by Travis Johnson, Stock Gumshoe | October 1, 2014 6:26 pm
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Och, this one hurts. I have bought and sold previously for an average 6% gain, but yesterday and continuing today will take forever to recover. Still believe in the story, but the infrastructure is lagging and making it less attractive/even inconvenient to the end user.
While I have made good returns on Westport on 3 occasions when it was in the $25. – $35. range and was considering some options plays again in the $18 – $21. range I am now glad I deferred. I was quite surprised it has fallen below $10. but for patient investors a time may well come when it could be worth looking at again because its technology remains appealing. The market is not always rational, this is a stock that has been punished to the extreme and I think it will bounce back, but as always the timing is the key factor.
I agree, the technology remains appealing — but apparently, appealing only to investors, not to customers. They have doubled the share count in five years but over the last four quarters reported the same gross profit ($24 million) as they did in 2009, and their operating expenses to support that $24 million in gross profit have risen by 300%, so their loss per share has gone from about 50 cents to three dollars — at least the dilution has meant that the losses are spread out among more shares, eh? 🙂
At some point, you have to sell something that customers want and will pay enough for that you can make a profit — Westport management has continually convinced investors that they are about to do that (including me), but after all these years I have to conclude that they’re either irrational optimists or prevaricators.
Travis, unfortunately you’re wrong again on Westport. It’s understandable given the history of a bad business model and burning investors. However, the company really started becoming compelling this year as they move from being a manufacturer of engines to working with OEMs. This sell-off is a max pessimism event. The question to ask is how will the company look in two or three years? Do they have a good business model now? I think the OEM supplier and partner model us right as that broadens their market and greatly reduces competition. Is there a large unserved market? Yes, trucks, buses and even trains are moving (slowly) towards natural gas engines. Are there catalysts for growth? Clearly new agreements indicate so. I think this is a clear long-term buying opportunity. I have made it a “must own” at my newsletter and made it a core long-term position at my firm this week.
Then I hope they’re right and that it works out… but I disagree that their model has really changed, and I don’t trust their forecasts or pronouncements at all.
Take another look. The model has massively changed. The math really stacks up well as a supplier to OEMs. Allows OEMs to cut R&D expenses by working with Westport. Old management was arrogant thinking they’d displace existing manufacturers.
Go watch baseball now though.
Myron I also made a little on Westport earlier but as I see it the problem is in not enough fueling stations built yet. As you know just about any internal combustion engine can run
NatGas but the low energy content means frequent refueling or larger storage tanks on board are needed. Myron I notice a lot of shares of PGLC are being accumulated by two persons,,,I think roughly 10 or 12 million shares. Have you any idea why?
Now under $7.00. Ouch.
… and now under $4.
A couple analysts are now predicting that they’ll be making a profit in 2017, I hope for their sake that they can get things working eventually. Maybe this will be the tax-loss washout in WPRT finally, but, as I said, they’re stuck in “show me” status now — no more projections, no more future possibilities, I have to actually see the progress in their books before I can believe it.
Travis I’m with you. Low oil price will work against them. If they had concentrated on making a dual fuel after market add on to existing diesels I think they would be riding high now instead of fizzling.