I cleared out my holdings in Westport Innovations today — during a very weak market for alternative energy stocks of most sorts it’s hard to sell anything in this sector, but I am very concerned about funding for the big ports Clean Trucks program that stands out as the single most important driver for Westport’s near term success. I wrote that it was probably wise to sell Westport a week or two ago when the prices were a bit higher, but wasn’t able to sell my shares until today.
Anything can happen in California, of course, and they may well come close to the multi-thousand unit orders that have been expected for the heavy trucks that service the Southern California ports, but in this financial environment, with state funding questionable and port traffic probably declining, it becomes a tougher sell. Westport’s natural gas engines are cleaner than “clean diesel” engines that are also being used, but they’re also, much, much more expensive — and with diesel prices coming down dramatically as oil falls, some of the operating cost advantage withers away for Westport and Kenworth’s trucks.
I expect Westport will still make a go of it in the long run, and their joint venture with Cummins, Cummins Westport, continues to make some very impressive sales in urban garbage, delivery, and mass transit fleets — particularly the recent sale of thousands of buses to an Indian transit agency. But while the Cummins Westport joint venture is profitable and can push some cash up to Westport, it’s not enough to make the company an attractive value right now — the costs of starting up and operating their new heavy truck facility are significant, and their R&D and operating costs remain quite high, so they need a second big revenue stream. If the port trucks end up being that second stream in the coming couple years, they can do quite well — if not, things might be a bit dicey. I bought with confidence that the large funding facility for renewing the port trucks would come through, and that it would be a huge benefit to Westport. With fiscal problems in California, lighter port volume, and lower diesel prices, I’ve lost most of that confidence — and a fair amount of my investment. Taking my losses, and clearing out now.--------------advertisement--------------
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