shopping list and macro update ?2

13:25 22-Aug-16

This morning Westport announced the sale of a portion of its joint venture in China.  I like it raising capital this way and might have liked a complete exit from China even better.  However, a Clinton win mitigates risk there while looking good for Westport and other green companies like AMSC and CVA.  I see WPRT as least exposed to a market downturn, whereas Covanta has a far more secure business model.  AMSC is somewhere in the middle ground, where it's still hard to argue with its long-term business goals, yet hard to  be completely comfortable with its finances, especially until we get more certainty coming out of Inox and India.

How aggressive one is about pursuing this shopping list depends largely the FOMC.  Yellen speaks at Jackson Hole this Friday, and we get more jobs data on the following one.  In the meantime, the talk has been hawkish, as expected, including a whopper from Alan Greenspan.  If he's right, that makes BGCP more of a bargain than ever, after the recent Santos article.  Paulo does generally good work, and explains the ownership structure well.  In light of that, I don't know how he could have missed the facts that BGC management more than offsets any dilution with share repurchases and that the transactions he highlights enabled the deal of the century in acquiring GFI.  It's possible that he didn't miss these points and, knowing that anything confusing is taken by retail investors as a negative, simply wants a better entry point following the latest dividend.  I may reach out to SA Editors about publishing a Pro article on the topic.  Either way, those who are able may want to take advantage of current BGCP pricing.  A Clinton win is also good here because it will solidify the status and enforcement of Dodd-Frank.

For the record, I'm also curious about the eMagin early warrant redemption.  According to the latest 10-Q, it removes almost all the outstanding warrants at a fairly market-neutral price, which might give tax advantages to the former warrant holders in the event of further stock upside.  However, the $4.5M raised probably only represents another quarter or so of operation.  I prefer to continue to wait and watch here, but will be doing so even more carefully.

By contrast, I think the most important point of Intel's Developer Forum is what did NOT come out of it.  Namely, and further detail on 3D-Xpoint, which is also seeing delays in sampling to customers.  As a result, I want nothing to do with INTC at current prices above $35.  Rounding out the negative side of the outlook, my next articles on SA should be bearish ones on oil.  They may eventually be followed by a formal exit of my LPL Top Idea, largely due to broader market risk.  The timing of that risk remains vexing.  The market is currently seeming very cautious, and that doesn't lend itself to a big retreat without external surprise.  The negative surprises that are out there don't look set to disappear anytime soon, so it's hard to see big upside either.  Invest patiently!