Q2: More evidence of the investment thesis

Q2: Revenues up 97%, Expenses up 53%. What's not to like.

PJM revenues started kicking in. The market cheered the raising of the revenue guidance and the stock took off to 18 again as the momentum players had a little fun. But then the momo's cashed out and the stock traded back down below 15.

Why? Probably because the company also raised expense guidance towards the high end of the range and said that the incremental revenue would end up being profit neutral.

Wall Street mistaken view: You (ENOC) are still too spend happy

Our View: Whippee -- zero cost investment in a great business!

What's the difference: Until you can calculate the NPV of a new customer or MegaWatt under contact you can't really tell if it is a good idea or a bad idea to invest incremental revenues or let them fall to the bottom line. The company can calculate that. Wall Street either can't, isn't, or is freaked by young guys spending money -- but this isn't that gig -- these guys know what they're doing.

Our thesis: Inflection point has moved out to about 160M- 170M level but returns after inflection point are near software levels. Marketshare matters as the industry is developing. The market is misunderstanding the near term pickup in PJM prices which ENOC will use to get to profitability faster. Q3 will be a positive surprise. Then the market will fret over seasonality. Volatility will continue with momentum players whipsawing this thing. By Q3 2009 it will all be understood and appreciated and the company will be worth 600M. (that's our view).