Hard to Imagine There Isn't Widespread Manipulation Here.
I know this isn't the only company/commodity where trading activity doesn't align with logic, but OPTT should not be trading at 33% under cash value. OPTT just received a 2 million dollar grant and a .01 cent/Kw hour tax credit, so cash burn is going to be significantly less - especially this quarter - while mitigated going forward.
How this stock could go down, despite all positive trends for ocean power technology converging and increasing in momentum is beyond me, or any logical sentient being.
Nobody with any understanding of this technology and/or finance would be selling right now. So the question remains, how did the mentally impaired come up with money to invest in this company in the first place, so that they would sell 9.70 cents in investment cash for 6.31.
Imagine if this was an IPO today, with 96.5 million in the bank, selling 10.2 million shares for 6.31 a piece. If you can't, you have company, because the chances of that are less a telephone pole toppling over onto you 3 days consecutively. And that isn't hyperbole, that IPO would just never exist because a company would never raise less cash than it has in the bank. And I ask you, since the April 2007 IPO, can anybody argue that wave power technology hasn't made sustained forward progress both technologically and through increased government awareness and financial support? I don't think you argue anything but the affirmative.
Loose Buoys - you offer a strong argument that OPTT management has often overstated and underdelivered. I would never argue against such a well reasoned viewpoint. The most recent installatoin of autonomous buoy for the Navy did, however, come through on time - if not a month or two earlier than expected -according to recent quarterlies. So although promising, OPTT has missed more often than met project completion dates.
But as for OPTT's current valuation, I think a few prior overstated project timelines are more than already priced in. We are trading at 40% under cash value. Which I think is priced for the worst of all possible scenarios over the next few years.
And most of OPTT cash is parked in the USA - but currently half there business is outside the USA. So their cash position - although slightly adjusted downward because of, if I remember correctly, about 12% cash in Pounds and Oz Dollars, can purchase more raw materials and services than it could before - especially in international markets. That could be a false assumption, but with commodity prices sinking as well - it makes sense to me.
Loose Buoys - I think the recent drop is due to market dynamics, but also Finavera getting their permit declined by a California licensing board or something. PG and E said this may set back wave power temporarily in California - but OPTT's project are mainly in Oregon and those appear to be moving along steadily. FERC also recently pushed the Minerals Management Services out of the way, and are trying to allow permits to be granted outside of the 3 miles from the shoreline. Right now, OPTT is pretty confined (because of a lengthy permitting process) to keeping projects within that distance. So I don't see how OPTT is effected by Finavera problems - The board may also have taken into account Finavera's last experiment in the ocean didn't go so well.
But with .01 kw/h tax credit issued, and a few grants coming their way,(one yesterday I believe from the Wave Energy Trust for a couple hundred thousand dollars) I think OPTT is in a better position then they were when this stock was trading at 15$. I find in the markets, that the truth often lays somewhere in the middle of extremes - and right now I think the markets and OPTT are at an extremities.
There is no manipulation here. There simply are very few people that want to own a piece of this company.
The management team was virtually unknown before the NASDAQ IPO. The investment community got to know these managers over the past the 19 months and there were a lot of red flags raised.
Review the facts on project timelines: In March 2007, this company said "engineering efforts are focused on increasing the maximum rated output of our utility PowerBuoy system from the current 40kW to 150kW in 2007, then to 250kW in 2008 and ultimately to 500kW in 2010." They set expectations for a 150kW buoy in 9 months. After 12 months (March 2008), they announced that they decided to completely redesign the PowerBuoy and then advised that the buoy should be expected in 9 months. Now on October 2, they announced that they received a grant for deploying their first 150kW buoy in Oregon in the second half of 2009. So now they say expect it in 8-14 months.
In March 2007, they set expectations for deploying a 40kW buoy in Spain in October 2007. They announced it was finally deployed on September 23, 2008.
Review facts on finance estimates. During the 4th quarter (July '08) earnings recording, Charles Dunleavy said that '09 cash burn “will be marginally greater“ than '08. During the 1st quarter (Sept '08) earnings recording, Charles Dunleavy said that '09 cash burn will increase by 25%.
Rather than hosting earnings conference calls where the investment community can ask questions, management prefers to record an earnings message. Management appears to believe that the investment community doesn't have the right to know their "secret" plans and project timelines.
Based on management’s past performance, how can you have confidence in their timelines for the 500kW buoy? How can you have confidence that they will reach their target of 5 cents/kWh?
It shouldn't be a surprise that large investors don't want to own shares of this company.