A rather different kind of Nanotechnology index was launched by Innovest this week, looking at the benefits and potential risks.
Innovest is an interesting company, focussing on rating companies for environmental, social, and strategic governance issues. While this may be of little concern to the average small investors looking to make a quick buck, or more accurately a buck one day out of nanotech, more and more large pension fund managers, from Calpers in the US to ABP in the Netherlands are basing their investments on environmental and social issues, and the opinions of companies such as Innovest are of increasing importance to them.
Innovests report warns that â€œexperts in the “nano” space are beginning to warn investors that uncertainty could result in product backlash and perception risks that could affect markets for nanomaterials and end-products.â€ While this is true, and we have highlighted the fact often enough, those who would be most affected by institutional investors sentiments, the large cap companies such as IBM and BASF derive very little of their earnings from nanotech, while those that do such as Veeco and FEI hardly present an environmental or social risk any greater than anyone in, for example, the semiconductor industry. The companies who have the most to lose by this kind of rating, usually identifiable by the â€˜nanoâ€™ in their name, are small cap companies way off the radar of institutional investors.
The 15 quoted companies are Altair Nanotechnoloogies, ApNano, BASF, Biosante Pharmaceuticals, FEI Company, General Electric Company, Headwaters, JMAR Technologies, Lumera Corp, Nalco Holding Co, Plug Power, Spire Corp, Starpharma Group and Veeco Instruments.
Another common problem with this type of report is the lumping of various disparate companies together as â€˜nanotech.â€™ While many of the fifteen public and eight private companies tracked by Innovest make use of nanotechnologies to some extent, it surely would make more sense to focus on companies producing nanomaterials if we want to focus on environmental issues.