Aspen Aerogels has raised US$150 million in financing from a Koch family investment firm to help grow its aerogel thermal barrier technology division, including new products which prevent thermal runaway in batteries.
Koch Strategic Platforms (KSP) has agreed to buy convertible notes in Aspen worth US$100 million maturing in 2027 and shares in the firm worth US$50 million by the end of Q1 this year/early Q2, the companies announced 17 February.
It comes eight months after a separate US$75 million investment by KSP in Aspen and will help the company pursue ‘aerogel thermal barrier growth opportunities’, the announcement said.
Aspen Aerogels is a stock-listed manufacturing company specialising in aerogels, which are synthetic gel-derived materials for insulation and cooling that have a variety of applications.
The material is made by replacing the liquid component of a gel with air, resulting in a low density, low thermal conductivity material that feels like polystyrene. It is much more efficient than regular insulation but high prices have limited it to a few niche industries.
To-date it has mainly sold to the energy infrastructure sector, primarily fossil fuels, and building materials markets but has been developing thermal barrier aerogels to tackle thermal runaway in lithium-ion batteries.
But this new segment did not materially contribute to revenues last year which totalled US$121 million, as per its 2021 annual results. All revenue was attributed to ‘energy infrastructure’ yet the company aims for a whopping 75% of revenues in 2025 to be from thermal barrier technology.
Shortly before issuing its press release regarding the investment from KSP, the company said it will construct an advanced manufacturing facility in Bulloch County, Georgia, US, tripling its aerogel production capacity.
Aspen intends to invest at least US$325 million in building the plant, adding to an existing facility in Rhode Island. The 500,000 square foot site, on 90 acres of land in Bulloch County’s Southern Gateway Commerce Park, is expected to open up late next year. Georgia is set to become a key hub for the US electric vehicle (EV) battery sector, with battery maker SK Innovation building two gigafactories in the state and a recent announcement that the US’ largest battery recycling plant is being built there by Ascend Elements (previously known as Battery Resourcers).
Aspen’s CEO Donald R. Young indicated the money raised from KSP will go towards growing and expanding the thermal barrier division.
“Aspen’s strategy is to leverage our aerogel technology platform into high-value, high-growth markets, driven by our ‘PyroThin’ thermal barriers which address thermal runaway in electric vehicles and by our energy infrastructure products which promote resource efficiency, asset resiliency and safety in traditional and emerging energy settings,” he said.
“KSP’s additional investment will support our growth and allow us to address additional high-value applications in ESG driven markets, including battery materials, hydrogen energy, carbon capture, and filtration, among others, further solidifying our position as a technology leader in sustainability.”
It claimed “US$1 billion of potential revenue from current customers” for electric vehicle (EV) thermal barriers alone, although as mentioned before it posted very little revenue from this last year.
The company says on its website that PyroThin is ‘optimised for helping to mitigate thermal runaway in EV and energy storage systems (ESS).’ It has tweaked its solution for cell-to-cell barrier applications and those for modules and battery packs.
It claims the market opportunity from 2021-2030 for its products in the EV thermal barriers space is US$30 billion, US$37 billion for ‘EV Battery Materials’ and US$31 billion for ‘Energy Infrastructure’.
KSP’s parent company Koch Industries is known for its background in fossil fuels industries and has been accused by groups including Greenpeace of funding climate change-sceptic propaganda. More recently, it and its many group companies have diversified to be involved in a large number of different industry areas today, from chemicals and biofuels to polymers and fibres, software and data analytics and many others.
This has extended to recent investments in energy storage and battery companies through KSP. Energy-Storage.news reported in July last year that KSP was investing US$100 million into zinc battery storage company Eos, another US$100 million into recycling specialist Li-Cycle was committed to in September and in October KSP entered a joint venture (JV) with Norwegian startup FREYR Battery to potentially construct 50GWh of annual battery cell production capacity in the US.
You might not think it’s possible to outperform the average Wall Street professional with just a single investment. Fund managers are highly educated and steeped in market data. They get paid a lot of money to make smart investments.
But the truth is, most of them may not be worth the money. With the right steps, individual investors can outperform the majority of active large-cap mutual fund managers over the long run. You don’t need a doctorate or MBA, and you certainly don’t need to follow the everyday goings-on in the stock market. You just need to buy a single investment and hold it forever.
That’s because 88% of active large-cap fund managers have underperformed the S&P 500 index over the last 15 years thru Dec. 31, 2023, according to S&P Global’s most recent SPIVA (S&P Indices Versus Active) scorecard. So if you buy a simple S&P 500 index fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO), chances are that your investment will outperform the average active mutual fund in the long run.
It’s a good bet that the average fund manager is hardworking and well-trained. But there are at least two big factors working against active fund managers.
The first is that institutional investors make up roughly 80% of all trading in the U.S. stock market — far higher than it was years ago when retail investors dominated the market. That means a professional investor is mostly trading shares with another manager who is also very knowledgeable, making it much harder to gain an edge and outperform the benchmark index.
The more basic problem, though, is that fund managers don’t just need to outperform their benchmark index. They need to beat the index by a wide enough margin to justify the fees they charge. And that reduces the odds that any given large-cap fund manager will be able to outperform an S&P 500 index fund by a significant amount.
The SPIVA scorecard found that just 40% of large-cap fund managers outperformed the S&P 500 in 2023 once you factor in fees. So if the odds of outperforming fall to 40-60 for a single year, you can see how the odds of beating the index consistently over the long run could go way down.
Warren Buffett is one of the smartest investors around, and he can’t think of a single better investment than an S&P 500 index fund. He recommends it even above his own company, Berkshire Hathaway.
In his 2016 letter to shareholders, Buffett shared a rough calculation that the search for superior investment advice had cost investors, in aggregate, $100 billion over the previous decade relative to investing in a simple index fund.
Even Berkshire Hathaway holds two small positions in S&P 500 index funds. You’ll find shares of the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) in Berkshire’s quarterly disclosures. Both are great options for index investors, offering low expense ratios and low tracking errors (a measure of how closely an ETF price follows the underlying index). There are plenty of other solid index funds you could buy, but either of the above is an excellent option as a starting point.
Before you buy stock in Vanguard S&P 500 ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $514,887!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 15, 2024
Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
Want to Outperform 88% of Professional Fund Managers? Buy This 1 Investment and Hold It Forever. was originally published by The Motley Fool
The numbers from the Department of Finance suggest they have struck taxation gold. But they’ve been wrong before
Published Apr 19, 2024 • Last updated 8 hours ago • 5 minute read
“99.87 per cent of Canadians will not pay a cent more,” the prime minister said this week, in reference to the budget announcement that his government will raise the inclusion rate on capital gains tax in June.
The move will be limited to 40,000 wealthy taxpayers. “We’re going to make them pay a little bit more,” Justin Trudeau said.
Article content
But it’s hard to see how that number can be true when the budget document also says 307,000 corporations will also be caught in the dragnet that raises the inclusion rate on capital gains to 66 per cent from 50 per cent.
Advertisement 2
Article content
Many of those corporations are holding companies set up by professionals and small-business owners who are relying on their portfolios for their retirement.
The budget offers the example of the nurse earning $70,000 who faces a combined federal-provincial marginal rate of 29.7 per cent on his or her income. “In comparison, a wealthy individual in Ontario with $1 million in income would face a marginal rate of 26.86 per cent on their capital gain,” it says.
Policy wonks argue that the change improves the efficiency and equity of the tax system, meaning capital gains are now taxed at a similar level to dividends, interest and paid income. The Department of Finance is an enthusiastic supporter of this view, which should have set alarm bells ringing on the political side.
That’s not to say it’s not a valid argument. But against it you could put forward the counterpoint that capital gains tax is a form of double taxation, the income having already been taxed at the individual and corporate level, which explains why the inclusion rate is not 100 per cent.
The prospect of capital gains is an incentive to invest particularly for people who, unlike wage earners, usually do not have pensions or other employment benefits.
Platformed
Article content
Advertisement 3
Article content
Recommended from Editorial
That was recognized by Bill Morneau, Trudeau’s former finance minister, who said increasing the capital gains rate was proposed when he was in politics but he resisted the proposal.
Morneau criticized the new tax hike as “a disincentive for investment … I don’t think there’s any way to sugar-coat it.”
Regardless of the high-minded policy explanations that are advanced about neutrality in the tax system, it is clear that the impetus for the tax increase was the need to raise revenues by a government with a spending addiction, and to engage in wedge politics for one with a popularity problem.
The most pressing question right now is: how many people are affected — or, just as importantly, think they might be affected?
One recent Leger poll said 78 per cent of Canadians would support a new tax on people with wealth over $10 million.
But what about those regular folks who stand to make a once-in-a-lifetime windfall by selling the family cottage? We will need to wait a few weeks before it becomes clear how many people feel they might be affected.
Advertisement 4
Article content
The numbers supplied to Trudeau by the Department of Finance suggest they have struck taxation gold: plucking the largest amount of feathers ($21.9 billion in new revenues over five years) with the least amount of hissing (impacting just 0.13 per cent of taxpayers).
The worry for Trudeau and Finance Minister Chrystia Freeland is that Finance has been wrong before.
Political veterans recall former Conservative finance minister Jim Flaherty’s volte face in 2007, when he was forced to drop a proposal to cancel the ability of Canadian companies to deduct the interest costs on money they borrowed to expand abroad.
“Tax officials vastly underestimated the number of taxpayers affected when it came to corporations,” said one person who was there, pointing out that such miscalculations tend to happen when Finance has been pushing a particular policy for years.
Trudeau’s government has some experience of this phenomenon, having been obliged to reverse itself after introducing a range of measures in 2017, aimed at dissuading professionals from incorporating in order to pay less tax. It was a defensible public policy objective but the blowback from small-business owners and professionals who felt they were unfairly being labelled tax cheats precipitated an ignoble retreat.
Advertisement 5
Article content
Speaking after the budget was delivered, Freeland was unperturbed about the prospect of blowback. “No one likes to pay more tax, even — or perhaps more particularly — those who can afford it the most,” she said.
She’d best hope such sanguinity is justified: failure to raise the promised sums will blow a hole in her budget and cut loose her fiscal anchors of declining deficits and a tumbling debt-to-GDP ratio.
That probably won’t be apparent for a year or so: the government projected that $6.9 billion in capital gains revenue will be recorded this fiscal year, largely because the implementation date has been delayed until the end of June. We are likely to see a flood of transactions before then, so that investors can sell before the inclusion rate goes up.
After that, you can imagine asset sales will be minimized, particularly if the Conservatives promise to lower the rate again (though on that front, it was noticeable that during question period this week, not one Conservative raised the new $21 billion tax hike).
The calculated nature of the timing is in line with the surreptitious nature of the narrative: presenting a blatant revenue grab as a principled fight for “fairness.” The move has the added attraction of inflicting pain on the highest earners, a desirable end in itself for an ultra-progressive government that views wealth creation as a wrong that should be punished.
Advertisement 6
Article content
Trudeau’s biggest problem is that not many voters still associate him with principles, particularly after he sold out his own climate policy with the home heating oil exemption.
The tax hike smacks of a shift inspired by polling that indicates that Canadians prefer that any new taxes only affect the people richer than them.
Success or failure may depend on the number of unaffected Canadians being close to the 99.87-per-cent number supplied by the Finance Department.
History suggests that may be a shaky foundation on which to build a budget.
National Post
Twitter.com/IvisonJ
Get more deep-dive National Post political coverage and analysis in your inbox with the Political Hack newsletter, where Ottawa bureau chief Stuart Thomson and political analyst Tasha Kheiriddin get at what’s really going on behind the scenes on Parliament Hill every Wednesday and Friday, exclusively for subscribers. Sign up here.
Article content
$75 per month
Complete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.
DJT Stock Rises. Trump Media CEO Alleges Potential Market Manipulation. – Barron's
Trump Media alerts Nasdaq to potential market manipulation from 'naked' short selling of DJT stock – CNBC
Private equity gears up for potential National Football League investments – Financial Times
Type 2 diabetes is not one-size-fits-all: Subtypes affect complications and treatment options – The Conversation
DJT Stock Jumps. The Truth Social Owner Is Showing Stockholders How to Block Short Sellers. – Barron's
How the NHL moved the Arizona Coyotes to Salt Lake City – Sportsnet.ca
Tofino, Pemberton among communities opting in to B.C.'s new short-term rental restrictions – Vancouver Sun
Art in Bloom returns – CTV News Winnipeg
Comments