Hyliion Remains a Buy for Patient Investors

On June 28, Hyliion (NYSE:HYLN) is set to join the Russell 2000 and Russell 3000 indexes. With more than $10.6 trillion of assets benchmarked against Russell’s U.S. indexes, Hyliion, a provider of electrified powertrain solutions for commercial trucks, is bound to attract more attention from institutional investors after it’s added to the two indexes. That’s excellent news for anyone who owns HYLN stock.

An electric semi truck charging.

Source: Scharfsinn / Shutterstock.com

When I last wrote about Hyliion on May 27, I felt like the stock was stuck in neutral. Nonetheless, I argued that the market for converting Class 8 commercial vehicles to hybrid-electric trucks, Hyliion’s specialty, ought to be huge. Thus, for risk-tolerant investors, I felt like $10 was a reasonable price to pay for HYLN stock. 

Now $10 is setting up to be an important line of support for Hyliion’s shares. If they break below that level, I’m not sure I’d be as eager to recommend the name. However, I don’t expect that to happen. 

For those willing to hold HYLN stock for 18-24 months, I believe that buying the name between $10 and $12 as an excellent move. 

Here’s why. 

A No-Nonsense Board

As I’ve gotten to know Hyliion, the one thing I’ve neglected to do is study the company’s board of directors. By doing that, I can often get a good idea of where a company’s focus lies.

We already know that Hyliion CEO Thomas Healy is a young entrepreneurial phenom who is on his third startup before reaching the age of 30. Forbes named Healy to its 2017 “30 Under 30” list. Healy is a brilliant mechanical engineer.

To do what Healy’s done at such a young age is an impressive feat and makes me more confident about Hyliion’s future. Naturally, as Hyliion’s CEO and founder, Healy is on the board, along with six other directors.

The average age of the board is almost 56, with Healy the youngest board member at 28 and Andrew H. Card Jr., the oldest at 73.  Card was a Chief of Staff for President George W. Bush and a Transportation Secretary in the Cabinet of George H.W. Bush. Card also has held several other transportation-related jobs during his career.

Card’s understanding of the transportation industry combined with his first-hand knowledge of how the government works makes him an extremely valuable and wise addition to the board. 

The two other directors I want to mention are Vincent Cubbage and Howard Jenkins. 

Cubbage was the CEO of Tortoise Acquisition Corp. I, the special purpose acquisition company (SPAC) that merged with Hyliion. He’s also CEO of Tortoise Acquisition Corp. II (NYSE:SNPR), which is in the process of merging with Volta Charging. The latter company operates 1,842 electric-charging stations across the U.S. Cubbage’s background is in investment banking. 

A Big Owner of HYLN Stock

Jenkins, the last board member I’ll mention, is the second-largest owner of Hyliion’s stock behind only Healy, who owns 20.5% of the shares outstanding. As of May 14, 2021, Jenkins’ investment firm, Axioma Ventures LLC, owned 7.3% of the shares.

Jenkins is the son of Publix Super Markets founder George Jenkins, who launched the grocery store chain in 1930 with one store in Winter Haven, Florida. Howard has served on Publix’s board since 1977. He was CEO of the company from 1990 to 2001. Forbes estimates that the Jenkins family is worth almost $9 billion.

Having a billionaire on the board is always helpful when it comes to attracting more capital. In addition, Axioma’s experience in technology investing makes it an ideal long-term shareholder for Hyliion. 

Despite selling some of Hyliion’s shares in 2021, Jenkins seems prepared to hold onto the company’s stock for a long time. 

The Future

On June 8, Hyliion announced a major expansion of its Austin headquarters. The facility will grow by 50% to 120,000 square feet. The addition will  triple the amount of space used by its battery development team. 

Unlike Lordstown Motors (NASDAQ:RIDE), Hyliion appears to be the real deal. 

However, those who are going to buy HYLN stock have got to lower their near-term expectations. Hyliion is in the second or third inning of a nine-inning game.  Patient investors who hold onto its shares for a long time will be rewarded. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.


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