If you think of all the hot new tech ideas out there now, Ideanomics (NASDAQ:IDEX) likely has most of them in its portfolio. From electric vehicles (EVs) to AI and blockchain-enabled financial companies, IDEX stock can be seen as a play in at least eight new economy themes.
To be sure, IDEX has lots of moving parts, but many of the companies in the portfolio have some affinities that tie them together.
The company’s interests in smart supply chain companies pairs up well with the fact that it has its fingers in electric-powered tractors, car fleet and motorcycles. And the EV firms fit well with its new acquisition, Utah’s WAVE, a inductive charging company that provides wireless charging for medium- to heavy-duty EV charging.
And it also has standalone ventures like Timios, a real estate transactions business. Its platform allows data to be shared by lenders, real estate agents, buyers and sellers to allow quicker, more-transparent closings.
Currently Timios is doing about $1 billion worth of closings a month and has racked up more than 380,000 transactions so far.
It also has an AI-driven fintech firm that provides pre-approval and risk assessment and management. The company has been operating in Asia for years as an AI firm and is now coming to market with its solutions targeted at the financial services market.
Blockchain Unit Monetize Illiquid Assets
One of the big financial stories these days is cryptocurrencies. But it isn’t as much the story of the currencies as it is the technology that the currencies are built on.
The blockchain is a complex algorithm that allows for transactions to be at once private and public. And its ability to do both simultaneously opens up a whole new world of opportunities in the financial markets.
One of the newest ideas is decentralized finance, which would redefine the entire financial system as we now understand it.
In IDEX stock’s case, it has Liquefy, a company that uses blockchain technology to monetize illiquid assets and create marketplaces for them to trade. This is new concept but if it can partner well, and it has access to the U.S. and Chinese markets, it could be significant.
Well-Positioned for Shift From Fossil Fuels
But let’s get back to what’s been driving the stock (pardon the pun) up to now. It’s EVs.
One major reason for this is the rise of ESG (environmental, social and governance considerations) investing among institutional investors. Certainly there’s been some form of this investing for decades, with socially responsible investing being the most recent.
But this time around, the change isn’t being driven by the demands of the 20% of the market’s individual investors. Instead, its the institutional investors who make up about 80% of market activity.
When institutional investors like pension funds and hedge funds decide that it’s time to bail on fossil fuel companies and invest in renewable energy, it’s a massive wave. And that’s what we’ve been seeing in the past year or two.
What’s more, that wave isn’t cresting yet.
Companies like IDEX and all the other EV hopefuls are now front and center. And IDEX has significant ties to China as well, so it also benefits from China’s green commitment.
IDEX Stock Remains Cheap
IDEX stock is up 687% in the past 12 months but it still only trades around $3.70, which means many institutional investors aren’t able to buy it yet. It’s a hot stock with individual investors, so it’s volatile.
For now, it’s worth some of your risk capital. But don’t think of this as a trade. Think of it as a long-term investment. If it gets big enough for institutions to buy in, you’re on your way. If it fizzles, it was worth ride.
The current interest will help decide its fate at this point. If management can wisely husband the windfall of money it has now, it promises great things. If it squanders this opportunity, it may be tough to regain traction.
On the date of publication, GS Early has no position in the stocks featured in this article. He did not have (either directly or indirectly) any other positions in the securities mentioned in this article.