Macro issues such as the credit crisis and the global economy cause money to move out of equities and a falling tide drops all boats.
Then it becomes a battle of the chart vs. the spreadsheet. Let me explain.
When the chart looks bad (as many do right now) the perception of the current price incorrectly impacts peoples perception of the value of the company. The spreadsheet shows us that a company is undervalued, but the chart says stay away -- which do you trust?
A. The spreadsheet.
As i write this ENOC is:
1) Growing Revenue at a 100% clip, likely to slow to a 75% clip next year (our number)
2) Completely based on annuity (vs. new sales) revenues. Excellent forward visibility for those that have the right spreadsheet
3) Publicly committed to being cash positive in the second half of the year (we think they hit that or do better)
4) Likely to do over 100M this year (we think they do that or better)
5) Gaining in marketshare --rapidly becoming the industry leader
6) Well set in early stage investments for "encore" product offerings (Beyond Demand Response into Energy Procurement and Energy Efficiency)
7) Unmercifully whipsawed by the stock traders using this as an oil proxy (which it is not)
8) Priced at 200M while having over 50M in cash
In terms of price action, the dynamic seems pretty clear (to us). Momentum players piled in on the way up to 25, the 'over bailed' on the way down to 10.
Chart readers and Ouija boards defined the price movement, but we see something better in the spreadsheet.
When the chart and the spreadsheet disagree, trust the chart for the 5 to 15 day day view, trust the spreadsheet if you are an investor. Our spreadsheet has an awful lot of green colored cells.
Didn't think it would get this low. Thanks that it did!
