Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
AMSC (was called American Superconductor)
AMSC (market cap was $0.129B mid14 is $0.064B EOY14)
AMSC is a pure-play investment in energy efficiency. Their original core business was superconducting cables, cables that could do for power transmission what fiber optics did for data transmission. Extending the technology to motors and regulators provides a wide array of products to a industry that is seeking efficiencies for massive infrastructures like power grids and cities. Several years ago AMSC also merged or acquired a wind turbine design firm, which provided significant service revenues. Good products and services delivered to a motivated market.
Something is obviously wrong because the market cap is dropping, not rising. The biggest news item was from several years ago. A Chinese customer that was worth hundreds of millions in AMSC revenues suddenly dropped AMSC as a supplier, and became a competitor. There is strong evidence of intellectual property theft from AMSC by the customer. The issue is in the Chinese courts and is being seen as somewhat of a showcase where China can demonstrate their commitment to protecting foreign intellectual property. In the meantime, AMSC lost the majority of its revenue, and awaits the trial and verdict.
If that was the only problem, then the core business could sustain the company with the decision potentially being a compensation for the theft. Unfortunately, the product sales have not expanded with the market. Either the technology doesn't work as well as advertised, the costs are too high, the industry is too conservative, or other solutions are out-competing AMSC. It is probably a mix. The two biggest possibilities I think are: 1) someone knows something about the China decision, 2) someone knows about a fundamental flaw with selling superconductors. As for China, I would be dismayed but not surprised if they were ruled against. As for superconductors, competitors like graphene may make AMSC's technology moot.
The company's potential continues to exist. The near term catalysts are the China decision, the joint effort called Tres Amigas that will connect the US' three main power grids, and core sales. The market is voting with its money suggesting that they expect the drop in revenues to continue.
I will continue to hold my remaining shares because the demand and catalysts continue to exist. Selling at such a depressed price would gain me little while negating the large and sudden potential price movement even small news items could generate.
DISCLOSURE LTBH since 2003 but the first shares were sold years ago, fortuitously in hindsight because I actually made a profit.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
