance for Nanohealth, which is a research partnership of eight medical centers and colleges that do research and development.

But iNano wants to be more than just an institutional research firm. They want to nurture nanotech firms and expose them to the investment community.

They will produce research on a universe of about 200 stocks that will be directly impacted by developments in nanotchnology. The research will discuss stocks as diverse as Kimberly Clark (who are interested in developing better fibers) to medical technology companies (nanocoatings for stents to make sure they are not rejected or to decrease the possibility of infection) to our parent, General Electric , who are making a large investment in R&D for nanotech.

What about investing in nanotech? Two problems:

1) right now, it's difficult to play nanotech directly, and

2) the science is extremely complicated and involves a lot of cross-disciplinary work. This has led a lot of investors to get discouraged by the sheer complexity of the business.

That's a mistake. This technology will--along with artificial intelligence and the advances in genetics--change the world.

But all ventures begin modestly. iNano just initiated coverage on their first pure-play nanotech investment, Harris and Harris Group with a buy recommendation. Here is a link to the report.

I'll keep an eye on them, and other companies with their eye on these disruptive technologies.

Questions?  Comments?