(This is an excerpt from an article I published on Seeking Alpha. Click here to read the entire piece.)
Ener1 (HEV) lost 36% last week after reporting earnings that disappointed with the news of a massive $73.3M write-down of the company’s investment in Norwegian electric vehicle company THINK. HEV management insisted this action should not be a surprise given disclosures in an earlier 10-Q and earnings numbers from the fourth quarter. Nevertheless, HEV lost 27% on that day alone. HEV is now down 64% from my last post on the company suggesting it was time to “ride Ener1 again.” I sold the last trade in HEV into a one-day pop that got as high as 60% after HEV announced a strategic joint venture agreement with Chinese manufacturer Wanxiang. I decided to go for another round after that entire move in the stock was erased and then some. HEV has fallen ever since.
So what happened? HEV appears to be another classic tale of a company with a lot of market and technological promise that got caught by complicated financing deals gone bad…I rely on the company’s conference call transcript and the earnings presentation for much of the rest of this post.
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As with most speculative stocks, the opportunity with HEV is high potential reward married with high risk. I was fortunate to recognize high reward the first two rounds. This latest round has been all the downside of the risk. If HEV can manage its balance sheet through the current financial pains, I see tremendous upside again in the future. However, it will certainly not be easy with the overall stock market sitting at lofty and tenuous highs.
*Chart created using TeleChart:
(This is an excerpt from an article I published on Seeking Alpha. Click here to read the entire piece.)
Be careful out there!
Full disclosure: long HEV