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John Petersen
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John Petersen is the executive vice president and chief financial officer of ePower Engine Systems, Inc., a Kentucky-based enterprise that has developed, built and demonstrated an engine-dominant diesel-electric hybrid drivetrain for long-haul heavy trucks that promises fuel savings of 25 to 35... More
My company:
Fefer Petersen & Co.
My blog:
ipo-law.com
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  • Why Supply And Demand Inflections Are Different
    For several months I've been writing about supply and demand inflection points like the one that started last week in Axion Power International (OTCQB:AXPW). While many Seeking Alpha readers are familiar with the technical behavior of news driven price spikes, there are very few students of supply and demand inflections because they're rare. I'm intimately familiar with supply and demand market dynamics because my work over the years has included several reverse merger transactions and that's where supply and demand inflections occur most often.

    Since this is an important topic, I went to extreme lengths and bought historical trading data for Boots & Coots International Well Control, a reverse merger that I worked on in the summer of 1997 and know intimately. Boots & Coots was a textbook example of how supply and demand inflections develop. The nice thing about the Boots & Coots transaction is that it had four clear supply and demand inflections between August 1, 1997 and December 31, 1998. Here's the 19 month high, low, close price chart.



    The first supply and demand inflection began in mid-September when the market had absorbed two-thirds of the free trading shares held by former shareholders of the public shell. The inflection ended on November 1st when restricted shares held by former officers and directors of the shell became free trading. Here's the two month chart.



    The second supply and demand inflection began in January 1998 when the market had absorbed about two-thirds of the shares held by former officers and directors of the shell. It was a sharper spike that was quickly alleviated when the company eased resale restrictions on shares that had been issued to consultants and others in connection with the reverse merger. Here's the chart.



    The third supply and demand inflection started in April 1998 when the market had absorbed about two-thirds of the consulting shares and the price reached a level where the early open market buyers started taking profits. Here's the chart.



    The fourth supply and demand inflection started in August 1998 when shares held by pre-merger investors in the firefighting company became eligible for resale and the company reported disappointing Q-2 earnings. Here's the chart.



    The important takeaway from these charts is that supply and demand inflections take longer to develop than news driven price spikes and traditional technical analysis of resistance and support levels won't typically give you an accurate view of what's driving the price.
    Tags: AXPW
    Jan 07 11:47 AM | Link | 16 Comments
  • Four Years of Axion Monthly Volume Data
    The following table summarizes monthly trading volume for Axion Power International over the last four years.

     

    2008

    2009

    2010

    2011

    January

    165,200

    381,700

    572,900

    4,122,900

    February

    182,400

    173,600

    375,000

    5,461,300

    March

    148,100

    348,300

    1,455,500

    13,145,700

    April

    121,500

    1,305,600

    790,000

    8,754,400

    May

    146,800

    349,400

    3,499,400

    3,324,700

    June

    82,900

    374,000

    1,105,500

    7,242,600

    July

    147,500

    298,400

    2,112,100

    3,992,200

    August

    123,100

    1,268,400

    1,089,100

    8,027,300

    September

    121,700

    593,400

    1,724,600

    5,534,800

    October

    251,500

    742,600

    2,180,800

    1,839,300

    November

    196,400

    368,700

    2,644,300

    5,350,400

    December

    215,600

    972,100

    4,467,700

    10,895,800

             

    Annual Total

     1,902,700

     7,176,200

     22,016,900

     77,691,400



    Jan 03 9:28 AM | Link | 17 Comments
  • My First Supply and Demand Rodeo
    Holidays can be fun because they leave time to go through ancient archives to find data that you knew you once had but somehow misplaced. This morning I found historical pricing data on my first client with a major supply and demand imbalance and thought the story might be instructive.

    WRT Energy was a gulf coast natural gas producer that had a great technology and $2 million in stockholders equity when it got talked into doing a Vancouver shell deal in the late 80s. Despite the promoters promises of unlimited fundraising capacity, the Canadian company was plagued by a depressed stock price, horrid supply and demand imbalances and a tragic inability to attract needed capital.

    I started working with them in the mid-1991 and ultimately took a job as their Executive VP. I developed a long term plan to clean up the supply and demand problems by re-placing about 40% of the stock with selected block purchasers and moving the company to the US market. It took the better part of a year to register the company under the Exchange Act and move the stock out of the hands of the willing sellers and into the hands of block purchasers who understood what we were trying to accomplish and what the long term business potential was.

    On October 12, 1992, we implemented a 1 for 5 reverse split and moved the stock from the VSE to Nasdaq. After the move we learned that a couple of the block purchasers who had assured me they were long-term holders were actually shoveling stock out the back door as quickly as they could. It took another couple months to bring them under control.

    The following chart adjusts all prices to account for the reverse split and applicable currency exchange rates; shows how WRT suffered through a year of dismal market performance while the sloppy supply and demand dynamic was being rectified; and shows how the stock performed once the supply and demand problems were resolved.

    While WRT was not able to attract significant capital when it was stuck in supply and demand hell, we raised $8.7 million in the first half of '93 and $30 million in the second half. In late-'94 we got talked into a $100 million high yield debt offering that proved to be catastrophic when natural gas prices collapsed shortly after the offering was completed and the properties we bought couldn't throw off enough cash to carry debt service costs. WRT ultimately ended up in Chapter 11 and the properties I bought are now the core operations of Gulfport Energy.

    WRT was a seven digit loss for me, but a priceless lesson in supply and demand dynamics and the dangers of debt financing.
    Dec 25 2:26 AM | Link | 27 Comments
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