I'm marveling at Nano Dimension (NNDM) and thinking to myself maybe some companies learned something from the dot-com era.
While valuations soared during the turn of the century, I don't recall companies tapping the market over and over for capital. Maybe that was the cause of the downfall. Had dot-com names that were focused more on eyeballs than profits turned their eyes toward amassing huge cash piles, perhaps more would have survived.
NNDM sits in a hot area, 3D industrial digital manufacturing. I've discussed the technical industrial revolution in the past and NNDM fits this category. It's a cash-intensive business to build out, and not a profitable one in the early stages either.
It makes sense the company will need cash; however, I can't recall the last time I saw a company pull off seven, yes SEVEN, direct offerings in FOUR months. Read that again. The company is averaging almost two offerings per month.
The first offering was small but they've progressively grown. In four months, Nano Dimension will have raised $1 billion in cash. That's more than twice the market cap of a few months ago. In the past month alone, NNDM has priced out $762.5 million, an amount roughly the same as its market cap from a month ago.
While this may come across as though I'm negative on management or the company, that's not the case. NNDM has been able to raise $1 billion against virtually zero debt. This provides the company a huge cash runway to recover from Covid-19.
Last quarter the company showed a huge loss of $20 million, but $16 million was driven by a share-based payment expense. NNDM is still burning $3 million to $5 million per quarter, but it is in no risk of running out of cash any time soon.
The risk for continued raises still exists. Despite having a huge pile of cash on the balance sheet now, management has shown a willingness to sell into every big pop, probably because buyers have shown a willingness to devour every offering, then push the stock back to new highs.
At some point, we'll reach a crossroads. Either the buyers won't step up or management will decide it has enough cash. NNDM does create a potential situation when it becomes acquired more for the cash on the balance sheet than purely for the fundamentals of the company.
Could you imagine a scenario where Desktop Metal (DM) uses shares to acquire NNDM? That company is debt free with a strong cash position itself after coming public via a SPAC. While this is more of a dream scenario, I envision a more traditional industrial making a splash in the sector with a purchase of a name such as NNDM.
A name like Jabil (JBL) or Flex (FLEX) is a logical choice, but what if we saw Honeywell (HON) , Illinois Tool Works (ITW) or Emerson Electric (EMR) reach across the aisle? That's what should happen. Big, traditional industry has the market cap capital to get involved in the sectors of tomorrow before they are priced beyond a reasonable level. Admittedly, I'm taking some liberties with the word reasonable, but I'm sure you get the idea; hopefully, some old school names get the idea as well.
(Honeywell is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells HON? Learn more now.)
