The back story: I started buying Liquidmetal Technologies (LQMT) in April at 21 cents per share, largely on speculation that liquidmetal glass would become the backing on next-generation iPhones. The company had a marketing deal with Apple and a new president with a substantial track record.

It has become my most-profitable trade ever. I have realized $28,115 in profits, and at the close yesterday had another $61,511 in unrealized profits spread between 200,000 shares (average cost 32 cents) in my swing-trading portfolio and 300,000 shares (average cost 26 cents) in my long-term trading account.

The news: The new iPhone came out last week, with Apple officials talking about how it has the most-durable glass ever used in any smartphone. No one said what the glass actually is and whether it is made by Corning – the expected supplier – or some other supplier.

Patently Apple – a reputable web site that looks at how Apple’s patents are developed/used and the first place to suggest that future iPhones would use liquidmetal — – published an article this week which suggested that the new glass might be using liquidmetal glass. That speculation sent Liquidmetal Technologies stock – which had been in the $.40s before the Apple announcement and re-traced to .30 after fallen into the $.30s after – back to the 40-cents range.

Listen to Jason discussing LQMT in August on the Raging Bull podcast

The reaction: Beyond the pop in the stock, the buzz around LQMT is that if there is any confirmation forthcoming that liquidmetal is in the new phones – or that we are moving toward its use in future generations of the phone – it’s a game-changer for the stock, a massive attention-getter.

With a market capitalization approaching $400 million, it’s going to take some news to push this stock to the next level. In my mind, a real company is one that makes something, sells it and has a path for profitability; LQMT isn’t there yet, but with good news on liquidmetal glass and a licensing deal with Apple, it looks closer to becoming a real company than it ever has before.

How I’m playing it: With stocks like this – and it was a turd left for dead under previous management – you look for reasons for your investment thesis to fall apart. In this case, where even the news is a speculation (I believe the glass will be a Corning product), the reasons for buying the company continue to hold up.

That said, LQMT is a hold right now to see how this story develops. My goal has been to sell into a major event when it unfolds – and it’s possible that an announcement on the use of the technology could be that event — at a price closer to $1 per share.  I’m still willing to be patient because I think there is a lot of room to run.

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 Jason Bond runs JasonBondTraining.com and is a swing trader of small-cap stocks. At the time this was published on RagingBull.com, as described in the article, he held 500,000 shares of LQMT; he started accumulating shares in April, and has realized and unrealized profits in the stock amounting to $89,626 and was planning to hold the shares as described in this article.

 

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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