Westport Coming to America

By Travis Johnson, Stock Gumshoe, July 22, 2008

Westport Innovations, the natural gas engine company that was teased a while back by the Alternative Energy Speculator, continues to develop. We should all be cautious, because this company has been around for a long time and gotten hyped up several times in the past before falling back down. It seems different to me this time because they’re on the verge of an appreciable level of production — they have a new plant to build engines for Kenworth in Washington State that will help supply the expected large demand from California ports, and they continue to make new partnership agreements with truck and engine companies around the world.

So there’s plenty of reason to be cautious, but the fall today is not for that reason — the shares are dipping because it looks like shareholders are about to be diluted again, largely, I expect to help pay for their new engine facility. The nice side of this dilution, however, is that Westport has also applied for a listing on the Nasdaq — it wasn’t all that hard to buy them in Canada, of course, but listing on the Nasdaq will bring a whole new universe of potential individual investors into the fray.

At the same time, the shares are doing to do a reverse split — partly in order to reach listing requirements for the Nasdaq, I imagine. They’re calling it a “share consolidation” since “reverse split” has the smell of failure to it, but it ends up the same — if you own shares, you’ll get 1 new share for each 3.5 shares you currently hold. It won’t make any difference to the business, obviously, though I suppose it’s possible that there will be slightly more interest from more cautious investors as the shares will be well over the psychological $5 mark.

In the end, I think this is all probably good — Westport has a history of blowing through money and not making much, but I have some optimism that the current environment is going to really give them a tailwind for some time — Cummins Westport (their joint venture with Cummins) is seeing huge demand from fleets and public transportation, and Westport is saying that they are under significant pressure to build capacity for heavy truck engines with diesel at such high prices around the world. Cummins Westport can increase capacity rapidly for midsize engines that already ...

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