Tuesday, March 20, 2012

Is an IPO in CloudBlue's Future?

CloudBlue is typical of the group, offering data security through software harvesting and deinstallation and disposition of defunct electronic devices through component recovery, equipment destruction and recycling.  CloudBlue was named a Visionary in Garnter’s new Magic Quadrant for ITAD.  CloudBlue is eStewards certified, a standards initiative set up by The Basel Action Network (BAN) based in Seattle, Washington.  The latter was founded in 1997 and named after the Basel Convention, the United Nations treaty that restricts trade in hazardous wastes and was intended to stop the dumping of toxic waste on developing nations.
My thesis that there is value to be added in the e-waste, recycling sector and that presents opportunity for investors.  Like all the others we have added to the ITAD, CloudBlue is presently a private company.  As long as the company continues to generate strong cash flows, it is likely CloudBlue or any of the other eCycling companies could remain private.  However, I see two other likely paths in CloudBlue’s future:  1) acquisition by one of the large waste management companies that want to expand into reverse logistics and CloudBlue’s other sophisticated services for electronics producers or 2) an initial public offering.

CloudBlue’s leadership, particularly founder and chairman Randy Altschuler, is no stranger to the capital markets.  At least his corporate bio says he has the experience to lead CloudBlue to the next level.  Altschuler is an alum of both private equity fund The Blackstone Group and investment banking firm Donaldson, Lufkin and Jenrette.  He also founded OfficeTiger, a business services providers, which he ultimately sold to RR Donnelly (RRD:  NSYE). 

We have included CloudBlue in our new eCycling Group in The Mothers of Invention Index composed of innovative and enterprising company in the broad field of environmental services, recycling and energy efficiency.  The group is off limits to minority investors right now, but upon reaching critical mass it is likely that the group could present interesting investment opportunities in the public market.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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