Here’s why I’m loading up.
For those unfamiliar, Agronomics is a venture capital firm that invests in the rising industry of cellular agriculture and cultivated meat.
This is the production of animal products from cells rather than entire animals. And the meat is produced by in vitro cultivation of animal cells rather than from slaughtered animals.
The firm has provided seed and early-stage funding to various start-ups. Here are some of those and what they focus on.
Lab-grown pork and beef
Is there a need for this technology?
Around 2trn fish are caught each year for human consumption, and many species are now close to being overfished. Yet, as the global population grows, ocean fishing is expected to increase .
I’m no expert, but that doesn’t sound sustainable to me. Put bluntly, overfishing could eventually empty the oceans, with catastrophic ecological consequences.
Fortunately, viable technologies have now emerged that could provide a solution. Cells taken from animals can be immortilised, meaning they can grow indefinitely. This allows for large-scale quantities of meat to be produced from a single biopsy.
Following the war in Ukraine, which caused food supply chain problems and inflation, nations are desperate to bolster their food security.
Hence why President Joe Biden signed an executive order last year backing new technologies like cellular agriculture.
He said these can be used “to achieve our climate and energy goals, improve food security and sustainability, secure our supply chains, and grow the economy across all of America”.
Agronomics recently announced that BlueNalu has raised $33.5m in a series B financing round. This firm is a pioneer in cellular aquaculture, which involves taking living cells from fish tissue to produce fresh and frozen seafood products.
It plans to launch its first commercial product — a lab-grown premium bluefin tuna toro — following regulatory approval.
For Agronomics, this latest financing round represents a two-times multiple of invested capital. This is highly encouraging as it proves the firm is capable of identifying early-stage opportunities in this space.
It now owns 5.12% of BlueNalu and it makes up about 8% of the portfolio. Agronomics is set to profit handsomely if this (or any other) firm one day goes public or is acquired, . That’s the aim here.
The firm’s net asset value (NAV) per share was 15.8p on 30 June. At 9p, that means the shares are trading at a 41% discount to NAV. In response, the board has launched a £3m share buyback programme.
Is the stock a bargain at 9p then? I think so, though that discount could widen further if investor sentiment around unlisted assets continues to deteriorate. That’s a risk here.
On the other hand, cellular agriculture could represent the biggest change in food production since the first domestication of plants and animals 10,000 years ago.
If so, it could be the largest mega-trend this century. And Agronomics provides a unique way to invest in it. This is why I’m buying shares at 9p.
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Ben McPoland has positions in Agronomics. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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