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  • wtblanch5 wtblanch5 Jan 5, 2012 11:29 AM Flag

    Read it and Weep

    Gelbaum and his trust have been 10% of volume sellers for some time. It was Special Situations that really killed the stock, especially at year end. I think it was a gift, but only time will tell.

    Much speculation they are completely out now, but we won't know for sure till February.

    John Petersen put it this way:

    "A consistent seller is never a problem unless they're willing to sell an unlimited number of shares into the market every day. Quercus has a 9 month history of almost never accounting for more than 10% of daily volume. That is not an albatross. It's just an assured source of supply which is something every market needs.

    The problem over the last 9 months is that Special Sits wanted to sell it's position as quickly as possible and didn't feel constrained by the fact that other holders might want to sell at the same time. They started pushing around the pay window by dropping their offer to a level that would bring the market to them in preference to everybody else. That left Quercus and all of the other people who wanted to sell in a position where they had to match or better the offer if they wanted to get any shares off. That's the reason that you saw a gradual but smooth decline in the price.

    It's like two really fat guys who want to leave a nightclub. If they're gentlemen and willing to take turns things flow smoothly. If they're competitive and willing to fight about who's going to leave first, there is a big crush.

    If I'm right about Special Sits being gone with no other big sellers waiting in the wings, Quercus will almost certainly hang back and let the price rise if that's what the price wants to do. If I'm right about the bulk of the float being in the hands of our Concentrator buddies things could change very quickly because the market is used to the idea that it can buy 150,000 shares a day. If a smaller number of shares is offered, the buyers will outnumber the sellers and the price has to rise."

    Of course he's assuming they execute well and the PowerCubes start getting real traction (including sales by Viridity Energy and Rosewater Energy) and the Norfolk Southern testing goes to on the track and requires a lot more batteries. The BMW testing (start-stop mileage gains and emission required improvements) continues, but we likely won't see a big order for say a year. They also make a bunch of flooded batteries which don't make a huge amount of money, but trains the staff and does contribute steady income. Company has no debt, but will need to raise money to expand production. They have options and smart management, but it's definitely a risk.

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