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Diary of a Dumb Investor: profiting from the next industrial revolution

I spy not one industrial revolution but two. And I think I know the right man to open the factory doors.

 
Diary of a Dumb Investor: profiting from the next industrial revolution

The American press is describing it as a failure. After firing six rounds, the AR-15 rifle simply snapped.

But this dud merely represented an early trial of a weapon that was in part printed. Yes, printed. It’s a step towards creating a design for a weapon that can be downloaded off the internet, and the whole weapon printed in its full 3d, fully-working, death-wielding inglory.  

This is merely one episode in the 3D printing (AKA additive manufacturing) revolution.

Here’s a quick run-down on how it all works nabbed from Global Industry Analysts, a market intelligence company that has just published a report projecting that the global market for 3D printing will reach US$2.99 billion by the year 2018.

Hailed as a transformative manufacturing technology, 3D printing involves fabrication of physical objects by depositing a material using a nozzle, print head, or any another printer technology. Though initially used for prototyping of products, 3D printing has evolved and is currently capable of customised short-run manufacturing of industrial products, dental implants, and medical devices. 3D printing is finding use in a diverse range of applications across varied markets. Though used initially for rapid prototyping purposes, technological advancements are increasingly facilitating the use of 3D printers for manufacturing final products.

The technology has now reached a stage where digital models can be replicated to produce physical components or prototypes, which would be similar to those of mass produced products. The declining cost of printers has led a wide range of industries ranging from aerospace and automotive to footwear and jewelry to adopt 3D printing technology for manufacturing desired objects. 3D printing technology is thus offering individuals as well as companies with the ability to design as well as manufacture objects at relatively lower costs.

In the coming years, 3D printing technology could evolve to enable printing of metals including precious metals such as silver and gold. Further, low-cost techniques are expected to be developed for enabling 3D printing of widely available materials such as paper and plastic. Another area of growth is the medical sector wherein 3D printing technology could be used for developing replacement parts. Potential also exists for companies to penetrate into educational and medical device sectors.

Journalists and tech experts are describing 3D manufacturing as revolutionary, hailing the next stage in industrial production. But it remains hard to get a grasp on just how true this is, how quickly it will happen, not to mention which companies will be at the forefront. And of course, which will be investable.

It is already being described as the ‘next technology gold rush’. Problem is, the companies doing this stuff mostly seem to be non-listed start-up firms right now, and the only way to invest is this highly-speculative but exciting technology seems to be via online funding platforms.

So I look elsewhere. Amid all of the cacophony on internet discussion boards about the promise – or otherwise – of such technology there does seem to be a smidgeon of interest from high-ranking investors.

Nigel Thomas, who is AAA-rated for his investing moxie by Citywire, wrote this in a recent report:

‘Our investment mantra, “Things will not get better or worse, they will become different” aligns us with identifying change and how to benefit from it. Sometimes the change is the development and adoption of new technologies such as 3D printing or nanophotonics, or simply the change in management at companies.’

He’s not giving much away. Who knows whether he has invested in anything relating to the development and use of this tech. After all, investment companies only like to reveal the top 10 holdings in any one fund and a look at Thomas’s Axa Framlington UK Select Opportunities fund doesn’t help.

Thomas though, has a keen eye for big trends. In the same report he says this:

‘All the backward looking economists, who have been predicting doom and gloom, tend to aggregate data, whereby they lose intelligence and analysis. They also miss important secular trends where businesses, because they are dynamic, adapt.’

He makes this comment in relation to another development changing the face of industry, a more concrete one: a US industrial renaissance. Or at least a return of industry to the States, bringing production closer to the customer.

This ‘near-shoring’ back from China comes as the country shifts towards energy independence, and as wages in emerging markets inevitably rise, diminishing their competitive advantage.

Thomas is seeking UK-listed firms like Ashtead (AHT.L) and Wolseley (WOS.L) for exposure to America’s industrial resurgence.

So if I invest in Thomas’s fund, I get a Citywire Selection Star Pick run by one of very few AAA rated fund managers who not only recognises the resurgence of US manufacturing, but also takes an interest in 3D printing to boot. Plus I tick the US exposure box, something I want as I feel we must be on the cusp of fixing this crushingly dull fiscal cliff nonsense.

I just need the dog of my portfolio, BP (BP.L), to make back some of its losses so I can ditch my holding and raise enough cash to buy into Thomas’s fund.

11 comments so far. Why not have your say?

snoekie

Dec 11, 2012 at 16:04

Well, I seem to recall that you bought BP at or near £5, its high in recent times (not so recent when you bought). In the meantime the divis have been coming in.

True the technology is exciting, but who is going to be making the breakthrough. Clearly it as a way to go. The printing may be right, but you styill need the right mix of metals/materials etc for it to be viable. After all, you can shape a car and make it look realistic with the technology, using paper, but will it work?

Forget getting a star pick rating, Keep your feet on the ground, safe ground, before you can think of flying. The technology clearly has potential, but it may take a while, quite a while.

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an elder one

Dec 11, 2012 at 17:01

Is this a joke! what on earth is 3D printing; pictures on balls?

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an elder one

Dec 11, 2012 at 17:03

if CAD/CAM its been around for yonks

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John Jackson

Dec 11, 2012 at 18:32

I have a few 3-d printing stocks. It's a massive industry, mainly US based (of course).

I have some 3-d Printing Corp (NY:DDD) which is erratic but up 12% in 2 months, and Dassault Systems , the French tech company. Up about 9% in the same period.

There are quite a few others to try. I'm looking at the 'organ printing' and other medical application companies as well.

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Bernard Bedford

Dec 11, 2012 at 18:36

If you google "Economist print me a stradivarius" you'll see that its been writing regular updates about 3d printing for nearly 2 years. This is not a secret technology but it has a lot of potential. By all means buy Nigel Thomas because he's a great manager but don't get carried away with guesswork.

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Jeremy Bosk

Dec 11, 2012 at 22:30

An Elder One

http://en.wikipedia.org/wiki/3D_printing

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Fagen39 via mobile

Dec 16, 2012 at 09:06

I am all for 3D printing investing, if you find a highly exposed fund or a UK share that I could put in my ISA, I would be very grateful.

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Jeremy Bosk

Dec 16, 2012 at 12:07

The machines themselves now sell for hundreds of dollars and are made in the USA:

http://www.3dprinterstocks.com/a-list-of-3d-printing-companies/

Arcam is a Swedish company:

http://seekingalpha.com/article/1040891-is-there-an-undervalued-3d-printer-manufacturer-yes-arcam-ab

HP has just started to make the machines but it is only a small part of the business.

Dassault Systemes SA produces software and is quoted on the international section of the LSE, ISIN is OHB4

http://www.3ds.com/

I can't find any UK quoted companies that have a major interest in this area. There are lots of small, unquoted ones, operating essentially as jobbing printers, to be found on Google.

You can buy foreign quoted stocks through many UK brokers.

You can sign up for a newsletter here:

http://3dprintingindustry.com/3d-software/

There are free designs to build your own (hobbyist, not industrial) machines and Google produces a free software tool.

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doug186

Dec 16, 2012 at 20:15

3D printing sounds exciting. So was the dot com boom. BT and KIngston Commuication shares were swept along to prices over 6 times to what they are worth now. Personally, I would be tempted to back Nigel Thomas who can research the 3 D market in more depth than a small time investor like myself.

As regards " adding BP to my growing pile of has beens ? - I would suggest you cut your losses as you did with LLoyds. I too sold out of Lloyds - not just out of frustration - but because I have lost confidence in the Company. What really lay behind their takeover of HBOS and do shareholders really understand the full ramifications? The same loss of confidence applies to BP.

Questions remain about their style of management. It will be interesting to see how BP come out of their dispute with the small company, the Redhall Group. BP have a 40% interest in Vivergo who owe money to the Redhall Group. Arbitrations have favoured the Redhall Group and now the case awaits judgement. BP investors should question why their Company gets involved in so many court cases. Having met their match with the Russians and the Americans, Is this a case of them trying to frighten small British Companies into submission?

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Jeremy Bosk

Dec 16, 2012 at 21:08

A lot of companies are delaying payment to suppliers simply because they can get away with effectively forced loans. There was a story in the Telegraph alleging that Balfour Beatty is doing this:

http://www.telegraph.co.uk/finance/yourbusiness/9743947/Business-owner-Why-I-wont-work-with-Balfour-Beatty.html

There is legislation which pretends to prevent this but very few small companies dare to exercise their legal right. One of the reasons Parliament rose against the proto fascist King Charles I was the issue of Ship Money, a system of forced loans.

http://en.wikipedia.org/wiki/Ship_money

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Jeremy Bosk

Jan 22, 2013 at 16:46

3D Printing is big business in the USA:

http://www.brookings.edu/research/interactives/2013/innovationstowatch

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