For those of you that follow my trades on Covestor you may have noticed that in late August I purchased shares of LQMT (Liquidmetal Technologies). CTeezy made mention of this purchase in early September. I have to admit, I’m actually really upset I didn’t find out about LQMT back in early August when shares could be had at a paltry .28 per share. At that time, LQMT was a company with a revolutionary idea, a lot of debt, and no real marketable products. Enter new CEO, Thomas Streipp, a leader with 30 years experience growing global technology companies. Streipp had been running long time tech company Symmetricom (SYMM) from 1998 to 2009 before joining LQMT. Sounds like he put his connections to good use right away as a quiet SEC 8-K filing was issued which announced that LQMT had entered into a Master Transaction Agreement with Apple Inc (AAPL). In exchange for a large license fee LQMT would essentially grant Apple exlucsive rights to the liquid metal technology in the consumer electronics field. Interestingly, the wholly owned subsidiary is called the “IP Company”. Hmmmmm what do we know that begins with “IP” and is associated with Apple?

Yeah. Just about every product begins with “IP”. iPods and iPhones and iPads oh my! It’s no secret that the world loves Apple products as evidenced by the millions of iPods seen being toted around each day (when I last checked Apple had sold over 110M iPods since the device was first launched). The true Apple geeks of the world especially got excited about this news. That’s why when word got out that Apple was interested in something called liquid metal, the internet blogosphere lit up with questions as to what Apple may be trying to construct. Maybe their own T-1000?

Ok, maybe that was just me, but I do believe most thought that this technology might be used in future models of the “IP” prefixed devices. Whenever sites like Gizmodo and Engadget pick up on this kind of news you are bound to attract some excited investors. It should have come as no surprise then that LQMT saw its share price rise about 500% in a matter of days. Who really knew what Apple was up to?

Almost as quick as the stock rose, it fell – as it should have – once the initial buzz of the news with Apple wore off. I, personally, was happy to see the drop because I had completely missed this initial runup. I waited for the chart to settle down a bit and ended up picking up some shares at .65 (a bit early) and later again at .56. To me it almost seemed like in the DAYTRADER’s mind this stock was just another pump and dump scheme. How many times have we seen the old, “throw a big tech company’s name in with the name of a small tech company’s name and attract buyers” trick. Normally one would think the fun is over, but despite this sell off the non-trader/geek world still remained abuzz wondering what may be in store with this new revolutionary material. As such the stock price has slowly begun a climb back to the .80 rang. The fact that this seems to have generated all of this buzz makes me think that we could see another run if any news is leaked regarding Apple’s involvement with the company. It is for this reason, that I’m speculating on LQMT as a potential breakout play.

I must say though, despite that fact that I am extremely bullish on this stock, it does carry with it IMMENSE amounts of risk. I mean, this company is trading on the pink sheets for a reason. I wouldn’t be surprised at all if Apple simply bought the rights to this material to keep other competitors away. Why chance someone coming out with a lighter version of an iPad or iPhone? Apple could just as easily cripple LQMT in the consumer electronics market as they could make them.

Additionally, as is common with stocks that rise very quickly in price, we could see some dilution coming at some point. This could send the share price right back to the .28 cent level that was seen for most of 2010.

All in all, I find LQMT to be one of those companies worth taking a small gamble on. I can’t even begin to guess what my target price would be if some large deal or buyout were to happen but I’d have to say that $1.70 per share could end up looking like a bargain in 2011.