Tuck this info in your Stock Watch folder. Potential for huge reward could be very large in years ahead just like the days before the Computer got rolling.

More on D-Wave

D-Wave has huge potential in terms of an upcoming IPO, in my opinion.


Dear Shareholders:

Harris & Harris Group builds transformative companies from disruptive science. This process can be long, and sometimes it includes unexpected twists and turns.

However, there are also days like Tuesday, December 8, 2015, that reinforce why it is exciting to build transformative companies from disruptive science, and why we believe passionately that these efforts will yield growth in value and returns for our shareholders.

 On December 8th, one of D-Wave Systems’ partners, Google, announced that its D-Wave 2X quantum computing system demonstrated an unprecedented decrease in the time-to-solution for a certain set of problems as compared with solving the same problems on classical computers. What do we mean by unprecedented?

Consider a decrease in time to reach a solution to problems involving almost 1,000 variables by 100,000,000 times. Let’s put this increase in speed in an understandable perspective. An article in Bloomberg stated, “In one test, the DWave machine needed just a single second to process calculations that would have taken a standard machine 10,000 years to solve.” We believe that such acceleration is without comparison in the history of computing.

We are not the only ones that are excited about this announcement. In the past 24 hours over 25 articles have been published online documenting and discussing this exciting breakthrough.

You can access these articles by clicking on this link to Google’s news search engine: https://news.google.com/news/story?cf=all&hl=en&pz=1&ned=us&q=dwave+systems&cf=all&ncl=dZiX84H9efiibMMsnNfEluViQM_dM&scoring=n.

As one of the earliest investors in D-Wave, we have seen the technology evolve from 2 qubits to today’s 1,097 qubit machine. While this increase in qubits is impressive, D-Wave is still in the early stages of development of its processors. One analogy often used to describe where DWave is today with where it could be in the future is comparing its current processors to the earliest Intel processors.

Intel’s earliest processors were slow and did not have other critical ecosystem pieces fully developed to take advantage of everything the technology enabled. Fast forward 15 years and then fast forward another 15 years, and look at the computing power made possible, and the market capitalization explosion, as processing power began to expand.

Now, imagine if D-Wave can continue to increase the number of qubits on its processors and improve the ease-of-use of the software and other infrastructure needed to use D-Wave’s machines so that they become broadly accessible to multiple industries and individual users. These are exciting times for computing in general and for quantum computing. In addition to Google, this has not gone unnoticed by companies such as Microsoft, IBM, and others that have rapidly stepped up their quantum computing efforts over the past few years.

The article in Bloomberg notes that Harmut Naveen, Google’s lead engineer on the project with D-Wave, believes that there is promise for D-Wave’s computers to improve battery technology, 2 desalinization machines, and solar cells. His belief is based on the unique qualities of qubits that may lend them to uncovering properties about materials, which could result in much more efficient industrial machines. “Because the operating system of nature, as far as we understand it, is quantum physics, you need a process that acts on quantum physics to describe parts of the universe,” Neven said.

 “Sooner or later, quantum computers will be the tool of choice to solve these problems.” Another article in Bloomberg cites Marcos Lopez de Prado, a senior managing director at Guggenheim Partners, as indicating that “these supercomputers could give money managers and banks, whose algorithmic-driven technology already dominate trading, another advantage in a highly competitive market. They can help managers better allocate money to a broad range of assets, find new ways to profit from differences in prices across markets, and value complex derivatives structures.”

 Leading companies and organizations are beginning to provide third-party, independent validation of the disruption that D-Wave’s computers may enable. Over the past few years in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K, we have discussed five core benefits to our shareholders.

One of these core benefits is that we provide shareholders with access to disruptive science-enabled companies that would otherwise be difficult for investors in the public market to access. We believe D-Wave is a great example of this benefit to our shareholders. We are excited to be part of what appears to be a dramatic advancement in computing.

We believe that Harris & Harris Group is currently the only way for non-accredited investors to participate economically in the potential future growth of D-Wave. We are excited for what the future holds for D-Wave and the potential creation of value this investment may provide for our shareholders. Thank you for your continued support, and we wish everyone a happy and healthy holiday season as we look forward to an exciting 2016. Douglas W. Jamison Chairman and Chief Executive Officer

If the share count has not changed then your investment in the Pender Growth Fund Inc. V.PTF @ $ 4.70 share  is basically a 15% investment in D-Wave. Not bad.



Quantum computing promises to turn Moore’s Law on its head with exponentially faster computing times than we are capable of today. Canadian quantum computing startup D-Wave made headlines recently by taking a problem that would take 10,000 years to solve with conventional computing and then solving it in seconds. This would imply that quantum computing is 100 million times faster than conventional computers. With such mind boggling amounts of computing power, we can take all that big data we’re creating every day and begin to do some pretty cool stuff with it. Just yesterday, IBM announced that their own quantum computing chip is now available for developers to play with via “the cloud“. This is what the interface looks like to the “IBM Quantum Experience”:

IBM_Quantum_Experience

So while buying shares in IBM will give you next to no exposure to quantum computing yet, investing in D-Wave stock sounds like a very viable way to invest in quantum computing, The problem is, D-Wave is a privately held company. Since we’ve had strong interest from our readers about how retail investors can get exposure to D-Wave stock, we’re going to give you three ways as follows.

Buy Shares in Harris and Harris Group (NASDAQ:TINY)

We wrote an entire article on this topic which you can read about here. If at the time we wrote that article you bought shares in Harris and Harris Group (NASDAQ:TINY), you’d be down -44% on your position as of today but on the other hand, your exposure to D-Wave would have increased significantly. TINY’s holding in D-Wave now accounts for 16% of TINY’s current NAV and is now their largest equity investment. Since our original article, Harris and Harris Group (NASDAQ:TINY) wrote up their investment in D-Wave by $4.1 million giving their 5.1 million share position a current value of $11.5 million. This would imply a price of $2.24 per share of D-Wave.

Buy Shares in Pender Growth Fund (CVE:PTF)

One of our readers, Vanisle500, turned us on to this fund which holds shares in D-Wave. If he is still holding his 10,000 share position, then the value of that holding would have increased from $6,800 to $16,000 or an increase of +147% in just 8 months. The question is, how much exposure do we get to D-Wave by buying shares in Pender Growth Fund (CVE:PTF)?

According to their financial statements, as of December 31st 2015, PTF held 1,120,720 shares in D-Wave with an implied valuation of $2.5 million (using TINY’s latest valuation). Their NAV as of April 29th 2016 was $15.9 million which means that all things being equal, buying shares in PTF gives you a 15.7% exposure to D-Wave which is roughly the same amount of exposure that an investment in TINY would give us.

Given the recent spike in the PTF share price, the fall of TINY’s shares, the increased liquidity for TINY, and the diversity of TINY’s other holdings, we’d buy shares in Harris and Harris Group (NASDAQ:TINY) over Pender Growth Fund (CVE:PTF) right now if we had to choose between the two for exposure to D-Wave. However, the absolute best way to buy shares in D-Wave is to actually buy shares in D-Wave which brings us to our third and best way to invest in D-Wave.

Buy Shares in D-Wave through Harris and Harris Group (TINY)

Last week an entity owned by TINY called “H&H Co-Investment Partners, LLC” began accepting subscriptions for investments from accredited investors to purchase a limited amount of equity interests in “H&H Co-Investment Partners, LLC D-Wave Series J”, an investment series created to invest in future rounds of financing of D-Wave Systems, Inc. For anyone who asked us how they can buy shares in D-Wave, this is your answer. You don’t have to be a shareholder in TINY to invest but do note the following:

Accredited investors interested to participate in this offering, who are identified as holders of Harris & Harris Group’s common stock immediately prior to the date of this announcement, will receive priority should the offering be oversubscribed, will be able to invest in the offering at reduced expense rates and will be entitled to reduced placement agent fees.

D-Wave is looking to raise $15,000,000 and the offer appears to expire on the 16th of June. In order to participate you need to create an account with FolioClient and invest a minimum of $25,000. For the average retail investor, that’s a significant amount. We’re not sure if we’re going to pull the trigger yet, but signing up for an account was easy enough. Be sure to read the prospectus which even contains some basic financials for D-Wave as seen below:

D-Wave_Financials

There is one last way which may be a long shot but we’ll mention it anyways. If D-wave looks to IPO, there’s one platform that allows retail investors to buy into IPOs before they go public. Motif Investing announced last year that they will begin offering pre-IPO shares for JP Morgan led IPO offerings. If D-Wave files for an IPO, let’s hope JP Morgan is the lead on the deal. In the meantime, you can open a Motif Investing account for free with no deposit required so you are ready to buy shares of future IPOs before they begin trading.