“Soros and Pickens are about to make $2.3 billion on this ‘Future Fuel’ company” (Alternative Energy Speculator)

By Travis Johnson, Stock Gumshoe, June 24, 2010

Here’s the pitch for the ad I’m looking at this morning:

“At the equivalent of $1.50 per gallon, the ‘fuel of the future’ is over 50% cheaper than diesel. And it’s many times safer, cleaner, and more environmentally friendly…

“But what only a few people know — the rich, connected people, like Pickens and Soros — is that the transition to this fuel has already begun…

“Across the nation, multi-billion dollar companies from Wal-Mart to Volvo to Peterbilt are switching the engines of their trucking fleets to run on a fuel that produces practically zero particle emissions and half the CO2 emissions that coal and oil produce.

“With over 7,000 trucks in their fleet, Wal-Mart alone is expected to save over $300 million by switching to this fuel.

“It’s so cheap and abundant that the cities of Los Angeles and Atlantic City are switching their trucks and buses to run on it — and they’re just the first of many major cities.”

Sounds exciting, right? Nick Hodge and the folks at Alternative Energy Speculator are telling us that they’ve got the stock to benefit from this trend … which is, they later make clear, the movement to use natural gas as a transportation fuel. And as you can imagine from the intro to the tease above, this is about natural gas as a fuel for heavy trucks.

Which means that longtime Gumshoe readers may already know our answer … but let’s read on, shall we?

Part of the pitch is that you’d be getting on board with George Soros and T. Boone Pickens, celebrity investors both …

“… we’ve been following one particular company that has been drawing notice — and a lot of investment — from some pretty big names…

“This company makes state-of-the-art engines that run on this ‘future fuel.’ And it’s already got contracts in place to convert the trucking fleets of Wal-Mart and other major clients to run on this clean, abundant $1.50-per-gallon wonder fuel.

“It’s also contracted with major truck-makers Peterbilt and Volvo to supply these “future fuel” engines as original equipment…

“Infamous billionaire speculator George Soros just bought more than 2 million shares and T. Boone Pickens already owns nearly 5 million shares…

“Not to mention that a major owner of the company has snapped up over 1.1 million shares on the open market since mid-February alone.

“When you get insider trading at that volume, it means only one thing: Those executives know something the analysts don’t.

“When company bigwigs who already own millions of shares start buying up more of their own stock on the open market, it’s because they know the price is going to explode…

“For the last 7 years, this company has grown by double digits…

“In 2008-2009 alone — during one of the worst recessions in American history, mind you — it grew over 60%…”

The ad goes on to talk about the big demand for cleaner trucks, particularly in port cities like L.A., and the nationwide push to clean up the huge, dirty diesel trucks that service those ports. L.A. has been the forerunner in the port pollution fight, though, here’s what they say about it in the ad:

“L.A.’s plan is to require all of these port-bound trucks to adhere to extremely strict emission standards so that the city will no longer look like it’s been sitting at the bottom of an ashtray for the past 20 years.

“Now here’s the part that’s of interest to investors like Soros and Pickens… L.A.’s plan gives incentives for truck fleet owners to switch to natural gas and other alt-fuel engines in order to reduce the pollution that the trucks give off…

“Which plays right into the hands of the company I’ve been telling you about.

“It would not surprise me one bit to learn that the reason company insiders, hedge funds, and in-the-know billionaires are loading up on this stock right now is that some hefty contracts with L.A.-based trucking companies are close to being inked.”

And there’s one other leg to the stool for this one — first we’ve got big insider buying, second we’ve got a push from the EPA and port cities to clean up their air and a subsidized move from large trucking fleets to cut emissions, and third … cost savings.

You’ve probably noticed that natural gas is still pretty cheap compared to oil (the ratio of the price of oil/gas has historically been in the neighborhood of 10, ranging usually from 8-12 or so, and it spiked to 25 or so when gas collapsed but is still high at about 15). This helps to urge truck fleet owners to invest in upgrades to natural gas engines, since fuel is such a massive portion of their expenses — so if natural gas is likely to still be cheaper than diesel fuel per mile traveled in the future, that can be a compelling argument.

And then they throw in just a bit more specific teasing about the stock:

“The world’s top 4 truck producers are nipping at the heels of this engine maker

“Truck and bus makers Daimler, Volvo, Dongfeng, and Tata are all supplied with LNG engines by this one particular company…

“Not to mention its partnerships with Weichai and Cummins — the #1 and #4 top engine manufacturers in the world.

“The company is producing equipment for everything from forklifts to high-horsepower, 16+ liter mega dump trucks.

“Even in the economic recession of the past two years, this outfit managed to create hundreds of LNG gas vehicles, bringing investors over 200% returns in the process…

“The company has over 9 years and $200 million invested in this technology — and their profits have been increasing for the past four years while big-name vehicle manufactures like GM and Chrysler were struggling just to cover their overhead.

“This outfit has 65 U.S. patents to their name, and has made several social and environmental lists across North America for their contributions to promoting clean fuel.

“So no matter which way you look at it, the ability for this company to achieve gains of over 1,925% is practically guaranteed.”

So I should just let you out of our misery, right? This stock is … Westport Innovations (WPRT)

And though Pickens was a major backer of both WPRT and their partner company Clean Energy Fuels (CLNE) (Westport makes the truck engines, Clean Energy builds and runs the nat gas fueling stations), It doesn’t look like he’s still an owner — recent filings do show major accumulation of the shares from “beneficial owner” Kevin Douglas, who’s another big investor and the guy who’s been buying shares like crazy this year, and George Soros’ fund has invested pretty heavily in WPRT with a near 5% stake, but it looks, at least on the surface, like Pickens is out. He is still on the board at Clean Energy Fuels and owns a big stake there, and of course he’s still out chattering about his “Pickens Plan” for using natural gas in transportation to anyone who will listen, though that advertising campaign seems to have run its course.

I also wrote about WPRT way back in 2008 for previous Alternative Energy Speculator teasers, one called “Clean-Energy Cash-Outs” and a follow-up that was tied closely to the “Pickens Plan,” and later that year featured them as one of the first stocks for my “Idea of the Month” writeups on the Irregulars site.

Westport is a technology company that has been morphing into an engine maker in recent years, turning their patents and research into alternative fuel engines (mostly natural gas and hydrogen) into a viable manufacturing business — first in partnership with Cummins, with whom they share the Cummins Westport business that builds engines for fleet trucks (garbage trucks, buses, etc.) and has great global sales, and now in partnership with big truck makers, some through Cummins for the somewhat lighter-duty trucks, some with their new Westport HD (heavy duty) division that’s working on a Weichai/Westport development deal somewhat like Cummins Westport and also working with Volvo, Kenworth and Peterbilt.

Though Cummins Westport has been consistently profitable for years, and I’d buy that company in a second if it were separately traded, the claim to investor attention in recent years has largely been the heavy duty truck segment — the appeal of getting port drayage trucks converted is great, since there are thousands of them and they’re largely short-haul trucks for whom the lack of natural gas infrastructure (gas stations) is not a big impediment, but the long-term promise is the conversion of the massive highway fleet.

I would personally have been scared out of the shares by California’s budget problems, because WPRT at the time was almost entirely dependent for revenue on the clean trucks program at the Port of Long Beach going through and making a big sales impact — and I thought the state might have to cut back on the huge subsidies that make truck conversion appealing for fleet owners, and that the fleets would more likely invest in less expensive options for cleaner emissions (the additional cost for adding Westport LNG injectors and fuels systems to a truck is close to $80,000, almost doubling the cost of the truck). Still, the shares have done better than I expected coming off the bottom … and though I haven’t looked at the stock very closely in recent months, I do still like the idea, I still love their joint ventures (Cummins Westport and now Weichai Westport, where they can get good distribution and manufacturing capability with limited investment), but it does still seem that the biggest opportunity and risk is the heavy duty segment, where they’re still investing and are not yet showing a profit.

Will that turn around in the years to come? Well, if they can maintain some technological advantage and the gasification of the truck fleet does move forward with large subsidies and the infrastructure is built out to fuel them, I imagine the future still looks pretty bright — but they’re not profitable now, and are unlikely to become so anytime soon (analysts had been predicting a profit in the 2012 FY, ending in March 2012, but after recent data releases they’ve switched that back to a loss of 12 cents a share two years from now. That’s not shocking for what is still a pretty early-stage company, at least in terms of size and product rollout, but it is unfortunately somewhat consistent with the Westport of two years ago — the optimism for a nice income statement has seemed for some time to be “a couple years away,” I hope that it doesn’t remain there.

Are you a WPRT shareholder, or otherwise have an opinion about Westport, natural gas engines and the “Champagne of Fuels”, or, for that matter, T. Boone Pickens and his “Pickens Plan?” Let us know with a comment below — thanks!

Related Gumshoe Articles

Nick Hodge’s “The one and ONLY move to turn $10,000 into $1 million on the lithium energy boom.”

Which lithium stock is being teased in the ads for Energy Advantage?

37 Comments Read More

“The Biggest Medical Breakthrough Since the Polio Vaccine”

What's Nick Hodge pitching now?

41 Comments Read More

Leave a Reply

33 Comments on "“Soros and Pickens are about to make $2.3 billion on this ‘Future Fuel’ company” (Alternative Energy Speculator)"

avatar

Danny
Guest
0
Danny
June 24, 2010 9:29 am

I was looking this up on yahoo finance and What I found was that two financial companies have downgraded this stock and this happened very recently. This doesnt look like a good pick at the moment.

Kenner
Guest
0
Kenner
June 24, 2010 2:32 pm

I wouldn't touch either one. Tourbine Truck Engines Inc. (TTEG) has the better technology and now has the backing of the China.

Bill
Guest
0
Bill
June 24, 2010 3:03 pm
I agree with the Gumshoe and Danny. Not much going to happen here in the next year or so given the deteriating economy (less CapEx in trucking industry) and deficit spending by the govt (natty gas incentives). However, long-term 3-5 yrs, WPRT should be a big winner. Will probably be taken over by somebody. I lived in Long Beach until recently moving. Anybody who drives the I-710 spur knows the deal—a 6 lane freeway jam-packed. 9 out 10 vehicles are drayage trucks, most burning diesel. LB/LA port authorities finally said enough—no more diesel trucks by 2015. Bought WPRT in spring… Read more »
charleroi6040
Guest
0
charleroi6040
June 24, 2010 3:06 pm

yyour just discovering now the motor engine could run on natural gas but here in europe i have been running on gpl for over 40 year just by adding some small component on gasoline engine.

BF'er
Guest
0
BF'er
June 24, 2010 5:10 pm
I am a huge fan of Boone Pickens. Saw him 2 weeks ago at the Exco Resourses (XCO) annual meeting (he is on the board and a huge shareholder). Board Chairman asked him to give update on what''s going on in Washington regarding Natural Gas. He said – There are two bills in the Senate and two in the house. They have different numbers in each body. One he referred to as the Natural Gas Act and the other one, Cap and Trade. Boone was heavily involved in writing the NG act and it is the bill with incentives for… Read more »
stone
Guest
0
stone
June 24, 2010 5:42 pm
Back in the early 80's The Coca-Cola Bottling Works of Jackson (Tennessee) converted their hundred vehicle fleet to run on compressed natural gas (CNG). At the time CNG cost per vehicle was about half that of gasoline. To convert an engine required only regulators to reduce pressure and an adapter for the carburetor. Of course, the vehicles had to be fitted with several storage tanks each holding 3,000 psi. There were 3 compressors and banks of storage tanks for quick fill. Mostly, the vehicles were filled overnight directly by the compressors. As I recall the whole project cost about $350,000… Read more »
vaag
Guest
0
vaag
June 24, 2010 6:19 pm

A few years ago a friend of mine was living in Brazil and had a diesel powered Chevy Suburban. For about u.s.$500 he could have it converted to run on natural gas or alcohol. He chose alcohol because of it's great availability in Brazil. Not a bad price for the conversion.

TV Guy
Guest
0
TV Guy
June 24, 2010 6:20 pm

In the course of my work, I had a chance to tour the WPT operation. The stock had it's day….not sure about "now". But what I can tell you it is a well-run plant with some great people and the technology is IMPRESSIVE.

rod
Guest
0
rod
June 24, 2010 6:41 pm
yes you can convert your gas engine to run on "duel" fuel (gas and nat gas) or gas and propane/butane, it was very popular back in the early '80's when of course nat gas and propane was cheap. The problem back then was the reduction in power, especially in comercial trucks and the distance you could travell. plus, over time there seem to be valve "burnout " problems and just overall other parts of the gasoline engine harmed from the other fuels.The good part was your oil seemed to stay cleaner. I can see why they want to develope a… Read more »
Bill
Guest
0
Bill
June 24, 2010 7:20 pm
Just a factoid for all to consider: On 7 Jun10, the Oklahoma legislature passed an OK Energy Act with one its goals to provide CNG refueling stations every 100 miles by 2015 and every 50 miles by 2020 on all interstate highways running thru OK. How? Don't know. Just know that Cushing, OK with its natgas Henry Hub is the largest central point in the US for collection and distribution of natgas within the US. Unless other states or the feds make the same committment, LA to NY or Miami by long-haul LNG/CNG trucks is far off in the future,… Read more »
John
Guest
0
John
June 24, 2010 7:40 pm

Interesting….I think that is where the real application for NGS lies IE local townships / municipals and businesses that can have their own filling station on site.

steve
Guest
0
steve
June 24, 2010 4:32 pm

Municipalities look like less likely buyers right now considering their overall fiscal fragility bordering on bankruptcy. If the Post Office, FedEx, UPS, and other carriers were interested, it would be compelling. I would think they are also waiting to see.

mpch
Guest
0
mpch
June 25, 2010 12:16 am

In Porto, North Portugal all municipal buses have a large sign on the roof, in English, "Running on Natural Gas".

Dan
Guest
0
Dan
June 25, 2010 2:39 pm

h ehttp://www.theoildrum.com/node/5615re is a link to an interesting article about natural gas conversions and some of the ridiculous fees involved. Thanks Gummy , you're the greatest. I've been an irregular for a while and it is a small price to pay for the wealth of information you provide http://www.theoildrum.com/node/5615

Bill
Guest
0
Bill
June 25, 2010 3:15 pm

For those interested NG vehicles and refueling stations, there is a free weekly newsletter (issued every Fri) providing 8 to 10 news articles. Site is http://www.NGVglobal.com. Excellent source for the latest news. WPRT and CLNE are mentioned almost every week. Enjoy.

Cor
Guest
0
June 25, 2010 5:25 pm

Soros and Pickens have made some very wise investments in the past and i think this could pan out for them well.

Robert Berke
Guest
0
Robert Berke
June 25, 2010 5:50 pm

The bet on nat gas is based largely on its current low price in comparison to oil. This underlying assumption is that were ng to become a major substitute for crude oil, the price would continue to remain low, but it is a far more likely that the price of the substitute will tend to rise towards that of the original. . I think that with much greater use of ng, the price will inevitably rise towards that of oill.

Paul the Good
Guest
0
Paul the Good
June 25, 2010 6:30 pm

Natural gas is so abundant that the United Satates has run out of storage facilities for it. Additionally, there have been several recent discoveries in Pennsylvania of NG and elsewhere in USA. The price won't go up very much unless the Icleand volcano creates another cold winter like the one following Mt. St. Helens eruption.

Boband
Guest
0
Boband
June 26, 2010 3:43 pm
Lots of fleets in Alberta running on nat gas…mostly things like city buses, utility companies, and some taxi companies. This has been ongoing for many years…I think since the 1970's. Also a lot of nat gas engines used to be used to power irrigation systems with gas lines piped right to the pump locations. So the technology is nothing new, but the problems of less power output, range for CNG vehicles, and availability of fill stations – all that limits usefulness. Posted to note that this is not a new technology, therefore some 10 bagger breakthrough is unlikely, but incremental… Read more »
Merit
Guest
0
June 26, 2010 4:38 pm

Just a few years ago, several gas-turbine power plants were constructed in California. This put giant utilities competing with homeowners for the same natural gas used for stoves, water heaters, and furnaces. The result was a dramatic increase in the price of natural gas sold to families. It is reasonable to conclude that more vehicles running LNG will also increase the price.

i am not saying that the whole idea is bad; however, there are side effects which are not all good.

microsoftaccount
Guest
0
July 2, 2010 9:09 am

Protecting and preserving our environment must be on the top of the hierarchy level of priorities. I agree with "Romancing the Stone"… Utilizing our work force might be a good pick to come up such solutions since unemployment rate rising in figures.
Meanwhile, topsteptrader newly introduced Live Real-time market trading using (CBOT and CME floor traders-alike platform which drive marketing transactions as easy as playing video games, where competitive traders, brokers and recruits chat with each other at the times compete among their selves.

Click the link below for a sneak preview Top Traders ranking http://www.topsteptrader.com/Leaderboard.html

kfj
Guest
0
kfj
July 7, 2010 8:24 pm

For the folks thinking of using Natural gas…think of the communities affected if they have natural gas 'wells' in their areas…
http://www.gaslandthemovie.com/

John
Guest
0
September 4, 2010 3:01 am

George Soros is a very intelligent and savy investor. He sees cycles and growth industries before they happen. Fuel and Alternative Energy growth is a an area that will only expand as there is a requirement for alternate sources.

Al
Guest
0
Al
December 2, 2015 3:52 pm

Soros is a manipulator. He takes positions and then pulls strings in government to effect policy change. Similar to insider trading. He uses his money, puts “his” man in office., and gets legislation passed that makes him billions!

Ian
Guest
0
Ian
December 16, 2010 2:59 am

At least using natural gas the money stays at home in the USA.

Dan
Guest
0
Dan
December 16, 2010 7:41 am

Going over seas to the highest bidder. They wiii pay 3 times the price we pay. they are building the export ports right now. Look up CQP and you will see what the Pickens Plan is all about. China, Korea and others will use this gas. We will lose job and our water will be polluted.

Tim Gaynor
Guest
0
Tim Gaynor
March 8, 2011 5:53 pm
The technology maybe farther along then some think. McNeilus Truck Manufacturing, MN, Is part of the Oshkosh Trucks. Together they have jumped in head first , to the application and use of CNG for Vocational Trucks, Tractor Trailer, Hwy and Heavy , and All Terrain markets. McNeilus is best known for producing Heavy Duty Garbage Hauling and Cement Mixer vehicles. The Actual trucks its self have been supplied by all traditional manufactures of truck frames with a variety of Diesel engine suppliers, Cat, Cummins, GM, and Volvo.. Oshkosh a venerable manufacturer and supplier of specialty designed off road and All… Read more »
Tim Gaynor
Guest
0
Tim Gaynor
March 8, 2011 5:55 pm

These CNG application have been tested in both Municiple and Heavy Duty Construction applications traditionally served by diesel engines. GM's Allison transmission and Eaton axle's have been developed to match up heavy duty power requirements and CNG engines from Cummins Westport have proven to be extremely reliable, durable, and cost effective power alternatives to traditional diesel engine applications. .
CNG is not a difficult fuel to obtain either. Look to your nearest landfill methane producers such as Waste Management and Veola to be the next Standard Oil's

Dean
Guest
0
Dean
February 2, 2012 1:00 am
I am an American who lives in Oregon for @ 8 months of the year; my Thai wife & I go to Thailand for the 4 inclimate months. Here in Thailand there are thousands of NPG and LPG retrofitted gasoline vechicles that run dual fuels systems. The conversion is affordable: @ $1,000 for NVG, @$400 for LPG. The gov’t of Thailand was subsidizing both fuels (Natural gas and liquid petroleum gas) so that the cost was 25%-30% THE COST OF GASOLINE OR DIESEL. Much cleaner burning than diesel….has helped the smog/pollution situation in Bangkok considerably. Cost of NGV/LPG is now… Read more »
alfred uranga
Guest
0
January 13, 2013 11:31 pm

if the dcgt engine made by turbine truck engine inc, runs on anything, why do do they trouble selling an engine.

Carol Adams
Guest
0
January 8, 2015 11:55 pm
WPRT Acquires Prins Autogassystem on (Fri, Dec 12, 2014) You have written a number of articles on this company in the past. I’m interested in your current opinion, after the above listed purchase. I owned this company years ago, bought under 8 and sold over 26, didn’t look back, till now. I’ve taken a position at 3.44 per share this week. I feel better about the outlook for their technology, since Global Warming hit the Leaders of most countries and China’s pollution problems grow worse. Westport Innovations, now claims products for land, sea, and rail. They’ve added a number of… Read more »
Gravity Switch
Admin
11
June 24, 2010 2:34 pm

Yes, that coincided with the cut in earnings expectations — lots of \”future\” in this stock, as there has been for several years, so the shares tend to ride on that sentiment and bounce pretty hard.

bill
Guest
0
bill
July 2, 2010 12:40 am

i think perryville hub flow is greater than the henry hub

wpDiscuz