The Investor Diary Entry #24: March 28, 2023
For the past few weeks I have been concentrating on studying in the Hydrogen production sector. HyTerra Ltd which is an Australian company listed in the Australian Securities Exchange, is the first company that I found that focuses on natural Hydrogen exploration and production.
While reading about Hyterra Ltd., I found many articles say that it is the first ASX listed company that focuses on the exploration and production of natural gas. I tried to look for direct competition, and other companies who are directly involved in the exploration and production of natural Hydrogen, but I couldn’t find any publicly listed company with that particular focus.
The Only Listed Company
Hyterra Ltd. was not the only publicly listed company in Australia. No, I couldn’t find any publicly listed company anywhere with a focus on natural Hydrogen exploration and production. Well, the production part, every company in the Hydrogen Fuel Cell sector is looking to produce Hydrogen, but the part of exploration is the unique one.
This made extremely interested in the company, and made me continue my research, but my mind was already biased, and just looking for reasons to invest, and ignoring all other factors.
Factors Not To Invest in Hyterra Ltd.
For starters this company has no track record of anything. It is trying out something that seems no one else is trying. It is either that this company is extremely clever and really on to something, or that it is fighting windmills. I couldn’t find enough information to tilt the view on any one direction.
I mentioned before the troubles that I went through because of my broker’s lack of clarity on its procedures when trying to buy Hyterra stock. Well I finally got part of the sum that I ordered and still waiting for the rest of the order to be filled. I bought the stocks out my bias and not out of an objective reading of the pros and cons of this company.
The second factor for not investing in HyTerra its that it is a penny stock company. Yes, I am looking for small cap companies, but Hyterra’s stock price is ridiculously low. Remember I said low, not cheap. There is a whole difference between a low price and a cheap price.
For Hyterra it is not possible to decide if the price is cheap, but for sure, such a low price, makes investing in this company extremely risky.
The Third factor for not investing not only in Hyterra, but in general in companies without positive free cashflow. With the continuous rise in interest rates, access to funds for startups or for that matter any company with negative free cashflow is getting increasingly harder.
In Hyterra’s case, and any company with negative free cashflow, not getting the funds necessary for its operations, means the closing of operations.
Those three reasons are enough to deter any person from investing in such a company or in any company with negative free cashflow, but I took the chance and bought a portion which is an OK portion of my investment pool.
Why Did I Invest In HyTerra?
HyTerra being the only publicly listed company that is exploring natural Hydrogen is a big thing for me. I tried to find out whether there are other companies even if they were private who are exploring natural hydrogen, but I could not find any. I say I could not find any, not Hyterra is the only company which is exploring natural Hydrogen is extremely bold and without proof.
Yes, it is a penny stock, but a penny stock falls within the small cap companies categories that I am looking for. It is a small cap company that is operating in an industry with high potential.
Therefore, the two-line story for HyTerra is that it is an extremely low stock price company that is operating in an industry with high potential, and focusing on activities that can drive huge profits which no other publicly listed company is currently focusing on.
Why I Don’t Understand HyTerra
Articles discussing HyTerra, say that the company has an earn-in interest in a joint development agreement with Natural Hydrogen Energy LLC. I really don’t understand what that means. Does it mean that Natural Hydrogen Energy is doing the well drilling while HyTerra is focusing on exploring possible drilling locations.
That is hard to digest because Hyterra is drilling wells in other prospective regions.
Conclusion
When the first part of my HyTerra stock order got filled, I felt happy but at the same time there was part of me which was not looking at this deal as a long term investment as I normally do.
I don’t know why I am looking at HyTerra as a get-rich-quick scheme. I think this should be added to the list of factors why I should not invest in HyTerra.
Penny Stock wake up greed in a person. This needs another mindset training to keep things into perspective and keep the long term outlook within my investment strategy.
The Investor
Tuesday 28 March 2023
About The Author
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