Hedge Fund That Benefited From Workhorse Bet Has a New EV Pick

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Formidable Asset Management LLC, a hedge fund that profited from an early bet on electric-vehicle maker Workhorse Group Inc., has a new pick for the sector: Nano One Materials Corp.

The Cincinnati-based fund sees Nano One as “a company with the potential to be truly transformative” as it looks to occupy a niche in the battery value chain by producing more durable nanocrystals. Nano One has a scalable, capital-light business along with established partners and innovative technology, the fund wrote in a research report on Monday evening. Formidable Asset said it recently established a position in the stock, but it didn’t provide details on the size of its stake or when it was acquired.

Nano One shares have risen about 117% this year, still significantly below the gains seen for more well-known EV stocks such as Workhorse, Nikola Corp. and industry leader Tesla Inc. Nano One is likely to stick with its licensing model, which could make the company profitable even at relatively modest revenue levels, Formidable said.

“The market has a tremendous appetite for electric vehicles,” Formidable Chief Executive Officer Will Brown and Chief Investment Officer Adam Eagleston wrote. “We believe Nano One’s unique position and technology make it a compelling way for investors to benefit from the seismic shift.”

Nano One insiders hold about 15% of the Vancouver-based company’s shares and its partnerships include a collaboration with Volkswagen, according to a recent presentation.

©2020 Bloomberg L.P.

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