The King of Essex Does Nano

This week's Barron's showcases an interview with one of the most gifted investors of all-time, Joseph McNay of Essex Investment Management. I was startled when I read his reply to question about areas that are emerging onto his radar screen, and he replied, "Another on-the-come area is nanotechnology. One of the most interesting ways to play it is through Harris & Harris (TINY), a New York venture capital company run by two MIT graduates. They specialize in private investments in nanotechnology. . . . . Harris & Harris has another 17 or 18 holdings, of which another 3 or 4 could go public over the next year or 18 months. It is a great way to capitalize on that industry."

Wow. Joe McNay - In Barron's, no less.

While I agree that TINY is a well-run and very interesting company, with excellent internal capabilities to make successful, long-term small technology investments, I am less confident about its near-term ability to hold its current price level (around $13). McNay's words (and there were more than I quoted above) alone drove the price up about 9% and it was trading at a significant premium to NAV at $11.

The key take-away from all this is not that one should rush out and buy TINY. The most important point is that a legendary, highly-regarded, incredibly respected, extremely savvy, professional investor is getting his feet wet in nanotechnology . . . . and he isn't even embarrassed to talk about it. Look for other, important, but lesser names to start promoting their positions in these kinds of stocks in 2006.