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The Company is a manufacturer, marketer and distributor of industrial batteries. It also manufactures, markets and distributes related products and it provides related after-market and customer-support services for industrial batteries.
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falcon2382 (98.93) Submitted: 6/06/08 7:35 AM : Start Price: $32.12 ENS Score: -19.77
I feel it necessary to really back up this call as it is going against a HUGE mass of green thumbs. I encourage discussion, as well, as I would like to know more about what I don't know. But what I do know is this:the first and obvious reason for calling an underperform on this stock (though not the best of the 5) is that this stock has moved up far too much and far too fast as a result of speculation. Very soon the slowdown (already underway even though Mr. Market hasn't reflected it yet), both in the US and Europe, and then in Russia (since much of their money comes from oil sales to Eastern Europe--and they don't know how to diversify their wealth) and then the rest of the emerging community, will force Mr. Market to show its cards.The second reason--less anecdotal--Insiders at ENS have sold billions of dollars worth of stock in the last month. Wait did you read that? BILLIONS of dollars worth of stock sold in the last month alone (check if you don't believe me), including several 10% owner institutions.The third reason is that an analyst whom I respect, Merriman Curhan Ford, initiated coverage of the stock at a buy January 15th (when the stock was trading at 22) and just lowered estimates and ratings for the company to neutral last week (when the stock was trading at 35). Timing for this analyst in the past has been pretty stellar.the 4th reason is that they are raising more money and issuing more debt, levering the company at a point that could--if things go well--amplify their gains, but if they are wrong, could drastically dig a hole that is difficult to get out of. Smart money insider's don't seem interested in letting their ownership get diluted. In other words--they are pressing the more-risk-more-reward-button at a time when the economy looks like it might not be able to support the extra risk.the 5th reason: the past several quarters' positive earnings surprises were partially the result of a week dollar artificially boosting earnings. The next quarter which will report earnings in 6 days on June 12th will have to reflect the fact the dollar hasn't moved much during the past several months (i.e. no artificial bloating effect) and meanwhile the cost of commodities--which i realize has favorably fueled speculation in the company given what they produce--happens to increase the cost of materials for the company as well. Remember, its probably not a coincidence that insiders are unloading billions of dollars worth of stock just before a dilutive stock offering and an earnings announcement...It is very possible--in fact, it is very likely, that I have underestimated the power of speculation in this stock and that it will continue to keep going up. However, there is no doubt in my mind that the risk/reward ratio is very heavily weighted on the risk side at this point. Anyone getting into the stock at current price levels are simply betting and not investing. The only scenario that justifies current stock prices is oil going to 320 per barrel and/or the US and European economy completely skipping over a recession. The facts just don't support such speculation.
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JosephStalin (< 20) Submitted: 6/06/08 8:06 PM
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I was concerned about the insider selling when researching the stock initially as well. After considering the good with the bad, I came to the conclusion that most of the selling was profit taking rather than an indicator of an ensuing doomsday.What makes you think the recent climb in the stock price is due to "speculation"? The company is doing very well financially and is poised to continue doing well -- that is not a speculation, it is reality.The short interest in the stock isn't very high -- 10%, the same as XIDE.Your post brings up some good points but I still think that ENS is a no-brainer in the long term.
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falcon2382 (98.93) Submitted: 6/09/08 10:41 AM
The principles of "speculation" are that you buy something because you think a future event will happen that will make it more valuable in the future than the present conditions currently price into its value now. In prognosticating the future, the price of your would-be investment is conditionally tied to the premise that your prediction is correct. In relation to ENS and all energy related companies, be them alternative or fossil fuels, the increasing upward movement has been the result of two mutually exclusive future events that, if they occurred simultaneously, would be a perfect storm and would in the end change life as we know it. These events are "we have reached peak oil" and "demand will not stall." We have no proof that either of these things have occurred and frankly, if we did have proof, which I am sure the intelligence agency of the various world powers has if such is the case, we would be in a pretty serious World War right now. Generally speaking when an entire sector jumps so quickly, one must decide how much of the jump in each individual stock related to that sector has jumped from speculation (even if that speculation isn't directed at that company but a general trend) and how much has jumped because of the individual merits of that company. At some point even good companies aren't worth buying simply because the sector is overbought. I could have picked many other companies, but when i saw insiders selling such a tremendous amount of stock, I figured it was a good company to target. It is important to remember that when the economy drops like it is, oil should be going down not up. And I know the media pundits keep saying "the demand in China blah blah blah," but they are being ignorant as usual. In the whole scheme of things, demand and supply are one in the same, they net a zero sum. And frankly, the fact that the Chinese government continues to subsidize the fuel cost differentials creating an artificial and temporary false sense of "low demand" in China is only hurting them. If they were to let the price of oil show its true colors the economy in China would slow drastically. But this is one dragon chasing its own tail. They are buying at the highest prices in history while everyone else cuts back. Until they finally admit that its hurting them the price of oil will continue to move speculatively higher. ENS and all other companies that even whisper to the oil industry are being directly affected by this. Its just another bubble--the true value is being covered up.As for your reference to 10% short interest being low.... I don't agree. That is actually the point when it becomes dangerous--plus its actually 10.7%, so closer to 11. But either way, What do you think is high if 10% is not? Countrywide financial is "only" at 17% and LEH is at 13%, Morgan Stanley is only at 3%. I know they are banks, but would you argue that banks are IN favor right now? I'm confused by your comment that 10% short interest is low...
cubanstockpicker (75.64) Submitted: 6/20/08 11:22 AM
"BILLIONS of dollars worth of stock sold in the last month alone"How can that be if the company has a market cap of 1.84 billion?
falcon2382 (98.93) Submitted: 6/20/08 2:55 PM
http://finviz.com/quote.ashx?t=ensTake a look for yourself my friend..... its scary isn't it?
falcon2382 (98.93) Submitted: 6/23/08 4:24 PM
Cuban... Technically speaking, a badly managed company can offer more shares than the company is worth. There are companies out there that haven't had a profit since ipo 10-15 years ago and still have a market cap. You also have to consider stock options. Depending on their accounting practices they may or may not be putting "potential" shares on the books, and certainly not mark to market. Let me know if you learn anything about this.
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