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Mark Krieger
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Mark Krieger is an avid stock market fan dedicated to the following ideals: (1) Focus on high relative strength, (2) Buy low, sell high (3) Short high, cover low, (4) Go against the crowd, (5) It's all about the rules and discipline- hold them dear (6) Analyze the balance sheet-seek low... More
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  • Fuel Systems Solutions Takes Off, Thanks To Kevin Douglas!

    In the last four trading days, (FSYS) has literally taken off, jumping an astounding 24% with the absence of any news. What could of prompted the jump? Could of it been my recent SA story published last Sunday (wishful thinking on my part) or falling natural gas prices? I was simply stumped until Thursday afternoon (after market close) when the mystery was finally solved.

    A 13-d filing by Investor Kevin Douglas revealed that he had reached the threshold of becoming a greater than 5% owner of the shares. In fact, Mr. Douglas who previously controlled just under 5% of FSYS's outstanding shares ( he retained 1,056,671 shares ) nearly tripled his stake in the company by adding another 1,615,013 shares, and now owns 2,671,684 shares or 13.3% of the company. He now becomes FSYS largest shareholder, passing up CEO's Mariano Costamagna's 8.2% stake, consisting of 1,634,185 shares.

    Now that Douglas has acquired a much bigger ownership position, there is no doubt that he will be able to exercise more influence on the Board of Directors. He might be inclined to suggest a stock buyback , a special cash dividend or even recommend the sale of the entire company. Who knows what activist roles he could take? the sky is the limit. The point is he has plenty of skin in the game, and will want to make darn sure that investment ultimately produces a reasonable return.

    One thing I don't understand is why did the shares rally so much before the news was actually released? were there those "in the know" who were already buying pushing up the price?I would like to buy more shares, but would prefer to do so on a pullback (I absolutely loath chasing quick rising stocks). Hopefully for those who missed the boat entirely or simply want to juice up their current positions, the shares will encounter a correction and retrace about 1/2 of their recent gains, putting them back to the mid $12's, but don't count on it.

    I did not even bother to mention Mr. Douglas in my most recent article, because frankly I had sort of lost faith in his "Mojo" regarding FSYS...Boy, was I sure wrong...Mr. Douglas came to the rescue of long suffering FSYS shareholder's in a mighty big way. Thank you Mr. Douglas!

    Disclosure: I am long FSYS.

    Tags: FSYS
    Feb 13 9:29 PM | Link | 3 Comments
  • Fuel Systems Solutions Second Quarter Preview

    This Thursday morning, before the market opens, FSYS will report its second quarter results. Expectations are again disappointing, with the alternative fuel provider slated to earn just 9 cents on sales of $107.5 million. That is in comparison with a earnings of 11 cents and sales of $109 million in the previous year's same period.

    Low expectations are a good thing, because they are easy to beat: Think about it, the company is expected to earn a bottom line of just $1.8 million out of $107.5 million in sales-that represents a paltry 1.6%. For every dollar of sales, the company retains just 1.6 my mind that is horrible...why even bother? The good news is that they are performing so bad, that there is ample room for drastic improvement in this number. In fact, 10% is a reasonable target that would enable FSYS to earn $2.00 per share, generating a PE multiple near the 9 mark.

    I am going to go out on a limb and predict FSYS will actually beat expectations and raise its guidance for the second half of the year. Why? (1) FSYS is way past due for a beat (2) its GM program is finally starting to ship product. (3) the recent strong price action of its stock leads me to believe that those in "the know" have been net buyers.

    Look for FSYS to put up earnings of 14 cents on sales of $111 million. If FSYS surprises me and happens to show another weak quarter, management will blame foreign currency losses, increased costs and higher R&D costs as the main culprits.

    Disclosure: I am long FSYS.

    Tags: FSYS
    Aug 03 10:04 AM | Link | 2 Comments
  • FARM: Second Quarter Will Surprise To The Upside!

    FARM is expected to earn 20 cents on revenues of $132 million. That seems way too low, when considering FARM put up sales of $131.8 million the prior year's 4th quarter. What? Absolutely no sales growth after the inclusion of the McDonald's, Walgreen and Treehouse Foods business? That does not seem right. Apparently Wall Street is assuming that whatever new business FARM won, it lost the same amount of business from other accounts..I don't buy this thesis. I think it kept its existing business and also nabbed the new. The fact is, second quarter started on October 1st, just about the same time as FARM began shipping to MCD and Walgreen warehouses, so the bulk of that business will be included in FARM's second quarter results.

    I am looking for a 6% rise in sales to $140 million (not much when consider all the new wins) a 620 basis point improvement in gross profit margin to 40% from 33.8% ( represents a 200 bp sequential improvement) and a also a 37% operating expense rate (a 100 bp reduction). Subtract out $400,000 for interest expense and leave out income taxes (the company has a loss carryover to cover that) and WAHLA!!!! you get net income of 25 cents representing a 5 cent beat on a 6% rise in revenues (also equating to a 6% beat on revenue expectations). I know my expectations are high, but remember the drastic drop in green coffee input prices will be fully felt for the first time, in the second quarter.

    sales of $140 x gpm of 40%=$56 m

    operating exp of 37% x $140=$51.8 m

    profit before income tax and int exp=$4.2 m

    interest expense: $400,000

    net income of $3,800,000 divided by 15,490,000 shares=25 cents

    I am not including any non recurring charges or gains ( represented on FARM's income statement as "other income") such as derivative or real estate transactions.

    Disclosure: I am long FARM.

    Tags: FARM
    Jan 12 7:11 PM | Link | Comment!
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