This Tiny Company Could Ruin Apple’s Week

By Matthew Milner, on Wednesday, September 10, 2014

It was the media event of the year...

Apple (AAPL) executives took to the stage yesterday to make two major announcements:

The first was the launch of the new iPhone: the iPhone 6.

It’s a beautiful device -- and, yes, it’s likely to be a great success.

But what had everyone so excited was the second announcement:

The Apple Watch.

Many industry observers expected Apple to launch a wearable device, but prior to the event, the details were still shrouded in mystery.

As the presentation unfolded and details emerged, it became clear that the Apple Watch could impact – even disrupt – entire industries.

And as you know, in the midst of disruption and chaos, investment opportunities tend to emerge.

Today, we’ll share one such opportunity with you.

It has us – as well as a savvy early-stage technology analyst – very excited.

Under-the-Radar Investments

After yesterday’s conference, many folks went out and bought Apple stock.

That might work out well for them…

But we had other ideas.

You see, in order to earn above-average returns, you have to uncover opportunities where nobody else is looking.

We generally look for (and write about) opportunities on the private side of the market. But yesterday, the most exciting idea we found was in the public market.

A good friend of ours, a former Wall Street analyst named Lou Basenese, had called us the day before Apple’s big announcement. He told us that one of his favorite companies might benefit dramatically if Apple launched a wearable device.

Wayne and I were intrigued.

You see, Lou’s the founder of Disruptive Tech Research and an expert on technology and early-stage companies. His commentary has been featured everywhere from The Wall Street Journal to CNBC’s Closing Bell.

More specifically, he focuses on small-cap technology stocks. Most of these companies are early-stage, but unlike the start-ups we focus on at Crowdability, they’re already publicly traded.

After the Apple event had wrapped up, Lou was kind enough to jump on a call with us for a Crowdability interview. During the call, he told us more about the intriguing technology company he’s following, and why it stands to benefit from Apple’s new Watch.

Below are select excerpts from the interview – we hope you enjoy!

What Had Lou So Excited

Crowdability: You seem pretty excited about Apple’s announcement today. Are you recommending we buy some Apple stock (AAPL) here?

Lou: (Laughing) We’ll save that discussion for another day.

Actually, what I’m most interested in is related to one of the features of Apple’s new device, the Apple Watch. It’s probably the most disruptive part of everything they’re showing right now – and not just for wearables, but for the entire mobile market.

You know this already – but one of the most annoying things about mobile devices is that you have to plug them in every few hours to recharge them.

It’s bad enough with our mobile phone or laptops, but who’d want a watch they have to take off their wrist every few hours?

Apple’s spent years trying to solve this problem. They’ve filed patents for a kinetic approach, where the motion of a person swinging their arms provides power… they’ve experimented with solar charging…

But based on the announcement we all heard a few minutes ago, it looks like they’ve opted for a wireless charging method instead. It’s basically a way to power up your device by putting it in close proximity to a charging station.

Now, to be clear, wireless charging has been around for a while. But thanks to recent innovations – like huge cost reductions in integrated circuits, and massive increases in computer processing power – novel approaches to wireless charging could really take off now.

How Apple’s Announcement Changes Everything

Crowdability: So how does Apple’s announcement today change things?

Lou: Apple’s a pretty unique company. They’ve got a way of captivating and then influencing consumers.

I think their adoption of a wireless charging solution in connection with this product could potentially be a tipping point.

I recently read a study about wireless charging… it turns out that two-thirds of consumers don’t even have a clue it exists. But once they were told about it, 83% said they wanted it – and would be willing to pay for it.

So what I’m saying is, the announcement today could be the tipping point for consumer awareness about wireless charging – and the tipping point for future mass adoption.

This is the thing that any serious investor should be looking at.

How to Play It

Crowdability: So can you tell us how you’re leveraging this opportunity?

Lou: I’ve been following a company called Energous for about a year. And I’ve got a position in it personally. The stock ticker is WATT. It’s trading now for about $11.

I think Energous could own this space – they do have some competition, but no direct competitors. They’ve got a really disruptive technology called WattUp. It’s one of the only truly wireless charging solutions in the world.

It can transmit charge over a distance of up to 15 feet.. and it can charge a moving device too – like a phone that’s in your pocket while you walk around a store.

Not only that, but it can charge multiple devices at once – up to 24 at the same time. So you could charge a bunch of mobile phones, tablets, and Apple watches at the same time.

Crowdability:  It sounds like a really innovative piece of technology, but how does Apple’s device help this stock, specifically?

Lou:  Good question.

The technology that Apple’s using to wirelessly charge its watch isn’t truly “wireless.” Unlike WATT’s technology, you still need to keep the device near or connected to the charging station.

I’ve got a pretty detailed investment thesis, but there are multiple ways to make money here:

First of all, as Apple’s competitors like Samsung introduce their own wearable devices, they’ll look to differentiate. A super-convenient wireless charging solution, like WATT’s, would be a robust differentiator. Demand could dramatically increase, and with it, WATT’s stock price.

Secondly, Apple has over $164 billion in cash. As a defensive move, it might simply step in and acquire WATT and its technology, making it one of the only device manufacturers to support true wireless charging.

And thirdly, a chipmaker like Broadcom (BRCM) or Intel (INTC) could step in and acquire them.

Public Venture Capital vs. Private Venture Capital

Crowdability: So Lou, one last question before we let you go.

As an investment opportunity, why should Crowdability’s readers care about this? I mean, how do you see this opportunity relating to equity crowdfunding?

Lou:  Well, like I mentioned, Energous is already public…

But it’s still an early-stage company, which means that most of its potential future value hasn’t been unlocked yet. In fact, there’s only been one financing round prior to its March IPO.

This type of opportunity is what’s called, “public venture capital.”

Public venture capital is like an early-stage venture capital deal, like what you guys focus on at Crowdability, but the company is already public – so there’s liquidity for investors, and anyone can buy shares.

But let’s be clear – just because these companies are public, that doesn’t mean they’re less risky than the private opportunities you write about. These are high-risk investments. They’re really just meant for speculative investors.

It’s Been An Exciting Day

Thanks to the Apple announcement and our conversation with Lou, it’s been an exciting day.

We know this was a little different than our ordinary articles, so we’re curious about your reaction.

Please email us at feedback@crowdability.com (or just reply to our newsletter)…

Let us know what you thought, and let us know if you’d like to hear about other deals like this.

(Please note: Matt, Wayne and Lou have no financial relationship with WATT, but as mentioned above, Lou does own some shares.)

Happy Investing!

Best Regards,
Matthew Milner

Founder
Crowdability.com

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