Origin Materials - Week in Review #6 (August 15-19)


Bank of America Presentation Posted

Last week, on August 9, co-CEO John Bissell joined BofA analyst Stephen Byrne for the BofA Securities 2022 SMID Cap Ideas Conference. The forty minute presentation features Bissell discussing the history of the company, the pitfalls of microbe-based methods to create materials from biomass, the advantages of Origin's platform, among other topics. The entire interview is available for your viewing and listening pleasure.

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Bissell on being cost competitive with oil-based materials: "Even with the extreme volatility of oil prices...we're going to be in a cost advantage spot for the foreseeable future."

Another Bank of America Presentation Scheduled

Perhaps due to popular demand from the SMID Cap Ideas conference (or maybe it's just a coincidence), Bissell will once again join a Bank of America analyst for a fireside-style chat at the Bank of America – 2022 Sustainability & Circular Materials Day. The event will be held virtually on September 1, with Bissell's appearance scheduled for 12:30pm EST. Loop Industries, whose mission is also to shift to sustainable materials and away from petrochemicals, will also be presenting.

Institutional Position Changes

To say that there were a plethora of ORGN positions updated in 13F filings this week would actually be an understatement. This week saw so many updates that I actually had to take four separate screenshots from Fintel to fit them into this blog post. A personal record!

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Of note here are Millennium Management selling out over 80% of their position and Apollo selling off nearly two thirds of their shares. These two stood out to me, as they were early investors in Artius Acquisition (AACQ) -- the special purpose acquisition company that took Origin Materials public. What's intriguing to me about these sales is these two funds would have purchased most of their shares around the $10 pre-merge level. So why would they be selling for a loss? Tough to speculate why, but these positions are dwarfs for Millennium and Apollo whose assets under management are $56 billion and $512 billion, respectively.

Insider Trading Activity

This week saw some stock awards and a pre-arranged sale by co-CEO Rich Riley. He sold 45k shares, which were acquired through a stock option exercise. As with Stephen Galowitz's sale last week, it seems to be a case of an insider getting paid. The sale date was pre-determined via a 10b5-1 plan, dated June 10, 2022. For more information on Form 4 filings and employee sale plans; you can make your own judgement as to the significance (or insignificance) of the recent insider sales.

Directors also received stock awards; all reported on August 17:

  • William Harvey acquired 18,361 shares; now owns 56,456 total.
  • Kathleen Fish acquired 18,361 shares; now owns 163,956 total.
  • Benno Dorer acquired 18,361 shares; now owns 157,986 total.
  • Pia Heidenmark Cook acquired 18,361 shares; now owns 156,456 total.
  • Karen Richardson acquired 28,954 shares; now owns 530,111 total.

Employee Update

As of August 19, the unofficial headcount sits at 145 employees. Notable hires this week include the first Baton Rogue, LA based process engineer (presumably joining the O2 team) and an Analytical Technician II joining the O1 team. The company's ability to attract high-quality talent has been quite impressive. Here is the partial resume of the assumed O2 process engineer, screenshot from LinkedIn:

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Mentioned in Sacramento Inno Feature

According to an article published August 19 in the Sacramento Inno, Origin Materials is one of three companies that are "catalysts for what will be billions of dollars of investments worldwide toward a lower-carbon future." Staff writer Mark Anderson got some great quotes from Bissell:

We will building plants for many years. We're going to be building plants as fast as we can get the financing for them for the foreseeable future. We will be doing this for the rest of our careers. When you build your own plant, you learn a lot more about what it takes to do it, and you learn it faster."

This is most intriguing for me and makes wonder if the ramp up to O2 and O3 will come sooner than expected. It seems that the only barrier going forward will be financing. Clearly, the customer demand is there with offtake agreements and capacity reservations totaling $8.1 billion as of August 3, 2022.

Weekly Chart

The first chart here is the weekly, as usual. ORGN pretty much mirrored the major indices this week, which also fell after a 5-week winning streak. 

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Though it's not an ideal setup for the bulls, the stock remains in the $5-7.50 range where it has pretty much traded the past 12 months. 

There are no major catalysts expected in the next few weeks. The next major construction milestone for the Origin 1 facility in Sarnia, Ontario will be mechanical completion which is officially "by the end of 2022." However, the company has been ahead of schedule on all other construction milestones. So it wouldn't be farfetched to think that mechanical completion may come early, which could be a potential catalyst for the share price.

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