One of history’s greatest investors, Warren Buffet, turned a group of textile mills into a massive global powerhouse conglomerate with his ability to find sound companies in which to invest.
Serious investors everywhere look to the Buffets throughout the history of share market investing for insights. Buffet’s partner at Berkshire Hathaway talks about the need for investors to become “learning machines.” Here is what he had to say about a key ingredient of Buffet’s success:
- If you watched Warren Buffett with a time clock, I would say half of all the time he spends is just sitting on his ass and reading. And a big chunk of the rest of the time is spent talking on the phone or personally with people he trusts.
The Internet has enabled thousands of investors with the time and temperament to read anything they can relating to the investing environment. Websites representing different business sectors abound, many of them free. Given the predominant position of mining in the Australian economy, one such site that should be on the radar of all devoted Aussie investors is austalianmining.com.au.
A recent promotional email sent by australianmining.com.au featured a white paper entitled Buyer’s Guide to 3D Printing and Manufacturing from US based MarkedForged, a privately held provider of 3D Printing Systems.
For newcomers to share market investing 3D Printing companies may not attract much interest, if any. But investors in the market for longer periods remember the breathless hype that sector generated almost a decade ago.
3D Printing was hailed as a gateway to the “fourth industrial revolution” with ardent futurists confidently predicting a 3D printer in homes around the world would revolutionise the way things are made, allowing consumers to create customised products for their own use.
Additive manufacturing is a more descriptive term for the technological process, but 3D Printing allows for ease of understanding the technology. Traditional and business printers are driven by software programs that translate human instructions to the machine which then applies some form of ink to a printable file. While this process has seen dramatic breakthroughs since the days of the dot matrix printer, the basic approach of creating two dimensional symbols suitable for printing remains the same.
Additive manufacturing adds layer upon layer of material, suitable for “printing” into a three-dimensional product.
Salivating over the prospect of a 3D printer in every home in the United States, the share price of the two industry leaders in the US at that time, Stratasys Limited (NASDAQ: SSYS) and 3D Systems Inc. (DDD) took off on a two year run before shocked investors began to learn the shortcomings of the technology at that time they should have heeded at the beginning.
The belief in the early days of the run was it would only be a matter of time before the cost of home 3D Printers dropped to the point they would be affordable in every household in the States. The warnings of the severe limitations of 3D Printing technology at the time were ignored. In short, the “ink” available for the process was largely limited to plastic materials, dramatically impacting the kind of products that could be produced.
In addition to the cost of the printer and the limited capability of plastic, there was the learning curve for consumers to make 3D CAD (computer aided design) programs do what they wanted them to do. Ignored in much of the hype was the already existing applications in industry, with a brighter future than the consumer space.
3D Printing was reportedly invented back in 1983 in the US with a layering process employed to furniture veneers. Industrial uses today have dramatically expanded to include products not requiring large scale production of hundreds or thousands of units. Creating individual prototypes of potential products; customised tools and fittings, and low-volume end-use parts are examples of suitable applications for 3D Printing.
These applications are available with the kind of higher quality machines for industrial use and the availability of more materials in the production process. Once limited to polymers – think composite plastics or resins – industrial use 3D printers now can make things using carbon fibre composites, thermoplastics, photopolymers, and metals in powdered form including stainless, bronze, steel, gold, nickel steel, aluminum, and titanium.
There remain many still touting industrial applications benefiting from 3D Printing, with some pointing to lower costs and improvements in available materials likely to drive demand in the consumer space in the not too distant future.
Aussie investors following the explosive growth of offshore 3D Printing manufacturers in the early years of this decade waited with bated breath for the first ASX entry into the space – 3D Group. In 2014 the buzz was all about this fledgling company seeking an ASX listing through a reverse merger with Oz Brewing. The company’s future appeared bright, already having designed and built one of the world’s largest industrial use 3D Printers, right here in Australia The company went bankrupt before the merger, with its assets going to another entity 333D Limited which went on to complete the merger and list on the ASX under the code T3D on 1 September of 2016.
The company listed with high hopes based on that big printer and a joint venture with 3D Graphtec to develop graphene for use in 3D Printing, but the stock price remained flat at $0.02 per share. T3D has fallen to sub-penny stock levels, trading now at $0.001 per share.
There are now three ASX stocks in the 3D Printing sector that could benefit from improving fortunes in the space. The website of German-based statistical analysis firm Statista shows the 3D market for printers, services, and supplies more than doubling between 2020 and 2024.
Global 3D printing products and services market size from 2013 to 2018 (in billion U.S. dollars)
The following table includes the three major existing players, listed by market cap. All are relative newcomers to the ASX with Titomic Limited (TTT) listing on 29 September of 2017, Oventus Medical (OVN) listing in July of 2016, and Aurora Labs (A3D) following in August of that year. These are highly speculative stocks, currently generating minimal revenue and no profit.
Titomic has the rights to a technology originally developed at the CSIRO (Commonwealth Scientific and Industrial Research) in conjunction with Force Industries that uses cold-gas dynamic spraying of titanium or titanium alloy particles to create industrial scale parts in sizes not possible with any other 3D Printing systems. Titomic has dubbed its process Titomic Kinetic Fusion™ technology (TKF).
The potential impact of this breakthrough should be obvious, and the company is making strides towards that end. Investor sentiment is high, with the share price up close to 250% since listing.
The share price is well off its all-time high, perhaps due to profit-taking and nervous investors heeding analyst warnings the stock price got too hot too fast.
One of the many unique features of the TFK process is unlike other processes, there is no melting of material involved, since the cold gas spray fuses one layer of material to the previous layer, usually titanium. The TKF process cuts production times and waste materials over other systems. The production lead time reportedly can be reduced from days to hours. In May of 2018 the company launched the largest metal 3D metal printer in the world at its state-of-the-art facility in Melbourne.
In May of this year the company announced another in a series of positive developments.
A 6 May announcement involved a contract with aircraft manufacturer Boeing Incorporated to develop large scale parts (9m x 3m) on a trial basis. The contract is small — $170,000 – but it establishes s business relationship with one of the largest manufacturers in the world that could become very lucrative should the test parts live up to Boeing’s expectations.
In February Titomic added three new patents to its already impressive existing list. Two patents with the CSIRO for pipe production, provide an entry point for the company into the oil and gas, defence, marine, and mining sectors. A European patent for load bearing structures opens the door for Titomic to penetrate European aerospace, defence, and automotive sectors.
In September of 2018 Titomic announced its maiden $1.8 million-dollar agreement in the defence industry, signing up with TAUV, a producer of armour for military and law enforcement use, to produce shock-resistant soldier-enabled Unmanned Aerial Vehicles (UAVs) in titanium.
Oventus Medical is using its 3D Printing technology to produce the O2Vent® sleep apnea treatment, an oral appliance which eliminates the mask needed in other sleep apnea treatments.
A recent investor presentation highlights the potential for the company to tap the US market for about $2 billion dollars. The oral appliances are custom made following initial consultation from a dentist or sleep centre and an oral scan.
The company launched the O2Vent® Optima here in Australia in January of this year and is signing up sleep centres/dentists for distribution in the US and Canada. The initial O2Vent® appliance is approved for use in the US with the O2Vent® Optima and the ExVent™ valve for integrating with other O2Vent® products to further improve airflow is awaiting FDA (Food and Drug Administration) approval in the second half of FY 2019.
The stock price has dropped in the last month but is still up about 72% year to date and 55% year over year.
In late 2016 the share price of Aurora Labs went on a hot streak as the company was getting ready to launch its cost-effective 3D metal printers for commercial use in the US, reaching an all-time intraday high of $5.39 per share on 30 November of 2016.
The company manufactures the affordable and versatile S-Titanium Pro 3D Printer for industrial use and sells metal powders and digital parts. Its first printers were shipped in late December of 2016. Aurora Labs posted a loss of $1.2 million for the Half Year 2016, a 421% increase over the Half Year 2015 loss of $247,342. Shortly thereafter the company announced a $7 million-dollar placement for institutional and sophisticated investors. The share price went into a tailspin from which it has yet to recover.
In mid-2017 Aurora announced distribution agreements in Germany and India, followed by an agreement in South Korea later in the year, adding Russia in early 2018. Aurora has had multiple share placements to fund expansion, with the latest coming in March of 2019 for $5 million dollars.
The company’s Half Year 2019 results showed a 400% revenue increase, soured by a 34% increase in loss after tax. On a hopeful note, Aurora signed a collaboration agreement with the University of Western Australia (UWA) and Royal Perth Hospital (RPH) to 3D print medical implants. On 1 May Aurora announced the launch of a Beta version of its improved Rapid Manufacturing RMP1 Beta Printer, expected to be ready for commercial distribution later in 2019.