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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 30 to 40... More
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  • When Will Axion See The End Of The Flipping? 78 comments
    May 8, 2012 10:45 AM | about stocks: AXPW

    It's one of the most common questions I see in the Axion Concentrators and one of the most fervently debated topics. Everybody has an opinion, if not a bit of an obsession. While some seem to believe the flipping can continue for an indefinite period of time, experience tells me the end is closer than most Axion shareholders realize.

    This is one of those fuzzy areas where there aren't any clear answers because we don't have enough data, but history can provide some pretty good guidance.

    2011 was a year of dreadful selling pressure that came from three big holders: Special Situations, the Quercus Trust and the estate of a deceased stockholder. By my count, those three holders sold a combined total of 22.7 million shares in 2011. The total reported trading volume for the year was 77.7 million shares, which means that roughly 38.8 million shares left the hands of willing sellers and entered the hands of willing buyers. So during 2011, about 60% of all selling came from the big three and the other 40% came from small stockholders who bought in the 2009 placement and others who bought shares in the open market and resold them for one reason or another.

    In January of this year, total volume was just a hair under 12 million shares, which implies 6 million shares of selling as the price moved from $0.30 to $0.60. Of that total, 622,500 shares came from Quercus, none came from Special Sits and none came from the estate. If we're willing to accept the idea that most investors are reluctant to sell stock for a loss, then the most likely source of supply for the other 5.4 million shares of January selling was the 7.4 million shares that people bought during the second half of Q4 2011 while the price fell from $0.38 to $0.27.

    At the beginning of February Axion added 26.9 million shares to the potential supply pool with a registered direct placement at $0.35. Over the course of my career I've represented clients in more comparable transactions than I can count. My clients always tried to place the shares well so that they wouldn't flow back into the market quickly. They always failed to some extent and in the typical deal the market had to absorb somewhere between 20% and 30% of the new shares within the first couple months after the offering. I've never been involved in a transaction where more than 30% of the new shares flowed back into the market. It does happen from time to time, but only in deals that are structured to flip 100% of the shares back into the market and those deals always go to one or two buyers.

    Based on prior experience, I think it's reasonable to assume that somewhere between 5.4 million and 8 million of the February shares were likely to flow back into the market in the short term. Anything outside of that range, either on the high side or the low side, would be very surprising to me.

    Since the registered direct offering was announced on February 1st, a total of 21.5 million shares have traded. That works out to 10.7 million shares of selling and 10.7 million shares of buying. Using last year's ratio of 60% from direct purchasers and 40% from normal trading, I'd peg the number of shares that have flowed back into the market from direct purchasers since February 1st at 6.4 million. Quercus sold 888,500 shares during that period, which suggests that the February purchasers have sold about 5.5 million shares, or 21% of the total number of shares sold in the February offering.

    We do not and cannot know how good a job the placement agents did in putting the February offering into strong hands. Based on my experience with comparable deals, I'd expect a flow back of 20% to 30% of the new shares. We've already passed the 20% level and for the last several weeks the market bias has been toward the high side of the Bollinger Bands. We've also seen the spread between the 10-day and 200-day VWMA narrow to $0.0221.

    If the placement agents did a cruddy job at keeping the flippers out of the February placement we might see another 2.4 million shares flow into the market, which would require a total trading volume of about 8 million shares of total trading volume to absorb. If the placement agents did a more skillful job with the February placement, the willing sellers could run out of stock at any time.

    At the end of January Axion was running on fumes and had a market capitalization of $52.7 million. Today, with about $8 million more liquidity and its first order in hand from Norfolk Southern, Axion has a market capitalization of $48.3 million, a 10% discount from late January levels. I know that everybody likes a bargain, but with the 10-, 20-, 50-, 100- and 200-day VWMA ranging from $0.42 to $0.45 I don't see the price declining from current levels. I would not want to be sitting on the fence or bottom fishing when the last of the willing sellers runs out of stock.

    Disclosure: I am long OTCQB:AXPW.

    Stocks: AXPW
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Comments (78)
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  • Mr Investor
    , contributor
    Comments (2649) | Send Message
     
    Excellent work again, John. Thanks.

     

    I think it's the very nature of investing in very small companies like Axion that trying to time your investment is an ineffective approach. That's because these tiny stocks simply move too quickly. Blink twice and you'll miss most of a run. Way better to get in at a price you think is reasonable and wait it out.
    8 May 2012, 01:02 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » My key takeaway from the numbers is that there doesn't seem to be much stock left in the supply barrel.
    8 May 2012, 01:15 PM Reply Like
  • amishelvis
    , contributor
    Comments (143) | Send Message
     
    John, With all respect, I use Charles Schwab, and every time I place an order for x shares, I see x added to the volume, no more, no less. I would agree that some brokers double count each trade, but Schwab isnt one of them.
    This scenario actually makes things better for us Axionistas that are waiting patiently for the rabbit bump to go to the far end of the Boa,,well, bad analogy.. but I'm sure you get it.
    I will call Schwab, and see if they can shed some more light. They have been a great company to work with.
    Great article otherwise, and I agree that the selling in this range will evaporate soon. I'm thinking a steady slow climb after .45 is broken, and a run of sorts with any news.
    8 May 2012, 02:03 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » You see X shares added to volume when you buy them from the market maker.

     

    When the market maker buys those shares from another stockholder another X shares appears in volume.

     

    So while there were only X shares that moved from a selling stockholder to a buyer, 2X shares show up in the trading volume.
    8 May 2012, 02:13 PM Reply Like
  • H. T. Love
    , contributor
    Comments (17774) | Send Message
     
    Unless we have inter or intra-broker trades going off. This seems to have been the case recently as evidenced by the daily shrt sales recently.

     

    Of course, you could be right and I could be wrong. But my learning has led me to understand just how many "exceptions to the rule(s)" there are in the POS we know call a "market".

     

    Look at the combinations from the last few days - especially the short sales. And recall that the average daily short sales was ~36% from Nov 11 forward last time I looked. Something has changed as we don't see (visually checked only) that since early February.

     

    5/4 and 5/7 especially suggest anomalies to the prior trends with the buy:sell ratios being what they are.

     

    0501 Vol 0222824, Sht 0008132 03.65% LHC 0.4300 0.4500 0.4301 b:s 1.23:1
    0502 Vol 0143270, Sht 0016000 11.17% LHC 0.4300 0.4549 0.4410 b:s 1:1.39
    0503 Vol 0181530, Sht 0028500 15.70% LHC 0.4300 0.4400 0.4350 b:s 1:1.04
    0504 Vol 0190417, Sht 0008500 04.46% LHC 0.4241 0.4400 0.4241 b:s 2.07:1
    0507 Vol 0080830, Sht 0009734 12.04% LHC 0.4110 0.4289 0.4200 b:s 1:4.25

     

    HardToLove
    8 May 2012, 03:28 PM Reply Like
  • H. T. Love
    , contributor
    Comments (17774) | Send Message
     
    Correction: Nov. '10 was the starting period for the determination of the ~36% average daily short sales.

     

    HardToLove
    8 May 2012, 03:50 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » We've always viewed the short data as a good proxy for stock coming out of registered form and into street name while you view it as a market maker phenomena based on activity you've seen with larger stocks.

     

    From a legal perspective, the 2009 purchasers had to keep their shares in physical form until they sold them. The February buyers, in comparison, were free to deposit their shares in brokerage accounts immediately.

     

    While the 2009 purchasers were selling, there was always a delay between the transaction date and the delivery date that gave rise to the short sale. With the 2012 purchasers selling, there is no delay between the transaction and the delivery.

     

    As near as I can tell, that difference is the reason short sales were high last year and are low this year.
    8 May 2012, 04:01 PM Reply Like
  • Mayascribe
    , contributor
    Comments (9830) | Send Message
     
    Thanks, John. Couldn't agree more that for the last spell of time, Axion has been heading sideways, and will most likely continue sideways until the flippers have "totally flipped out." ;-)

     

    Didn't BlackRock also sell a million shares a while back?

     

    BTW: Today is probably the first day in memory that I haven't checked in on Axion's price; probably since I was coming home from Honduras, Dec. 23, 2010! That's how confident I am in your analysis. Will I hold out? Probably not.
    8 May 2012, 02:38 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » They apparently sold a million shares sometime in 2011, but it's very hard to tell when because the sale didn't take them below 5% and I've never been able to find Section 13 holdings reports for the BlackRock entity that actually holds the shares. Special Sits and Gelbaum were far easier to track through their reports.
    8 May 2012, 02:44 PM Reply Like
  • f-kru
    , contributor
    Comments (259) | Send Message
     
    John, thanks for the post. I've been into Axion since 2009 and I've come used to the fact that there seems to be always someone or something to spoil the plan. But, boy, a lot of stuff has happened over time.
    To me BlackRock ist still an unknown risk factor. If they hold tight, we might be finally on the way to fair valuation soon, which is probably in the 250-300 million range, as has been discussed a couple of times.
    8 May 2012, 03:04 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » If Blackrock becomes a risk, we'll get a very clear indication. Their last report on Schedule 13G said they owned 6,100,000 shares at December 31st. http://1.usa.gov/yZpUiZ

     

    If they make any sales that take their holdings below 5%, or roughly 5,750,000 shares, they'll have to file another report on Schedule 13G that that reflects the sale. Until we see a filing, we have to assume they're still in place.
    8 May 2012, 03:11 PM Reply Like
  • brishwain
    , contributor
    Comments (84) | Send Message
     
    blackrock apparently did sell - to now below 5%.
    9 May 2012, 12:19 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » I just saw the filing. Since the reduction in their holdings was 910,000 shares, as compared to 1,050,000 shares in 2011, it almost looks like their strategy is based on selling off a modest block every year rather than exiting completely. Since they're no longer 5% holders, I don't think we'll see any more filings.
    9 May 2012, 12:32 PM Reply Like
  • f-kru
    , contributor
    Comments (259) | Send Message
     
    I hate playing devil's advocate... ;-)
    After what happened last year, a lot of us have become to expect the worst, but your theory about Blackrock strategy of selling only a chunk every year sounds very reasonable.
    With Gelbaum almost gone and larger sales orders soon to come, I'm hoping that we're finally on the way up.
    10 May 2012, 05:17 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » I posted a longer message in Concentrator 96 that talks about how the 2009 offering came together. Since Blackrock was the lead investor in that offering, I seriously doubt that they're pursuing anything other than a long-term strategy.
    10 May 2012, 06:40 AM Reply Like
  • tripleblack
    , contributor
    Comments (13490) | Send Message
     
    I tend to agree, John. Any company that holds for 3 years before selling shares is not a "flipper" in my book.
    10 May 2012, 07:58 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » More importantly, deals like the 2009 placement that put 7 years of volume out in a single whack don't happen without understandings among the lead investors. The understandings usually aren't reduced to contracts but in the institutional investing world a manager's opportunities are only as good as his word. We'll never know, but a strategy that says "we're going to sell 15% of our position every year starting a year after the closing " is a good way to take a little off the table if things go south and a great way to maximize the upside if things go north. It can run on autopilot once the plan is adopted without ever putting undue pressure on the stock. That's a far more likely scenario than leaving the money sit for two and a half years, having a good deal of business progress and bailing for a loss right before the miracle.
    10 May 2012, 08:12 AM Reply Like
  • magounsq
    , contributor
    Comments (980) | Send Message
     
    Albeit the REE/gold world, but in my quest to appreciate the status quo of the AXPW pps, might this be analogous?
    Blackrock reducing their AXPW stake for what they might consider ground floor opportunities on the fore, e.g. banking, investment houses, REE, real estate, Europe...or just plain cash on the books for other opportunities?
    With that in mind, having a certain degree of confidence that AXPW will have that bump up, and overall AXPW will be a profitable venture for Blackrock even after taking some off the table annually?

     

    Investors Dive In - Significant Buying Opportunities Currently Exist

     

    http://bit.ly/Kq9VHh

     

    "Gene talks about what's happening in the market today and how Vultures should be handling this current market sell-off. He says when people are selling their stocks, it's a great time to be buying. As a gold investor, Gene tells us he is willing sell a little gold to invest in junior resource companies because of the significant buying opportunities that currently exist. He says, "that's what you have the gold for; it's to preserve your buying power for times when it really works for you." "
    10 May 2012, 02:56 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » In the mega-funds like Blackrock, entry and exit strategies are usually implemented to optimize average returns on comparable classes of investments. They don't have thousands of guys in green eye shades pouring over reports and other information from every investment to determine the optimal time to buy or sell. They establish a fund-wide policy and stick to it. You have to remember that Blackrock manages $4 TRILLION dollars. While the actual numbers are lower, they could theoretically have $2 million investments in a total of 2 million companies.

     

    Whatever Blackrock is doing, they are most likely doing it on autopilot.
    10 May 2012, 03:08 PM Reply Like
  • f-kru
    , contributor
    Comments (259) | Send Message
     
    John, of course I've seen your comment on the same topic on the APC. I don't post regularly, but I visit the concentrator almost every day. It makes total sense to me that Blackrock has implemented a strategy that runs on autopilot.
    If I recap the facts correctly, we know they sold 15% somewhere in 2011 and they sold 15% in Q1 2012(?)
    So the strategy could be "Sell 15% every first quarter a year", but in the bad case it also could be "Hold for two years, then sell 15% every quarter". Right?
    11 May 2012, 07:30 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » Whatever the strategy was, it would have had to have made sense in December 2009 when Blackrock and three other big investors each bought 7.2 million shares of a company that only traded 3.6 million shares a year on the sell side.

     

    Whatever the gentlemen's understandings were, they would have had to have made sense at four times the magnitude.

     

    I don't believe the possibility you've suggested would have made sense to any of the big investors in December 2009.
    11 May 2012, 09:22 AM Reply Like
  • f-kru
    , contributor
    Comments (259) | Send Message
     
    Point taken, I hope your're right. At this time to me 12 months more or less (before the seeling is over) don't matter anymore ;-)
    11 May 2012, 09:48 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » Even if your theory about Blackrock was right, there isn't enough stock left in the hands of non-Axionistats to last past September.
    11 May 2012, 09:59 AM Reply Like
  • f-kru
    , contributor
    Comments (259) | Send Message
     
    I've learned to be patient. The important thing is that volume stays at least at the current level, as you've pointed out so many times. Which shouldn't be that much a problem with the expected 300% growth and the "very exciting year" ahead of us as TG said.
    11 May 2012, 10:10 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » Volume is still pretty volatile on a month to month basis because the typical investor's first instinct when he doesn't understand the behavior of a seller is to hit the sidelines or put in a GTC buy order a couple cents below the current trading range.

     

    It all seems to flow from a paranoid presumption that the other guy knows more and is less disciplined.

     

    This year has been particularly bi-polar for trading volums with January at 12 million, February at 9 million, March at 4 million, April at 7.6 million and May to date at 1.1 million. It's bouncing up and down like a ping-pong ball. Hopefully things will stabilize some after next week's conference call.
    11 May 2012, 10:19 AM Reply Like
  • D-inv
    , contributor
    Comments (4114) | Send Message
     
    a short while ago Jak posted a rationale on APC96 or APC97 that strikes me as quite plausible. That BR sales in December and January could have been triggered by a fund rule to lighten exposure to firms with "going concern" issues which were raised in November and lifted by February direct placement financing. Short sales volume was high in January - February relative to march or April.
    11 May 2012, 12:34 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » The nice thing about pet theories is everybody has one.

     

    I've laid out the scenario that I find most plausible based on my past experience with more transactions than I'd care to count.

     

    I may be wrong, but it's my theory and I'm sticking to it because no alternative explanation meshes with my experience.
    11 May 2012, 12:43 PM Reply Like
  • f-kru
    , contributor
    Comments (259) | Send Message
     
    Absolutely, things tend to get exaggerated quickly the one way or the other. I've been through many times of doubt, because I neither have the first hand experience with Axion management nor with securities and financing that you have.

     

    There were a couple of bitter pills we had to swallow, but at this time to me this is only about the "when". The NS order to me was a great validation that they really can pull it off.

     

    If more sales and growth happen this year, sooner or later volume has to follow as Axion gains more and more visibility outside of our little circle.
    11 May 2012, 02:58 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » I'm looking forward to the call on Tuesday morning and hoping that Tom will finally be able to add some color on how he sees the NS relationship developing. Axion's stock has been so broken for so long that investors don't want to build their hopes too high. Sooner or later quarter after quarter of consistent performance will blow away the paranoia and make cleaning up the remaining slop irresistible. Then the dynamic will change.
    11 May 2012, 03:10 PM Reply Like
  • metroneanderthal
    , contributor
    Comments (1510) | Send Message
     
    I'll drink to that - in fact it is a nice 6 euro bottle of Hautes-Cotes de Nuits - it has been a pleasant surprise..
    11 May 2012, 03:32 PM Reply Like
  • Mayascribe
    , contributor
    Comments (9830) | Send Message
     
    f-kru: Funny you wrote, "bitter pill!"

     

    Waaaay back, about four years ago, in one of JP's earliest articles, because I didn't know where else on Seeking Alpha to post other stocks I was interested in, I posted about five non-energy storage related stocks.

     

    One of them was Arena Pharmaceuticals (ARNA). The stock rolled around for four years, and then finally, finally, today it popped 75%.

     

    That innocent and truly naive posting, by the way, contributed in part to my meeting several Seeking Alpha stalwarts like HTL, FocalPoint Analytics, OptionsGirl, Mark Bern (now K202) and others.

     

    Out of that came the Renegades, and eventually QuickChat was created, probably the best "anything about everything" blog on the Internet. From that came other themes created by OptionsGirl, FocalPoint Analytics, Robert Fergusen, and tripleblack's incredible Rare Earth Elements blog series.

     

    And now we have the Axion Power Concentrator series, and all the various "spidering" threads like this one, by JP, bangwhiz's threads and Google website, WDD's blog, articles being written by jakurtz, Futurist, etc., charts and graphs being created, and on and on.

     

    So that's a little history of how all this came to be.

     

    Biotech Arena Pharm took way over four years to get it's fat pill approved by the FDA.

     

    I have a feeling in the not-too-distant future, that us Axionistas will be getting "phat" on Axion shares, despite the bitter pill we all just swallowed of miilions more shares being potentially sold off by BlackRock.

     

    To me, yes I admit, I'm bummed by this development. But I never once thought of selling. The theme of my investment still holds great promise, and though the stock has been set back from the pounding by four different multi-million share holders, the premise, this business model, still has unbelievable upside potential.

     

    It's just going to take a little longer than I had at first expected. That's all...more time and patience are required.

     

    11 May 2012, 03:48 PM Reply Like
  • SMaturin
    , contributor
    Comments (2275) | Send Message
     
    ARNA been berry berry good to me today!

     

    May AXPW do the same in a few years!
    11 May 2012, 03:56 PM Reply Like
  • Mayascribe
    , contributor
    Comments (9830) | Send Message
     
    SMaturin: Well done! Congrats!
    11 May 2012, 04:04 PM Reply Like
  • SMaturin
    , contributor
    Comments (2275) | Send Message
     
    Thanks!

     

    I was a skeptic about ARNA last year, based on the FDA's hostility to obesity drugs. But the company did an excellent job of answering the Complete Response Letter, and I became convinced they would be the first to get approval as their share price was bottoming out this year, and decided it was a good bet.

     

    They still need official FDA blessing at the PDUFA meeting next month. But after the AdComm vote of 18-4 in favor yesterday, that will surely occur. I am sitting on a 175% gain now, and expect it to only get better as we approach that date.
    11 May 2012, 04:11 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4160) | Send Message
     
    CONGRATS SMaturin. Well merited and well done!
    11 May 2012, 06:07 PM Reply Like
  • metroneanderthal
    , contributor
    Comments (1510) | Send Message
     
    As baseball was to Petey Rose. Congrats.
    12 May 2012, 06:54 AM Reply Like
  • metroneanderthal
    , contributor
    Comments (1510) | Send Message
     
    John,
    Thanks for providing this information.
    8 May 2012, 04:00 PM Reply Like
  • jakurtz
    , contributor
    Comments (1919) | Send Message
     
    I think the sad thing is that the flippers or our "suppliers" blew it on that NS order. If there was going to be a fire of demand coming out of that news they dumped 1.2M gal. of water on it and the fire was just about out at around 11pm the same day and in case it tried to recover the kept throwing water on it.

     

    Yesterday, 10k sat at .4279, 1/100th below the ask all day. Someone bought it this morning at 10pm. 8.5 hours it took for someone to feel comfortable buying 10k @ .4279 -- within 1 minute another 10k at .4279 took its place.

     

    Unfortunately, anyone watching the stock closely really has no incentive to buy other than its a darned good price to buy at if your confident in their business developments.

     

    Until their is some evidence supply has run out and that 10k 1/100th below the ask stops appearing all we have is the same situation we have had for two years, an insatiable amount of supply flowing into the market and no good news going unpunished.

     

    I believe Axion will see the end of supply someday soon, but I also believed that 6 months ago. I have no problem with their business prospects, I do have problems with their stock performance. Its like a little boy trying to stand up and each time he does he gets whacked over the head, sooner or later he'll stop trying to stand up.
    8 May 2012, 04:05 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » I share the frustration, but oddly enough it's the biggest reason I think the substantial bulk of the float has been put away in Axionista's sock drawers. The stock has been so badly behaved for so long that the hot money either never enters, or it gets tired being watched by drying paint and moves on. Sometimes even the patient get to the point where they feel like a tribe of pygmies trying to finish off that last platter of leftover elephant in the fridge. It feels like it will never end but it does, usually when you're not expecting it.

     

    Then people who were waiting for evidence end up chasing the price.
    8 May 2012, 04:24 PM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    or, or...he continues anon to endure the abuse, but his head gets harder a little every day, the spark in his eye deepens, he grows a little bigger and stronger week by week, and then finally one day, he snatches the ruler, stands up and delivers his own dose of almighty smackdown. Boom!
    8 May 2012, 04:32 PM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    John, I know (I think) it's your thesis that the majority of the shares having traded are moving from weak hands to relatively strong, and thus there to stay for a good while in sock drawers far and wide, but could we also have a small but effective cohort of highly skilled silent lurker/traders, working the stream, and using the wealth of information shared here in the APCs to gain the edge? IE, could there be more than a few stealth ninjas who are managing to successfully trade in and out for pennies and/or fractions, and thus contribute to the apparent volume, but who don't really represent a meaningful movement of shares, only illusory churn? Could we have collected such barnacles in any number? You've made the case that hot-money types and drive-bys are largely going to leave us be, not being fans of watching paint dry, but I wonder if we might not have a few more of the really patient and dedicated gold-panners working the creek than we've all tended (and liked) to think...

     

    Let me hasten to add, that as like HTL, I do certainly admire their skills, and would not begrudge them their gains, being just and fairly won. My main question is just could these types be greater in number and more of a factor than we've otherwise previously thought?
    9 May 2012, 01:45 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » Trading for lunch money takes a huge amount of skill in a big liquid stock with significant volatility. It's almost impossible in a small illiquid stock like Axion that trades under 100,000 shares more often than it trades over 1 million. Granted the reported daily range is typically a couple cents, but the spread between the majority of buys and sells is very thin.

     

    If you take yesterday as an example, the average trade price was $.4217 and the total value of all trades was $33.354. If you take all sales below the average price and calculate a spread, you get to a total of 163.27 for the day. You get to the same figure if you do the same calculation on the upside. With a total trading spread of $326.54 for the day and market makers who insist on earning a living, there really isn't anything left for day traders.

     

    In my experience if a game's not worth playing people don't play it.
    9 May 2012, 02:11 AM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    Ah...thanks John-- that spread calculation is pretty illuminating...and reassuring. I was thinking not necessarily day-trades per se, but rather several days span or so, but I can see how the same principle would apply--If that were really someone's game, they'd be much smarter working a much bigger creek somewhere else...

     

    So if that notion truly is justifiably dismissed, then it really does mean that the bulk of shares are in fact flowing from weaker to stronger hands. And such a thing must end at some point. Repeat, it will end at some point, not an option. Ok, hmm. That's in my pipe now. Will commence to smoking. ;)
    9 May 2012, 02:23 AM Reply Like
  • Futurist
    , contributor
    Comments (2127) | Send Message
     
    "Using last year's ratio of 60% from direct purchasers and 40% from normal trading, I'd peg the number of shares that have flowed back into the market from direct purchasers since February 1st at 6.4 million. "

     

    I like the premise of your article and obviously the conclusion will keep my eyes on the peeling paint. But the above quote is an interesting assumption. Why would I assume that this years selling percentage is the same as last years nightmare scenario?
    9 May 2012, 07:22 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » Because so far this year the selling pressure has not abated and that indicates a continuation of the trend.

     

    January was a month that didn't have much in the way of identifiable selling pressure and the price doubled. As soon as the direct placement was closed the selling pressure ramped and the price got pushed back down despite the placement's elimination of the financing risks.

     

    The only logical explanation I can find is that a portion of the February offering ended up with short-term holders who use a 20% up and out strategy and hope to turn their money several times a year. I've witnessed similar patterns with other clients for years where 20% to 30% of the new shares find their way into the market within a few months and the rest end up with longer-term investors.
    9 May 2012, 07:44 AM Reply Like
  • anthlj
    , contributor
    Comments (227) | Send Message
     
    Also, the 35c placement, and another share issuance on the horizon, may have been the last straw for some of the longer term holders, causing their shares to be mixed in with the ready flippers from the new issue.

     

    The NS news only served to provide a volume spike needed by those who want to exit. They don't seem keen on getting out below 40c but any attempt to build upwards on news will be squashed for the foreseeable future. It seems that Axion will really have to build a head of steam sales wise before the supply side weakens. But IF TGs prediction of 300% revenue growth across 2011/12/13 holds true then we should be OK. Others seem disinclined to believe him.
    9 May 2012, 01:46 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » If you believe you can accurately describe the horizon at this point you are a far smarter man than me.

     

    The idea that you can predict the behavior of stockholders you don't know anything about is patently absurd.

     

    Based on 33 years of experience in the securities business and more public and private financing transactions than I'd care to count I think we may see another couple million shares of selling.

     

    Unless you can point to comparable experience you should probably listen and learn instead of pontificating from a position of ignorance.
    9 May 2012, 01:58 PM Reply Like
  • anthlj
    , contributor
    Comments (227) | Send Message
     
    John,
    With all respect, your supply 'puddle' is the most enduringly tenacious body of water I have ever encountered.
    Its persistence is certainly frustrating to us all, and I suspect this accounts for the tone of your response.
    9 May 2012, 08:37 PM Reply Like
  • Futurist
    , contributor
    Comments (2127) | Send Message
     
    Anthlj,
    I don't need to defend John as he does a great job of that.
    But before you state he has an attitude maybe you should reread what you wrote:
    "They don't seem keen on getting out below 40c but any attempt to build upwards on news will be squashed for the foreseeable future. "

     

    You are predicting the future actions of unknown shareholders. An impossible task. John is predicting a "supply of shares" of 2 Million. A mathematical prediction based on the facts of 2011 and his experience.

     

    If you can't see the difference you simply are being dishonest with yourself.
    9 May 2012, 08:48 PM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    Some measure of frustration on everyone's part is understandable, but you make a valid distinction Futurist. Understanding and getting some handle on the bounds and limits of the problem are the best cures for that frustration...
    9 May 2012, 09:11 PM Reply Like
  • DRich
    , contributor
    Comments (4557) | Send Message
     
    >481086 ... The best advice, unless a person's horizon is short, is to forget the share price. Traders care about share price and why it does or doesn't move. Follow the company and its performance. After paying a fair value price, it is the only thing that matters.
    9 May 2012, 11:17 PM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    D, sound advice certainly, and I appreciate it. What we have here is a temporarily broken stock, and far, far from a broken company. Quite the contrary. So I'm honestly not fretting myself too much about the selling and/or price, but I do understand why some might, and why it might contribute to a bit of general gloom around here among the brothers. All that said, I can't help but admit that a price somewheres north of here would still be a happier thing. ;)
    10 May 2012, 01:34 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » If management takes care of the business the stock will take care of itself. I worry about short-term market performance because a big chunk of my personal fortune is tied up in Axion. That being said I haven't seen one business decision in the last four years that I wouldn't have supported if I was still a board member.
    10 May 2012, 02:17 AM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    I'm full ham in this breakfast, and them's is comforting words. ;)
    10 May 2012, 02:29 AM Reply Like
  • bangwhiz
    , contributor
    Comments (2241) | Send Message
     
    I'm with you DRich! I don't think the share price today means crap. The company is financially able to execute its business plan and that is all that matters. The NS announcement indicates to me they are succeeding, The stock price will follow if they continue succeeding.

     

    Worrying about when it will increase is a waste of time. It will rise when it rises, until then go read a book, kill aliens in a video game, chase women, whatever. It will be more productive and you will sleep better. What I would really like to do is go fishing, but alas, I am stuck with caring for my mother so I read books.
    10 May 2012, 01:47 PM Reply Like
  • DRich
    , contributor
    Comments (4557) | Send Message
     
    >bangwhiz ... I do a lot of reading, love to play video games, but need that share price to rise ... a lot ... to be in the chase. There is a reason I don't post a picture as an avatar.
    10 May 2012, 01:51 PM Reply Like
  • CO3
    , contributor
    Comments (245) | Send Message
     
    DRich: you mean you don't really have white hair, a big nose, and a
    sharp piercing stare ??
    (darn, I must have been thinking birds are like dogs...)

     

    (inside joke, for a time I was alternating a picture of my dog and myself, both with reindeer ears. And like most dogs & owners, there is a resemblance )
    10 May 2012, 03:50 PM Reply Like
  • metroneanderthal
    , contributor
    Comments (1510) | Send Message
     
    Nice one CO3. Unfortunately, everyone comments that my dog and I have the same color hair - salt and pepper.
    10 May 2012, 04:29 PM Reply Like
  • CO3
    , contributor
    Comments (245) | Send Message
     
    You can always go back to krill,
    unless it matches your eyes ......
    10 May 2012, 04:37 PM Reply Like
  • DRich
    , contributor
    Comments (4557) | Send Message
     
    >CO3 ... Not far wrong but the stare is more vacant than piercing.
    10 May 2012, 05:23 PM Reply Like
  • CO3
    , contributor
    Comments (245) | Send Message
     
    Do these ears make me look fat ??
    12 May 2012, 11:39 AM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » Slimming, very slimming
    12 May 2012, 11:45 AM Reply Like
  • metroneanderthal
    , contributor
    Comments (1510) | Send Message
     
    There is only one right answer to that question. No! Any other answer and you are left to wallow in your honesty.
    12 May 2012, 01:02 PM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    Verily. For this little while, it's been a veritable un-dead sea! ;)

     

    But its days are surely numbered, whether near 1 score or nearer 10, in time it too will shrink to nothing but a dry dusting of salt, and then like a memory, it'll be gone--- forever merely blowin' in the wind.
    9 May 2012, 09:03 PM Reply Like
  • AlbertinBermuda
    , contributor
    Comments (712) | Send Message
     
    The NS announcement was the good news I was waiting for.

     

    I will continue to buy when cash allows. For me its an opportunity to improve my average purchase price.

     

    I suspect that if Europe wasn't in near meltdown that there would be fewer AXPW sellers looking to accumulate cash.
    10 May 2012, 07:16 AM Reply Like
  • AlbertinBermuda
    , contributor
    Comments (712) | Send Message
     
    All this fuss about Blackrock selling is silly.

     

    If there haden't been this disclosure most of us would have continued to carry on as normal.

     

    Just because they have reduced their holding means nothing to us other than there are a few more shares available to buy at a good price. Look at the recent volumes. We are not seeing millions of shares on offer and/or being sold. The volume is way down and the share price is steady. What is the problem?

     

    Like others have said, get out of the stock if you don't like the price.
    10 May 2012, 03:54 PM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    Al, in my mind this kind of thing is just what we're here for: Something like this (blackrock's selling) pops up on someone's scope, then gets further attention, and then is discussed / debated / substantiated / de-fanged by the many, soon a consensus view begins to form and emerge as to what it means, as well as a camp of dissenting opinion, and then we move on... in other words, it's all good... ;)
    10 May 2012, 04:41 PM Reply Like
  • AlbertinBermuda
    , contributor
    Comments (712) | Send Message
     
    I do agree but it is plain that some have been a bit shaken by the news.

     

    It is always good to sit back and review ones position in light of changing events but to me the moderate selling by Blackrock is more of a non event especially in light of the NS announcement.
    10 May 2012, 05:18 PM Reply Like
  • 481086
    , contributor
    Comments (3366) | Send Message
     
    I basically share your conclusions Al. Blackrock is doing what it does for any number of opaque reasons. Useful to be aware of them, but NS is what's meaningful.
    10 May 2012, 05:25 PM Reply Like
  • AlbertinBermuda
    , contributor
    Comments (712) | Send Message
     
    Sorry to ramble on,

     

    But more so because the Blackrock selling was done in advance of the NS announcement.

     

    Granted that in the great scheme of things the AXPW holding that belongs to Blackrock is indeed tiny. And yes who knows if there is a single analyst within Blackrock that has a clue as to what we expect will be a long and steady supply of product to NS and hopefully all others in the rail space shortly. But we have insight and we have knowledge of other applications for the PbC that few others have. Not "insider knowledge" but we are informed by the hard work and diligence of our group.

     

    I keep buying.
    10 May 2012, 05:40 PM Reply Like
  • H. T. Love
    , contributor
    Comments (17774) | Send Message
     
    Albert: "some have been a bit shaken by the news"

     

    Yes. Perfectly normal. But that's no reason to suggest that we all ignore it.

     

    Some will always be shaken - we shouldn't apply the remedy to the healthy.

     

    MHO,
    HardToLove
    10 May 2012, 06:07 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » The nice thing is that price and volume didn't seem rattled at all. It was just the resident worry trolls trying to stir up trouble.
    10 May 2012, 11:43 PM Reply Like
  • Mathieu Malecot
    , contributor
    Comments (1075) | Send Message
     
    so far this year has been great for axpw. hoping they sell into more markets before refinance.
    10 May 2012, 11:55 PM Reply Like
  • tripleblack
    , contributor
    Comments (13490) | Send Message
     
    I realize that my trading habits would probably appear bizzare to many experienced traders, but they have served me well over the years... And I have been giving a great deal of thought to the matter of Blackrock's selling Axion.

     

    I was not particularly upset when first I saw the figures, nor am I now, and for a while I was bemused by that and wondering why I was not worrying too much...

     

    So here's what passes for logic in my swiss cheese brain, at least where figuring out my own preferences are concerned:

     

    I would rather they sell off their share NOW, when the result is a stagnant but cheap level of availability for the Axionista faithful, rather than do so when the sales (and the headline, "Blackrock sells millions of shares of Axion") could do real damage, moving the stock not fractions of a cent but dollars.

     

    Perhaps this is not clear thinking, but it is the way I view the situation (and that would cover just about any reason why they might be selling, frankly).
    11 May 2012, 05:38 PM Reply Like
  • blinc
    , contributor
    Comments (217) | Send Message
     
    seems to me the NS purchase is real significant.
    them RR's know how check stuff out, in all kinds of weather,
    road bumps & switch yard hand goofs. yep

     

    so I bought some, just to spice my interest in the coming
    earnin's reeport, yup. I susspect that there NS RR jus' might
    be buyin' some more batts & if they do, well them other RR's
    be right behind. probbly good for the stock. yep, not much to lose
    & a lot to gain. let's watch & see.....
    11 May 2012, 06:30 PM Reply Like
  • D-inv
    , contributor
    Comments (4114) | Send Message
     
    Question. Does anyone know of a reason supporting a regulatory or institutional investment practice/policy breakpoint (threshold) at $50 million market-capitalization?
    11 May 2012, 09:14 PM Reply Like
  • John Petersen
    , contributor
    Comments (30044) | Send Message
     
    Author’s reply » There are some fairly typical ranges of $25 to $50 million for R&D companies, $100 to $500 million for transition companies that are out of the R&D stage but not yet profitable and >$500 million for profitable growing companies, but they're more psychological breakpoints than anything else.
    12 May 2012, 12:04 AM Reply Like
  • D-inv
    , contributor
    Comments (4114) | Send Message
     
    Thanks for the feed back. The question crossed my mind on realizing that since the February direct placement, Axion's share price has hovered just below the level required to support a $50 mil. market capitalization.

     

    $50 mil. / 113,211,091 shares outstanding as of 3/1/12 = $ 0.44165 per share.
    12 May 2012, 12:30 AM Reply Like
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