After my recent considerations on 3D printing stocks, I had an opportunity to speak with Alan Meckler, manager of the 3D Printing and Technology Fund and producer of the Inside 3D Printing event series, about the long term possibilities of 3D printing stocks and 3D printing in general. The Fund (TDPNX – TDPIX), which seeks long term capital appreciation through focused investment in global 3D printing and technology companies, has been acquiring equity securities issued both by U.S. and non-U.S. 3D printing and technology related companies.
“We have been following 3D printing stocks for a long time and began investing in them when they began their upward run,” says Mr. Meckler. “After a period of great enthusiasm from consumers, it was only natural that stocks returned to a value that was more in line with the company’s current revenue levels. Now, they are going to become less volatile and eventually head on a more stable growth curve.”
The companies in the Fund include, among others, those in the manufacturing, biotech, computer software, and hardware industries. In selecting securities for the Fund, the Adviser uses a “top down” approach to create a universe of securities in which the Fund may invest. The Adviser then employs a research oriented “bottom-up” investment approach to create the Fund’s investment portfolio, focusing on company fundamentals and growth prospects when selecting securities.
Among the Top 10 Holdings, which represent 51.59% of the Equity Holdings as of December 31st, 2014, the 3D Printing and Technology Fund includes familiar “pure player” names, such as Stratasys, Organovo, 3D Systems, Materialise, Arcam Metals, and SLM Solutions, as well as both 3D software giants, Autodesk and Dassault Systems. “We also invest in companies that either have begun expanding into 3D printing or have openly manifested their interest for this technology,” Meckler explains. These other companies include General Electric (a giant 3D printing adopter, and among the first to use direct metal 3D printing for aerospace engine parts production) and, of course, Hewlett Packard. “We had taken them into consideration even before they officially announced their move into 3D scanning and 3D printing, since they have always been quite outspoken about their aim to enter the market.”
Recently the worst performers among pure play 3D printing companies were voxeljet and ExOne; however Meckler feels that their current weakness is psychological and that they are destined to begin a new ascent, as their technologies become more implemented in the industry as a whole. “As small companies they are much more susceptible to market fluctuations,” says Meckler. “This means that they skyrocketed when investor enthusiasm was high and suffered when their first results came in and were not necessarily in line with the high market expectations. They sell a small number of machines each year but they are solid companies and are destined to grow in the long term.”
In fact, one thing that has always surprised me about 3D printing stocks is that investors are somehow much more skeptical about 3D printing companies – that are based on solid products, technologies and patents – then they ever were with Internet-related stocks and start-ups, which often did not have anything solid backing them, other than a potentially viable business model. Meckler agreed that this peculiar behavior can hardly be explained, adding that, in general, 3D printing stocks are not counter-cyclical, but will tend to grow with the market as a whole. This means that, if external events don’t negatively impact the general economy, these stocks will be solid performers.
The other, more general, technology companies that the Fund invests in are mostly related to robotics, a segment that is directly connected to 3D printing. “A 3D printer is essentially a robot,” says Meckler, “and robotics is changing the world we live in. This is the new industrial revolution and it is a process that cannot be stopped. It is, of course, a long term strategy.”
With 40 years of experience in the media industry, and as the lead executive for two initial public offerings and three secondary offerings, Meckler has witnessed many trends come and go; however he bet on the 3D printing from the very beginning by founding the Inside 3D Printing trade shows that take place in the United States and in many countries around the world. Previously, he had been Chairman and CEO of Mecklermedia Corporation from December 1993 until it was acquired by Penton Media in November 1998. He also served in the same roles at Jupitermedia and Mediabistro. If someone knows the ins and outs of finance, it may very well be him.