Week 22 Results
MONSTER PORTFOLIO 2011
Balance: Inception 01/07/11
$1977.32 Stock
$13.65 Cash
Total $1990.97
$19.06 Cash
Total $2,059.78
This by far was the worst week ever! My Portfolio dropped another 8% or so this week. My speculative play Westport Innovations (WPRT) was taken to the cleaners. Not only did I lose all of my gains in this stock, but now I’m in deep in the red. Westport totally tanked this week. This was bad for my portfolio in the short term, but a gift for the long term. I’m riding this bad boy out until the end of the year. Westport dropped me into a pit and now they are obligated to reel me out by the end of the year. I will explain.
First off on Wednesday I decided to sell Weatherford International (WFT) because I believe I can make more money in Westport. I did this after WPRT dropped more than 15% in a single day. This was a high risk maneuver, but I’m confident it will pay off. WFT is still a good company and I wouldn’t sell it for those of you who own it. I had to raise some cash in order to buy WPRT and I had to sell some stock to accomplish this.
Next I’m going to list the reasons why Westport Innovations (WPRT) is a buy. I had an opportunity on Wednesday to listen to the live conference call for Westport and it wasn’t that bad. So what they lost more money than expected! They are trying to grow the business and in order to do this they must spend money.
Here are some key points of what I interpreted from the conference call and the reason I bought more WPRT when it was down.
WPRT Overview
Pro’s
1. Revenues came in at $38.1 million vs $34.5 million in the prior year. That's an increase of 10.4% (Making progress)
2. Full year results were $148.1 million vs $121.7 million in the prior year. A positive increase of $26.4 million or 21.7% vs last year. The Full year gross margins was 38.6% vs 31.8% in the prior year. (Another positive)
3. 480 HD units still in the pipeline or $26.4 mill from ASP of $55,000 per unit. That is a estimate. David Demer suggested these orders will be shipped towards the end of the year and WPRT is seeking to get that business to 250-300 trucks a qtr, but suggested early next calendar year they expect the business to be operating at this level. Delivery times of about 4-6 months after announcements of HD Orders. The 2nd half of year should be good.
4. Emer deal to add $31 to $34 mill in next 6 months or take the average and that’s $5.41 mil per month. This company already makes money! Emer has a strong position in multiple countries including Italy, Germany, and India. This increases market exposure and helps accelerate growth for the Juniper business (A plus) Emer brings the off engine components and WPRT focuses on the on engine components. This in turn will allow WPRT to supply a complete system to the OEM’s. A full package deal! Mentioned in the conference call an analyst was hinting towards the India market for growth and Ian Scott the president of Juniper Engines stated that Emer has a joint venture that supplies to the largest auto OEM Suzuki Maruti in India. Currently there is a big push towards fuel station infrastructure. India could be a asset down the road.
5. Reaffirmed CAGR of 30% (Compound Annual Growth Rate) That’s tremendous growth.
6. $180 million in cash and short term assets. A plus
7. Juniper stationary engines. This is a field trial for engines in the oil field sector. Engines that drive power units. The market is very large. Juniper is trying to develop an engine that has a higher durability then their competitors. They are hoping to launch these engines in the near term. This is speculation, but another positive. ($3000-$4000 a unit)
8. David Demer's suggests that at the current moment Westport has their hands full of business. He also believes they will see continued strength in CWI. CWI added $25.1 million this qtr with revenue on 773 units, which is approx $32,470 per unit vs $30.9 million on 998 ($30,961 per unit) units sold the same time last year. Although the revenue was lower they made more money across the board per unit. The unit price increase was $1,509 or a 4.87% hike to the upside. (Making Money!) David Demer stated CWI is doing very well and will continue to have a good year. Also, WPRT is seeing new orders in transit and refuse trucks. This is reassuring because CWI generates the bulk of Westport’s revenues.
9. Lastly, Joe Soros fund (Soros That’s a 70% increase. That fund holds over $117,000,000 in Westport stock alone. Joe Soros is a smart man and he knows how to make money. This should help add confidence to the purchase of this stock.
Con’s
1. Extra Debt from Emer approx $77.6 million, but WPRT will reduce that debt down by $25 million. So after the debt reduction Westport will be taking on roughly $53 million in debt. This will help reduce interest and principal payments. That’s a plus for a negative. LOL! I consider this the main reason that the stock sold off. The analyst I believe had a hard time understanding the value of the purchase. This is a short term negative for a long term outcome. Westport is positioning themselves for the future and the stock price will appreciate when the business takes hold.
2. U.S. Government still hasn’t come to an agreement that will be favorable to Westport’s business.
Turnaround Challenge
Goal $352.91
Current $-166.67/352.91
% of Goal -48.99%
Current Holdings:
Apple (AAPL)
Cosi Inc. (COSI)
Westport Innovations (WPRT)
Have a great night!
Clay-
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