When the tax selling is done, ENOC usually wafts up in very late December/early January.
We'll see if it does again this year, whether the Company has legs.
3 more thoughts -- #'s 1 and 2 would be negatives, and #3 would be positive:
1. wonder if this is a classic MM move because the retail investor community is poised to capture the upward seasonal trend that starts around now. Only problem is -- the Company, earnings prospect-wise, is not what it was these past two years, and this could be a trap. I'm suspicious when I see all the rags pumping this weekend. Could be an engineered move, with the precipitous ENOC drop we have seen now over and over again. Often -- the day after expiration. And wonder how the expiration played in.
2. What about oil at $55-$60 now?! What is the impact on ENOC's portfolio of business, if these levels persist? Energy efficiency propositions, etc. OR --
3. Can this same question about energy prices be posed a different way -- With economic activity way up now, and cheap energy, will electricity demand increase, significantly increasing the need/attractiveness of demand response?
Other than these, I don't have any questions!
Funny how we retail investors are groping in the dark. For sure, the trading rags have picked this up and are spinning it as a major momentum reversal. I'm not sure -- not yet.
Seasonality-wise, PPS typically heads northward in early January, and through the first quarter. But during the past two years, there were major new initiatives underway (SSAS, Europe, Add-ons) and the earnings hopes did NOT materialize.
We have the SG's intent to Appeal the FERC 745 set aside. One has to recognize the big slide down since May of this year, right when the set aside happened. And now the SG's announcement on December 8 to appeal. But Healy was crystal clear that the impact on Enernoc's business was negligible. So I don't know that now -- an appeal and the PROSPECT of the set aside being overturned, IF the Supreme Court even decides to hear the case, and no material impact on Enernoc's business either way -- whether this is the source of the upturn.
If a short squeeze, why? Just because of the seasonal change in momentum, or that combined with the options expiration? Wonder if there were a boatload of $16 calls, and what the open short interest was, and how it's changed.
I don't know about buyout potential. Multiple is currently very high, with an earnings growth rate that has been stagnant over three years. So I don't know what kind of premium, although I guess that would also be driven by the acquirer's strategic needs, and how valuable the fit was. Also don't know that Management would be selling at current pace if buyout were imminent.
I mentioned in the post where I had gone short (since covered just over $15.00), about the tax loss selling. Typically, it's caused some December volatility with Enoc, driving it down a couple of times before the ascension in the early New Year. Don't know if that's done yet, and with the float still pretty thin (I believe), that could drive things quickly (down).
We'll see, I guess, on all points very soon.
Actually wondering the same thing. Seems rather large for options expiration though - no? That was a lot of shares moving hands at the end of the day for sure....... Buyout news leaking?...... Short squeeze?....
Sentiment: Strong Buy
So what does this mean for demand response, FERC, and Order 745?
The Solicitor General’s intention to appeal before the Supreme Court signals an important step in the Order 745 case. The Solicitor General, as ‘gatekeeper’ to cases involving the United States government, has signaled this is a case it believes to be worthy of review by our nation’s highest court. It’s not a responsibility the Solicitor General takes lightly, and its decision shows why this case is so important.
The next step in this legal process is for the Solicitor General to file its brief by January 15th (stating why the Supreme Court should review the lower court’s decision). From there, all eyes will be on the Supreme Court to see whether or not they decide to take up the case.
In the meantime, EDF will be watching this case closely and keeping our Energy Exchange readers up-to-date on new advancements. Regardless of the outcome, there’s no doubt demand response is an invaluable clean energy resource that must play an important role in our transition to a clean energy future. How the Supreme Court decides to treat this case will have a significant effect on how demand response is valued in our energy markets, and to what extent Americans are able to reap the full benefits of this important resource.
Again, hats off to Motsam for identifying early what happened. I held my short position for a bit, but it was clear that buying momentum was building. The relative strength past few days -- since the announcement of the appeal -- has been pretty extraordinary (even with the market-driven dip).
If Healy's position was sincere-- that 745-driven volume is only a small piece of Enernoc's mix, then there shouldn't be much of a positive impact. But one can't argue with the price action the past few days -- exactly since the news hit -- so it is what it is.
Seems to be building strongly, coming off the monumental slide since May (when 745 was set aside).
Sometimes these PR issues take on a life of their own, seen as positive for the sector and all boats float. I think that's what we may be seeing, but it's reversed direction now, and appears to be upward.
I wonder if the PR value, at least, of the 745 appeal -- won't be like the bombs that were set off in the dam in Force 10 from Navarone. Takes some time to take effect.
I do note Enernoc's PPS slide, magnitude and consistency -- since the lower court set aside this past May. Combine this with the seasonality, and typical uptrend this time of year leading into the Q4 report.
Strange (positive) behavior today, holding a point and a half above yesterday's close, despite the bloodletting in the general market. Makes it seem like there are some legs at this level, but who knows, given the light volumes and probable manipulation. Either way, again, good find yesterday on the Supreme Court appeal.
Looks like the PR value trumps. Great find, Motsam. I just covered at 15.04 -- virtually breakeven, but the buy momentum appears to be building. We'll see if it's a trap. wouldn't be the first --
Hello Motsam --
While I took some off Friday afternoon, I've still got this short position on as a short term trade. So I'll take the other side.
- Appeal was a virtual certainty, so I don't know how big the news is, or if it's even significant news.
- Enernoc revenue impacted by 745 amounts to less than 2% of its mix. Healy commented on the fact that 745's being quashed did not materially impact Enernoc, so I would imagine that the planned appeal, now going forward, would not have much impact either.
"Energy payments that are the subject of Order 745 have not been a material component of EnerNOC's revenues. Of EnerNOC's approximately $1 billion of revenue over the last three years, these payments have represented approximately 2% of those revenues. EnerNOC's preliminary estimate of the impact of Friday's decision suggests that EnerNOC and its customers could be required to refund in a future period as little as $0 and as much as $20 million if Friday's decision on Order 745 survives any continued appeals process. Order 745 does not pertain to capacity payments which the Company is contractually due or has previously earned."
- I'm also virtually certain that the consensus 70 cents EPS for FY 2015 assumes an appeal, for what it's worth to Enernoc.
Whether or not 745's being put aside is successfully appealed, I'm questioning ENOC's ability to move past the 70 cents annual EPS at a growth rate that will again justify the current multiple. Until then, until this is demonstrated - (i.e. how initiatives like Europe, Japan and the current acquisition will be accretive, especially given the falling energy prices) - I don't see how the share price can justifiably, significantly increase.
2015 consensus revenue growth is only 11%. I believe this simple fact may be validating the growing list of negative concerns.
Other than that, everything is OK.
Big news came out on the regulation side late on Friday ( prob explains the big initial jump when privately the word got out). The Solicitor General is taking the FERC 745 ruling to the SCOTUS. Great news for EnerNOC and other DR providers. Not sure how quick this will happen but VERY promising that there is a potential path to clear this whole distraction up! I wouldn't be shocked to see a big bump up tomorrow as this news becomes more public...
Sentiment: Strong Buy
Revenue grew 38% in 2013, is projected to grow 22% in 2014, and forecast to grow only 11% in 2015. This slowdown is a significant concern in the absolute, and for the multiple. 40X is not consistent with 11% revenue growth.
Earnings were .76 in 2013, but dropped to .37, this year, forecast to rise again to .70 in 2015. So 2015 revenue growth rate has declined to 11% year on year, and 2015 earnings will be lower than 2013 earnings.
In short, the business will generate more earnings this year, but growth is slowing to nothing. All of these numbers, I believe, were before the recent dilution, and before the steep drop-off in energy prices.
I look to Europe and don't see the answer, nor do I in Japan. My last understanding of the regulation changes were that they were neutral to negative for Enernoc. I can't get excited about an 11% growth rate and the tsunami of falling energy prices, and I can't believe that the year end spike we normally see leading into first quarter is warranted -- from PEG, fundamentals or business standpoints.
I guess a lot of this will be clarified in the 10K early next year, and I look forward to it.
When I wrote the post above, the pps was 14.50-14.52, up about 5.5% on the day, as you said.
Enernoc closed the day at 14.93, up only 1.6%, with my short position in the green. This is what I was referring to. Enernoc spikes hugely when something like a 321,000 jobs report hits. It holds the gains in times of plenty (when the company's got plenty going on, PR momentum and strong anticipation for outperforming earnings).
But Enernoc was birthed as a story stock, and it still carries with it vestiges of the investor excitement that surrounded renewables and other energy innovations (like Demand Response) earlier in the decade. The exuberance sometimes gets out of hand. I've watched this happen -- and profited from it -- for years, many times posting here.
If there are legit advancements with the company, we'll know soon enough. There may be volatility but the upward trend bouncing off 14 will continue (of course, flavored by what happens with the more general tide (the broader market).
On the other hand, if nothing new is happening (other than the dilutive acquisition, coming on the heels of the 2% or so share distribution) then we're back down in the 13's, and that could happen pretty fast.
I took off some of my position over the weekend and will be watching next week as to whether I cover on the rest, maintain, or add. Cautiously always with Enernoc, because it can fly either way, as we see continuously.
I really like this Company and always have. I often am long, but sometimes go short in times like this when I think it got ahead of itself.
Good luck to you and greetings to all of those who hang around this board. There are some excellent posters here.
Hey Wonk, your jab is appropriate and I wish you luck. My average is now $15.02 because in fact, I did short more. But that's it, as much of a position as I want to take.
I would caution you -- today is a pretty wild day for the market, and ENOC tends to swing pretty good. But the fundamentals (or lack of fundamentals) I noted in the original post are still intact. ENOC also has a history of crashing pretty hard after these runs, and I just don't see the business support under this share price. I don't know that we are staying here.
Incomplete information (as with all of us), and if I have to cover, I will -- win some lose some.
Hey JPM, could you please short some more? It's only up 5% today and I'd like at least a 10% gain before the weekend. Thanks.
I am not sure what to make of all these sales. Except for Neil Moses, they are all coded as: "The purpose of this transfer was to cover tax obligations of the Reporting Person in connection with the vesting of certain equity awards." I don't think there is any sea change here.
lesserfool -- greetings --
I always took some solace in the fact that Healy was on a programmed sell - regular quantities and at regular intervals. I figured, hey, the guy took a lot of compensation in stock at startup, he's got a right to cash in on his accomlishments over time. Doesn't mean the company's going down the tubes.
But now I see it's Healy, Dixon, Cushing and Moses. It's all of them selling in the 14-15 range. I have to ask myself -- with all of the factors I noted in the original post of this thread, and with no new news to counteract this malaise -- what am I looking at here?
Caveat -- haven't been keeping up on Enoc that much -- could be things brewing I don't know about. But unless it's some huge move in DR regulation -- or something else that could impact the company positively in the next 12-18 months, I don't see it.
Despite my small short position, I am welcoming of any mention of catalysts or challenge to my assumptions. I have a soft spot for this company, I really respect what they did/are doing. But that and pps are different things sometimes. I think now.
If anyone is still here, check out Market Pulse (on Yahoo menu). Look at the insider selling just today, and not all of the programmed stuff.
Management is running for the hills.