Verenium..Is This Dog Ready to Start Barking??

Since the inception of the Sirtuin Investor on December 1, 2007, only a select handful of stocks have been profiled. Within a year of their profiles, Sirtris Pharmaceuticals (SIRT) and Quadramed QDHC, were the subject of cash buyouts at hefty premiums, with the QDHC buyout still pending. A third, Cytori Therapeutics is up about 100% in the 3 months since the company was first highlighted. The latest two companies profiled, China Green Agriculture (CGA), a value/growth story and Apollo Commercial Real Estate Finance (ARI), a yield play are still too early to judge but have done well so far. A pretty impressive record over two years. However, among the big winners, there has been one hell of a dog, Verenium Corporation (VRNM).

Most bloggers would likely not bring attention to their losers. So why do I even mention this dog of an alternative energy play? The answer is simple...this dog may be about to get its bark back.

For those new to Verenium, let's first review a little history. It was on May 21st, 2008 that I first profiled VRNM when it was trading at about $2.75 per share. A year and three months later its selling at about $4.80 per share. Not bad, huh? There's only one problem.....it did a 1:12 reverse split on September 10, 2009, meaning it is down about 80% since the first profile here. VRNM shares were killed as a result of its weak balance sheet and some misunderstood debt covenants that got it into trouble in February 2009. This risk was duly noted in my original profile. Those problems have since been mitigated, at least for the time being, by a capital raise and debt restructuring, but the stock has remained weak.

Now may be the time too take another look at Verenium. In August 2008, VRNM signed a VERY IMPORTANT partnership agreement with BP to commercialize its primary cutting edge technology in the production of cellulosic ethanol. The joint venture, called Vercipia, is one of a handful of companies positioned to help the country meet federal mandates for the shift to cellulosic ethanol production from much the criticized corn based ethanol. Vercipia has an application before the Department of Energy to obtain financing for a 36,000,000 gallon cellulosic ethanol plant in Highlands, Florida. I expect the procurement of this financing to be approved and to take place in the first half of 2010. This is the catalyst that should get the shares moving. Once that first plant is built and proven commercially viable, others are sure to follow and the market should recognize this.

Follow the links on this page in order to do your own DD and invest at your own risk. VRNM is still a risky stock but the catalyst to move it much higher could be close by, and in my opinion, a 100% short term move is not out of the question.