Most large positions in call options have a large put position with the same strike and maturity. This is an indication that these are synthetic trades for shorts. At this time WPRT is hard or expensive to borrow. In addition the short seller runs the risk that the lending broker could call the stock at any time (assume the origional holder sells). The short could eliminate this risk by entering a convergence trade with their broker.
The broker sells stock to the short and at the same time the broker buys a call from the short and writes a put to the short seller. The strike of both the call and put are 4-6 points above the current market. At this point in time both the broker and the short have no risk. If the stock rises the broker looses on his stock but gains an offsetting amount on the call. The short is also hedged at this time. If the stock falls the broker makes money on the short but looses an offsetting amount of money on the options.
The short then enters his short position by selling the long stock and is left with a synthetic short with the option position. (short call/ long put). At option expiration the the short will deliver the stock back to the broker by exercising the put if the stock is below the strike or having stock called if the stock were to be above the strike. Naturally the short has to repurchase the stock in the market to make delivery or more often than not many of these options positions will be rolled forward prior to expiration.
It looked as if 3000+ conversion trades expired on Friday. Shorts must either cover today and deliver the stock on the expired contracts or roll the position forward. Look for blocks of puts and calls 200+ contracts at a time. I would expect to see activity with strikes in the 20 area.
conversion trade for 100000 shares was rolled forward today (using options) @2:45.24 pm
An August maturity (24 strike) was rolled forward to September (20 strike) for an 18 cent premium. This is an annualized rate of 14.7%. Shares still look tough to borrow. The short is still betting the stock will trade lower.
Normally, the strike (as in this case) is set 5-6 points out of the money to protect the broker taking the other side of the trade. The broker wants the stock to be several points out of the money or several points in the money at expiration. This insures the one side of the trade (puts or calls) will be exercised. The largest risk for the broker is that the stock is at the money (strike price) at expiration. The broker won't know how many (if any) puts will be exercised or how many calls they need to exercise to offset their short and close out the conversion trade.
open interest indicate that several thousand more contracts need to roll to continue the trade or the shorts may close their positions.
so there goes the lesson
In 5-6 quarters these cost will be fully written off and earnings (all else being equal) will increase by about 6 cents a share (annual). This alone will be worth another 50-75 cents in the stock price. Also in the next quarter the retained earnings line should go from negative to positive making this a more desirable investment for conservative accounts.
We still need some mid range (3-5mm) contracts to boost this stock and keep it above $5.00 Lets hope we get some good guidance on the contract pipeline in the conference call.
SG&A costs were a bit higher than expected but Gross margins are moving back toward historical levels. Other costs (R&D) are lower as a percentage of sales as the top line grows and the actual dollars spent holds at past levels.
Yesterday was the first time I had seen any after hours trading in this company in the past 3 years. Nice to see a bid into the mid 4s.
NOT BAD FOR A COMPANY THAT HAS REVENUE GROWTH OF NEARLY 30%. This could move to 6 if the third quarter comes in at the same levels as the second. This Market pays up for growth. It is hard to find and managers are willing to pay a premium for it.
The cost of the first truck (s) to any fleet will be the most expensive..
1) you have to update your facilities
2) you must have employees get certification(s)
3) the cost of the engines are much higher.
After the first units are added the the costs of adding additional units falls as the facilities and employee cost have already been expensed. I also believe that units will be held and used longer than normal because the company will have marginal savings ($2.00 .gal) over other units.
The company indicated that many fleets were starting with 5-10 units. I expect to see steady growth in the quarters ahead and will take advantage of the lower price and add to my position.
The conference call indicated that about half will be delivered this year and the balance next year. In addition UPS indicated that they would build 9 additional lng stations(13 total) for these trucks. Earlier this month UPS indicated that they had 8 built and will finish the 5 others by September. If each of these completed stations had an average 30-40 trucks to service It would indicate that ups would take delivery of the new trucks (at the time of station completion) or about 150-200 trucks in July & August. Sales may be slow in Europe this quarter but the ups order should help the sales growth in the 3rd quarter. WPRT makes both the Icepack tanks and cwi the engines.
We would all like to see faster sales but the trend is headed higher and the stock will follow.
I have seen that with a few other small cap stocks. Don't understand but I believe that you are correct. Manipulation
Q after Q revenues are lower than expected. Early last year they projected a 10% rise in revenues and cut that later until we had a fall in revenues. Same this year. They keep cutting costs but need revenue to grow. First q they blamed an order was pushed out to this quarter. Now we see revenues still lower than last year.
ULBI had sales of 78mm last year and now project about 10% lower or about 70mm. ULBI had about 40 mm revenue in the 2nd half of last year. If we hit 70mm in sales for 2014 then we should also expect 40mm in this years second half. If we assume that we keep the lowered expenses then logic would dictate that we will have lower margins or earnings would be projected higher than guidance.
Long time holder but I must see a turn for the better soon.
Last week it looked as if nearly 1 million shares were were synthetically created with options trades. The stock looks to be harder and harder for the shorts to borrow. My only source is interactive brokers and over the past week shares available to short fell from 30000 to 15000 then 10000 yesterday and only 6000 today.
I have to believe that it is becoming more expensive to borrow if you can locate any shares to borrow. With the stock moving up against the shorts and the stock becoming more expensive to borrow the shorts may have to reevaluate the economics of the trade and cover. They may also be forced to cover because the lending broker may no longer have access to shares lent and may recall the shares from the trader. At that point the trader must locate other shares from another source or repurchase the short shares in the market and deliver them to the lending broker. If they fail to deliver the shares then the lending broker has the right to repurchase the shares in the open market and send the bill at what ever price paid to the borrower.
In normal market conditions the short seller gets paid a premium (not retail) for shorting shares. The synthetic trades created last week indicate that the shorts paid about 10% annual rate to borrow the stock thru a convergence trade. (the advantage of this type of trade is that the stock can't be recalled but it has an expiration date of the options trade).
I expect to see some of the shorts cover over the next two weeks as we go into earnings. The stock popped a few points last earnings release and I don't believe that some of the shorts want to go through that again.
THE PRICE OF NATURAL GAS MEAN NEARLY NOTHING AT THIS POINT. Gas at 3..85 works out to about 50 cents per gal equivalent. Your local station will probably pay 69-70 cents equivalent with the 20 cents going to the pipeline companies. It takes another 14-16 cents in energy to compress the gas that brings the cost to about 85 cents. the difference in the 85 cents and the $2.00 retail price goes for the labor and the $million plus cap ex needed for the compressors, insurance, taxes and other costs (including profit) for the small business owner. You can see that the cost of gas is one of the smaller components of the retail price.
Kind of like Starbucks. Everyone says that thy will raise the price of a cup because the coffee prices (futures) are rising. You can bet rent , labor, and depreciation are much more of the cost of the cup of coffee than the beans.
Much more important to follow the price of oil. Spikes and uncertainty will be one of the drivers pushing fleets toward WPRT engines not the price of natural gas. The cost of oil at 103 is about 2.45 a gallon and the retail price of diesel at about 4.00 less 50 cents taxes is 3.50 or about 69% of the product price. Much higher than gas at about 25-30% of the retail price.
Falling gas prices won't hurt but is no game changer for the fleet manager.
I believe that the company may do north of 10mm in revenue and earnings may top 10 cents. We had quite a bit of announced contracts at the end of the past quarter. Lets hope the momentum continued thru this quarter.
AUG 23 & 24 OPTIONS VERY ACTIVE TODAY ( both calls & puts). In fact it looks as if block size in calls and puts traded at the same time. This may indicate that someone is putting on a synthetic trade because the stock is getting hard to borrow or may be getting expensive to borrow. 1100 of the 23 contracts traded and another 4700 24 strike options (nearly 600000 share equivalents.).
Long and holding
WHERE DOES THE 97% NUMBER COME FROM?
PROBABLY the same 97% scientist that told us to dump butter and use margarine 50 years ago. Today, half of the country has cholesterol problems the SCIENTIST say never mind.
Take advantage of others ignorance of the revenue line. and buy the stock. Once JVs become profitable, the revenue will drop to the bottom line. This stock is a no-brainer.
THIS IS A NON-CONVERTABLE NOTE.
This transaction provides an additional 55mm in liquidity for the next 3 years. The rate may be a little high but they didn't have to issue additional equity. Everything is in alignment for this company to do much better in the near future. Additional CNG/LNG stations are being added at a good clip. class 8 truckers are adopting the new engine and many more cities are initating or expanding their bus fleets to cng.
Short interest is still high and the stock has been moving higher.
1) Truckers save nearly $2.00 per Gallon. If the average truck burns 20,000 gallons a year they save nearly $40,000. Adjust for the higher initial cost, 10% lower gas mileage and currently fewer CND/LNG stations they may have to travel a little out of the way to get fuel costing time and travel expense. Basic economics are driving the acceptance in this market.
2) CNG station owners may invest 800k to 2mm for their facilities. Most are not like Clean Energy that could build and wait for the market to develop. Today the stations can see that the WPRT engine is being purchased and the market is growing. They are getting commitments from truckers and starting construction on additional locations which will enter service in the next 12/18 months. Once again the economics will drive the market. CNG stations access their gas for about 50-70 cents a gallon and sell it for about $2.00 A nice markup compared to diesel. It cost about 14-16 cents to compress it and the extra facilities costs of the must be depreciated but if they can get a commitment of 20 trucks to fill at the station they will have about 400000 (20*20000*$1.00) in cash flow which should cover their costs and get them to breakeven. Anything above the committed 20 trucks and they will start to earn a nice profit.
As additional stations are built more and more truckers will achieve the economics to switch to NG driving additional economics for both the trucker and station owner. Up to now it has been chicken and egg, The station owner didn’t want to spend millions for a station that had no trucks and the trucker didn’t want to spend an additional 60k for a truck that had limited range with no stations.
If each new station needed 20 trucks then 5000 trucks would be needed just to fill minimum commitments of 250 new locations add another 4-5000 units a year to fill in existing fleets and WPRT is a winner.
Its just basic economics.
of 7mm shares while normal volume was about 1mm shares. I bet most on this board thought "short covering" but if you look at the numbers, shorts only covered 240,000 shares from April 30 to May 15. that was from 11.73mm down to 11.49mm.
Any indication that orders are picking up will send this stock well above fair value in short order. I don't know when this will happen but at these levels I don't understand the risk/reward position of the shorts.