On another board, one member offered a you tube video by Andrew Limpert as proof of the un-investability of PFIE.
I watched the whole thing and came away with just the opposite opinion and a desire to add more. I’m not sure what the other board subscriber found obnoxious since I thought the entire thing was informative, well delivered and straightforward. He sounded honest and this is the fellow that was accused in the short article as being a fraudster.
I watched the whole thing and came away with just the opposite opinion and a desire to add more. I’m not sure what the other board subscriber found obnoxious since I thought the entire thing was informative, well delivered and straightforward. He sounded honest and this is the fellow that was accused in the short article as being a fraudster.
In the oil and natural gas industry, various applications (e.g. tanks, line heaters, separators, dehydrators, amine reboilers, etc.) are used in the production and transportation of oil and natural gas. These applications require heat, which is used to facilitate the proper function of the application. To provide that heat, a burner is used within the application.
…I listened to the CFO, and basically got “we need to keep things ‘warm’ (steady temperature) so we turn on flame when it gets too cold, and turn off the flame when it gets too hot”…
…so I guess I could flesh out my question and say, “are these proprietary thermostats”?..do they own some sort of patent on these thermostats?..
…what stops Halliburton, for instance, from saying, “hey, could we toss a thermostat on those pipes over there?”…
…do they have to call Profire?..
…now sometimes, the most obvious solutions make the best companies, and larger companies can’t be bothered with developing their own (heck, even Google bought a thermostat company!)…
They do have patents and they discuss this issue in the their 10K. It also shows only one client generating >10% of their business and that’s Cheasapeake Energy. Patent litigation could obviously become an issue in the future for them. For right now, it may be easier for the “big boys” in big oil to just use PFIE services rather than spend their dollars in R&D for this technology. I could also see this company becoming an acquisition target in the future as the large oil companies begin to use these products. Think it’s worth the risk/reward right now.
…only one client generating >10% of their business and that’s Cheasapeake Energy
Hi Stormey, that’s one heck of a 10% client and having Chesapeake gives them a lot of bragging rights. Chesapeake is a major company, and if Chesapeake could get a better, or even equivalent product from a big-name oil field service company, they sure would be doing it. Says a lot about the absence of big name competition.
…what stops Halliburton, for instance, from saying, “hey, could we toss a thermostat on those pipes over there?”…
If by “toss a thermostat” you actually mean “engineer a complete system for temperature control that includes electronic controls and sensors, controlled ignition, remote monitoring and shutdown, suitable for installation in the rugged and demanding environment of the oil and gas fields and applicable to the wide range of applications that require heat in this industry” then the answer is yes, I am sure Halliburton can do that, assuming they invest the time and money.
To me PFIE sounds like the sort of company that National Oilwell Varco (NOV) buys up. I am sure most of what NOV sells could be purchased elsewhere or built in-house by someone like HAL, but NOV seems to be doing alright.
They do have patents and they discuss this issue in the their 10K. - Stormey
No. PFIE has several patent applications pending. No further details provided.
Patents, Trademarks and Other Intellectual Property
Although we believe that the success of our business depends more on the technical competence, creativity and marketing abilities of our employees than on any individual patent, trademark, or copyright, we have pursued the acquisition of intellectual property for a number of our products.
We have filed several patent applications for various product innovations. Management will assess the strategic and financial value of each potential patent as the various intellectual properties are developed.
On another board, one member offered a you tube video by Andrew Limpert as proof of the un-investability of PFIE.
I watched the whole thing and came away with just the opposite opinion and a desire to add more. I’m not sure what the other board subscriber found obnoxious since I thought the entire thing was informative, well delivered and straightforward. He sounded honest and this is the fellow that was accused in the short article as being a fraudster.
I didn’t see anything that seemed to be a glaring cause for concern regarding Limpert. The growth opportunity does appear to be huge here and the company already reports positive earnings. Because a micro cap company poses some inherent risks (namely those mentioned by Huibs above), I’ll only put a small amount of money into this position and look to add over time.
Would like to thank Saul for finding this little player with big potential. The risk/reward with a small position is enticing.
Although we believe that the success of our business depends more on the technical competence, creativity and marketing abilities of our employees than on any individual patent, trademark, or copyright, we have pursued the acquisition of intellectual property for a number of our products.
…fantastic to read…
…after having been invested in IP property rights companies like IDCC for years, it’s encouraging to see companies leaning on their successful delivery of product, and not on IP lawsuits…
…one of the reasons I like TSLA so much, they give their patents away in hopes of growing their market, rather than hiding behind a wall of dubiously enforceable patents…
I feel compelled to remind the investors without a lot of experience that this is a tiny tiny company. At a $200 million market cap it’s Extremely Small. My husband is a professional salesman in Silicon Valley. He has had annual quotas of $100 million that he was responsible for. Compare this to the revenue that this company had at $44 million. It’s small. That means it’s going to trade with much more volatility then stocks of a higher market cap.
Just make sure you understand and size appropriately any position that you take. That doesn’t mean it’s a bad investment it doesn’t mean it’s a bad company, it just means you need to understand what you’re getting into. How many sales people do they have? The whole company is only 100 people. We don’t have a long-term track record to see what kind of volatility in sales they might have.
Saul is an extremely experienced investor, he understands the risks that he takes, I hope that you understand the risk that you take.
I feel compelled to remind the investors without a lot of experience that this is a tiny tiny company… That means it’s going to trade with much more volatility then stocks of a higher market cap. Just make sure you understand and size appropriately any position that you take. That doesn’t mean it’s a bad investment it doesn’t mean it’s a bad company, it just means you need to understand what you’re getting into…
Excellent and important observation Flygal. Thanks!
Earlier I wrote about potentially taking a small position in PFIE. I had a dollar figure in my head, but didn’t equate it to a percentage of my overall portfolio. Given the warnings above, I thought I should do that.
It came to 0.4% of my port. Seems very reasonable to me.
I don’t consider the company I work for to be even remotely mid-size and see the issues we’ve faced over the years. We are 10x PFIE. Any number of things can derail a super small cap company. However, 0.4% is a bet I will take on a company that posts earnings and has shown high growth and a reasonable PE.
EPS hasn’t changed much YoY due to ~5MM new shares hitting the market last quarter. If their current growth rates are indicative of those to come, EPS will start its ascent.
PFIE seems like a reasonable bet because of the potential upside. How’s this for a final thought? I’d rather put 0.4% of my money into PFIE than AMZN.
Hi Huibs,
I usually look forward to your comments, get what you are saying and appreciate them. This one I see even got a thumbs up but at the risk of being labeled out of touch, I have no idea what a thermostat has to do with my statement.