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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (53923)	5/23/2014 9:47:39 AM
From: E_K_S	Read Replies (1) of 78550

Hi Spekulatius An emerging value play or just a spec play? I tend to agree w/ you on ERII but see the potential opportunity somewhat compelling. First, when looking at other companies (your list was a good start) in this sector none are such a "pure" play with possible huge growth potential as ERII. That said, what is the catalyst for their sales to double in the next 12-18 months? I am betting on those six new Oil & Gas sales reps. ERII's past three year financials shows little to no revenue growth last year but a 14% reduction in their cost of that revenue (w/ SG&A staying the same too) implying some other efficiencies in their sales model. The one thing that popped out to me when I listened to the CC was their rental income from one or more of their customers. That reminded me of what C&J Energy Services, Inc. (CJES) was doing with their (hydraulic fracturing) pump services division. Equipment leasing is a unique source of revenue for a pump manufacturer. Could that become a separate "service" unit? A CEO that will explore that line of thinking for adding to their revenue stream, first as a sales tool and second as a possible separate line of business is a plus. It still comes down to growing sales and revenues. Finally, that big insider buy for 1 mln shares @ $5.21/share on 5/7/2014(w/ 54 Mln shares outstanding) and the company using scarce resources to buy back shares (last quarter) tells me that others with more knowledge than me see significant value in the company. I also see 3 new director Buys 5/20/2014 from director TREMPONT DOMINIQUE and director MAO ROBERT YU LANG at prices around $4.50/share. I do like the sector but so far I found no pure plays for just these types of pumps. Some of the companies you listed are foreign and difficult for me to analyze and/or buy shares. Flowserve Corp. (FLS) w/ a forward PE of 16.7 was one that may be a candidate stock. With a $10Bln market cap it much larger. I only got a partial fill the other day on my order @ $4.49/share so I plan to continue to watch the sector and see how ERII does w/ their new sales reps. At this point, it's a spec play w/ insiders that see value opportunities. EKS

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