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Saudis ask for aid if world cuts dependence on oil + Short of the Day



October 09, 2009 – Comments (1) | RELATED TICKERS: OPEN.DL

The only thing that comes to mind when one reads this article is, WHAT?!?!

Saudis ask for aid if world cuts dependence on oil

There are plenty of needy countries at the U.N. climate talks in Bangkok that make the case they need financial assistance to adapt to the impacts of global warming. Then there are the Saudis.

Saudi Arabia has led a quiet campaign during these and other negotiations — demanding behind closed doors that oil-producing nations get special financial assistance if a new climate pact calls for substantial reductions in the use of fossil fuels.

HAHAHAHAHAHA.  Yeah right.  You've been gouging us for years with your price fixing cartel, but we should feel sorry for you if we actually find a way to be self-dependent and create our own energy.  I don't think so.  Besides, it's not going to happen soon anyhow.

While we're on the subject of alternative energy, I thought that I would mention a company that I shorted yesterday.  Much like my thus far successful Open Table (OPEN) short, this is another IPO that caused investors to suffer from irrational exhuberance and bit its stock up to an absurd level.  The company is...A123 Systems (AONE).

Here's my quick thoughts that I jotted down on the company yesterday:

A123 loses money on every unit that they sell. They have a short client list.

This is a win big / lose big stock. If, and this is a tremendous if, the company is successful in developing an excellent battery for use in plug-in electric vehicles or a storage device for solar / wind power it has the potential to be a big winner. The government certainly wants them to be successful, it's pouring tons of money into the company.

I am betting however that the stiff competition from larger, better funded, established foreign competition in the battery area will develop better products than this U.S. start-up.

They couldn't even win the battery business for the General Motors Volt and the government owns GM.  The General decided to go with batteries from a foreign competitor. 

Now given the success of this company's IPO and its backers in both the government and private industry I'm sure that a lot of people will disagree with the above statement.  Please tell me why this company will be a winning investment.  I seriously want to know and I'd like a better explanation than "you'll see."  I'm not short it in real life or anything, so you won't hurt my feelings.

This short can still be a winning investment, even if A123 proves to be a successful some day, as long as its valuation drops significantly after the IPO euphoria wears off.


1 Comments – Post Your Own

#1) On October 12, 2009 at 9:37 PM, ChrisGraley (28.61) wrote:

Bend over and I'll give you some freakin aid!

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