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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (53923)	5/23/2014 9:47:39 AM
From: E_K_S	Read Replies (1) \| Respond to of 78566

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

To: Spekulatius who wrote (53923)	5/23/2014 11:01:55 AM
From: gcrispin	Respond to of 78566

I have no argument with management's pay being high. The current technology is piston driven and not nearly as efficient as what ERII has introduced into the marketplace. The skid formfactor, in my opinion, is not the significant difference here. Sinopec, in a pilot program, is on record as saying that they reduced their electricity use by 25% in a year, and the CEO's stated interest by oil and gas (also in the CC transcript) would suggest that the energy savings over the current technology is what this is all about. blog.energyrecovery.com I think I mentioned in my previous post that this is not a traditional value play, though their margins, their balance sheet and their market share in the lumpy desal business are admirable. Regarding valuation, EKS mentioned in the previous post the recent schedule 4's that have been filed. nasdaq.com Lorentzen Ole Peter recently bought a million shares at 5.21. He is not an insider but a beneficial owner of more than ten percent of the stock. To my understanding, he was involved with company previously and has now returned with large purchases of the stock. He is seeking a position on the board. The direct buys and direct option exercise by two directors for over 130,000 shares, in my opinion, confirms my belief that this company has something unique to offer. Robert Mao's background is in material science so I find his purchases compelling. Below is an excerpt regarding his background. Mr. Mao is a graduate of Cornell University with a bachelor's degree in Materials Science and a master's degree in Metallurgical Engineering. He also holds a master's degree in Management from the Massachusetts Institute of Technology.