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CVA and EMAN pricing ?2

09:29 06-Jun-17


Seeking Alpha just posted a Pro short article on Covanta.  The main thrust of it is that Covanta derives most of its profit from energy generation... an assertion that I find ridiculous.  To my mind, the accounting analysis in the new SA article ignores that much of Covanta's revenue is municipally contracted, with this morning's announcement of a 5-year extension of the contract with Delaware County, PA being the most recent reminder, and that tip fees have been rising for the rest of it.  There is no mention at all that Covanta's waste disposal process is inherently superior to simply dumping trash in a landfill. 

The article should go public tomorrow morning, and the author has a minimal following, so this may get the attention it deserves, which is to say only from SA Editors who like lots of numbers, but can't bothered to check them or actually understand a business model. Then again, Covanta has a rough quarter or two ahead and faces an uncertain domestic environment.  Furthermore, it has been receiving a fair amount of negative commentary, as I warned might happen.

I've also been getting some questions about EMAN pricing.  I see no news that would account for the rise in shares.  In fact, all I see is coming competition from both new entrants and more established players.  It could be that someone just caught wind of the Facebook/Oculus collaboration that I mentioned recently, but I think a better guess is that short sellers are simply tired of paying 2%+ interest on their positions, now that dilution is out of the way.  Even so, the terms of the dilution were terrible, and I am not inclined to chase shares as eMagin progresses towards a make-or-break moment.