A Stock That's Surely Going to Zero
Published on November, 16, 1999

For reasons sketched yesterday, I rarely recommend stocks in this space. I am certainly not recommending one today. Indeed, I have to assume it is going to zero.

It is called Borealis, and -- full disclosure -- I own a bunch. This is one of the reasons I think it's going to zero.

Seriously.

I am a surpassingly fortunate man, but I don't think of myself as particularly lucky. OK, there was the time on the New York City subway train 36 years ago when I had the entire high school yearbook to give to the printer but left it on the train, and would surely have had to throw myself under the train if the lost-and-found people hadn't efficiently retrieved it and had it waiting for me at the end of the station. This was lucky beyond all reason. This was life-saving. But generally I think of myself as blessed, not lucky.

So Borealis has to go to zero.

Because if it doesn't go to zero, that would mean its claims have at least some validity. And that would mean, with just 5 million shares outstanding and a US dollar market price around $3, I had stumbled into a bit of luck to rival the subway episode.

And that kind of luck comes just once in a lifetime.

Borealis claims (among other things) to have invented and patented an electric motor that is 30% more efficient than today's motors. If true, the entire world would want to license it. They would make hundreds of millions of dollars a year on licensing fees. They wouldn't even have to make anything. The market cap of such a company would not be today's $15 million, but billions and billions.

Although the technology is different, I have to think this is a case of cold fusion. There, if I understand it right, an immutable law of physics prevented the dream from coming true. Here, with Borealis, it is an even more fundamental law -- of human nature -- that tells me it can't be real. Because if it were, or even might be, why wouldn't the tech-savvy people who've looked at this thing not have bid the stock to the moon? Or at least to 50?

It's not as if management is trying to keep it all a secret. Hardly! There is, for starters, the web site -- www.borealis.com. It explains the harmonics of the motor, whatever that means, with colorful representations that almost make sense to a layman. (Another bad sign?) There are the press releases. And, most amazingly, there is the daily e-mail shareholders get telling them that day's closing stock price. In all my years, I have never encountered that.

And it's Canadian!

(Sorry, all my Canadian friends; but let's face it, there have been one or two funny stocks deals flying south on the wings of Canadian securities laws.)

So it can't be legit because: (a) I'm not that lucky; (b) tech-savvy people who've seen it would have bid it to the moon; (c) no one has seen it, so far as I know, in the sense of seeing an actual working motor verifiably doing what they say it can do; (d) they e-mail daily stock-price updates; (e) it's (sorry!) Canadian.

Can it? Some of you are actually physicists yourselves. Could you possibly take a look and tell me whether there's even a prayer my ship might come in? No matter what you report, I won't sell my shares, because this is a classic case of an otherwise bright person becoming obsessed with a magnificently greedy dream.

Scary, no? I am powerless. Logic insists this will be zero, and yet I hang on.

One day, maybe they'll go into this company, grab one of the as-yet-phantom motors off a deserted work bench -- heavy little sucker, this dingus -- and ask Humphrey Bogart, with a quizzical look, what is it? And Bogart will take his time and reply . . .

Well, you've either seen the movie or you haven't.



1998, 1999, Andrew Tobias