Reconstituting AQMS Board and Management Could Be the Needed Change

It’s been a long time since I’ve written a substantial blog about Aqua Metals (AQMS). This abstinence was primarily driven by disgust. Disgust with management for continually missing guidance. Disgust with the board for watching this go on for years. Disgust with the continually shrinking share price. And, finally, disgust with myself for having believed in Steve Clarke and his vision.

I initially got on the AQMS bandwagon in August of 2016. At that time, production was right around the corner and the Company was on the verge of signing a partnership with Johnson Controls. Things seemed to be headed in the right direction and the stock was reflecting this.

About 8 months after my initial report on AQMS, the stock was up well over 100%. Things couldn’t have appeared any better. Sadly, not everything was as wonderful as it appeared.

I think it’s now safe to say that this investment, to date, was a failure. The stock is down 74% since my initial recommendation and the earlier shareholders have been diluted by a financing down at $2.10…a level that would have been unthinkable but a few months earlier.

I’ve written extensively regarding what I like about Aqua Metals. They are a low cost option to recycle lead in a much cleaner way. Savings on power and on pollution makes this a very green solution for what has historically been a toxic mess of an industry. The fact that the economics behind the process are compelling turned this into, what I thought was, a potential home run.

It’s important to note that none of the reasons I feel for AQMS are any less valid today than they were almost 2 years ago.

The fundamental thesis is still intact. Where things went wrong, and what I missed, obviously, was in the management of the Company. The leadership of AQMS was more than challenged when it came to representing the facts about the business. More importantly, they were epic failures when it came to getting the Company’s process up and running on a decent time schedule.

On top of this, the board was well compensated while they appeared to simply sit on their hands and watch management flail. They almost seemed oblivious to what was going on.

Which brings me to yesterday’s Schedule 14A filing whereby Kanen Wealth Management has filed a dissident proxy vote. This filing is actually very good reading if you want to revisit the numerous over-reaching statements by management about the business…it can help you understand why you lost money, or make you mad about having continued to believe management after so many targets were missed.

The level of incompetence/misleading/lying/you-name-it is staggering in hindsight. The document is available for your viewing here.

I suggest you read the Schedule 14A prior to voting your proxy. Besides detailing the history of missteps by the Company, the filing also lays out the recommended new board members for AQMS. It’s a solid group with a diverse set of skills. More importantly, their individual track records demonstrate success.

Meanwhile, the Company has proven itself to be out of touch with investors yet again in their actions. Most galling of all is putting Thomas Murphy up as a board candidate…this is the guy who retired last year from the role of CFO. At that time, his departure was widely viewed as a positive for the Company. Now he’s to become a board member? Unreal.

Even more important than the different boards, and direction, for the Company under the two proxies is one tidbit that is hidden in the history of the communication between Kanen and the Company. Kanen is proposing that Steve Cotton return as CEO!

Were Cotton to return, this would be a very positive event for Aqua Metals in my opinion. First, off, he knows the industry and the Company. A transition to Cotton as CEO would likely be the smoothest possible transition for the Company.

Additionally, I have made it known publicly for some time that I believe the JCI relationship is stalled. Cotton brought JCI to the table. If anyone can reenergize that partnership, this is the guy to do so. And, a successful partnership with JCI is the key to making this a billion dollar Company.

I have stated for a while that I’m sticking around AQMS until they announce full production. That announcement would likely have sparked a rally and, with Clarke in charge, given me a needed exit. I’m now changing my game plan here.

If the Kanen board slate gets elected, I’m feeling as reconstituted as the lead AQMS recycles. This is the shot in the arm the Company, and the stock, needs. Perhaps, this investment will turn out to be a winner after all? The odds are suddenly looking better.

Tailwinds' Disclaimers & Disclosures: For a full list of disclaimers and disclosures, please visit