10/5/07

Economics

protectionism (Free trade is a major positive for world and US economic growth.). This new poll among conservatives was a featured article in the WSJ yesterday and is not good news. If you didn’t read it, you should:

http://online.wsj.com/article/SB119144942897748150.html?mod=hpp_us_whats_news

a rising tax and regulatory burden (Government has never proven that it could solve economic problems efficiently or satisfactorily.) Taxing the Internet:

http://www.washingtontimes.com/article/20071003/EDITORIAL/110030017/1013

Politics

Domestic

International War Against Radical Islam

The Market

Technical

Fundamental

This morning on the Market open, the Aggressive Growth Portfolio will buy a position in H2Diesel Holdings Inc, (HTWO-$7.25) a new 10 Bagger. I will follow this write up next week with a more detailed discussion of the company; however, management is now doing a road show, the stock is moving and I want to establish a position quickly.

H2 is commercializing a vegetable oil and animal fat based fuel alternative to diesel or distillate fuel oil. The important highlights to this story are:

(1) the company owns the rights to a proprietary, patent pending technology that converts vegetable oil and animal fats into a commercially viable alternative to diesel fuel,

(2) the company has built a bench test plant that has demonstrated that [a] this fuel can be produced at a cheaper cost than diesel or bio diesel and [b] it is a stable material that can be produced, shipped and stored without loss of effectiveness,

(3) the company has a source of supply of raw feed stock that will meet its most optimistic growth projections into the foreseeable future,

(4) the only permits required to build a production facility is a building permit,

(5) the company has demonstrated the commercial effectiveness of this fuel as a diesel substitute with a major US corporation,

(6) burning this fuel results is significantly less pollution than burning diesel or bio diesel,

(7) for a user to convert from using diesel/bio diesel to H2 requires nothing more than cleaning its storage tanks and feeder lines,

(8) the company is currently in talks with 40 potential customers [utilities]; 6-7 are in advanced stages,

(9) the footprint of the production facility is so small, that it can be located on site at most user’s facilities,

(10) the company is currently raising money to build its first 25 million gallon a year production facility which should yield $7 million operating profit annually,

(11) the company can add 25 million gallon per year modules to its initial facility up to a capacity of 100 million gallons per year,

(12) the first Market that the company is attempting to penetrate uses 600 million gallons of diesel per year.

I remind subscribers that this is a high risk investment. It is appropriate only for those who can afford to lose their entire investment. Any position should be one quarter to one third of a normal holding.

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