Here’s a rebuttal to the short attack that makes a punch:
http://discussion.fool.com/profire-energy-inc-pfie-31512060.aspx…
I doubled my position and after reading the above, will assess if I have more room in my position size for this little charmer.
Mykie
Wow, a great quote from that article:
The short attack pretends to prove that Profire Energy is a fraud because Limpert had some problems with the SEC. What they fail to mention is that Limpert was named “Utah Business CFO of the Year” in 2012, after the SEC proceedings.
I have a very respected businessman friend who is part of our little investment club who had some very interesting comments regarding negative comments made in the SA short attack on PFIE. Thought I’d share his thoughts with this board. Disclosure: He owns shares of PFIE
The SA article noted
" First, Sadler Gibb had 2 employees and 24 audit clients. I thought to myself, how can a two-man accounting firm would be able to complete 24 audits? I continued reading the PCAOB report and realized how they were doing it…errr by not doing it. Of the 9 audits the Board reviewed, 8 were found to have deficiencies! Of all things, one of the deficiencies was a failure to perform sufficient audit procedures to test revenues!"
The author evidentially did not take the time to go to the web site for the accounting firm to confirm the PCAOB notes regarding the number of employees. While Sadler Gibb website did not list the total number of employees, there are currently 5 partners listed at the firm - http://www.sadlergibb.com/about-us/partners/ which negates his argument of only 2 auditors and just a guess of a 5 to 1 ratio of partners to non partners probably would have 10 to 25 auditors based on my previous experience. The partners do have decent experience and it does specialize in public companies and Sarbanes Oxley.
The allegations of the PCAOB findings are very common even for big four firms so I would not be over alarmed by those finding. Often the PCAOB findings do not change the results on the financials - they just want further procedures performed to provide additional confidence over the numbers. There were no requirement to reissue or restate financials. This in my opinion is a non event.
Although I would like a big four or large regional firm performing audits, I would presume ProFire management had relationships with that accounting firm and since it was not a big four or a regional firm they felt they would save a lot of money with the audit, taxes and probably get better service and attention as a smaller public company.
Doesn’t change the fact that the stock will take a hit this morning - only that I continue to feel that -to steal the phrase of one of the persons on the thread - the real “Pump and Dump” is being done by the author.
War Eagle
Just like KNDI , PFIE is going to need a big name accounting firm if it wants to enter the realm of big name companies. Not that these big accounting firms don’t have lots of pimples , even boils on their record, it is just the way the game is played. A Big Name Accountant adds an aura of respectability, analysts feel comfortable with them. And they do have enough expertise to handle obscure or difficult issues.
Just like KNDI , PFIE is going to need a big name accounting firm if it wants to enter the realm of big name companies.
Hi Mauser,
Little companies can’t afford big name accounting firms, and certainly don’t need big name accounting firms in order to sell more of their products and increase their revenues. PFIE is a tiny company at a market cap of $179 million. They won’t need a “big name accounting firm” until they quadruple or quintuple their market cap, as they won’t be “entering the realm of big name companies” until then.
Saul
As a PFIE stockholder (smallish position) I am hoping that quadruple comes really soon. 
But your point is taken.
However if not big 4 at least regional, or someone that satisfies analysts. Because complaints of inadequate accounting is an easily fixable problem, one a lot easier than trying to sell burner ignitors to sometimes dubious cash short customers…
Agreed.
This is a x-post of a comment I posted on the Hounds Board. Folks gung-ho on PFIE might not enjoy it.
http://discussion.fool.com/ive-pretty-much-kept-out-of-the-fray-…
Putnid, appreciate the post. It’s always great to hear the other side.
But you tend to focus almost completely on flaring, which is a very small part of their business. They primarily provide management systems for burning that occurs during the processing steps at the well, including extraction, separation, and even preparation for transportation. There are a number of steps that use burners to either provide direct heat or to govern temperature. BMS units help make each of these various burners more reliable, more efficient, and safer to operate.
You also seem to make a lot of assumptions, like the need for this technology has already been satisfied on all existing wells. Or that Profire must have a lot of meaningful competition because your google search brought up a lot of results. Or that large companies, by virtue of being large and reputable, must already have high-grade solutions to this problem (incidentally, Profire’s largest customer is Chesapeake, and they also sell to Shell and ConocoPhillips).
I’m not an expert on the oil industry, and I absolutely rely on things that Profire tells me. You may very well be right on some of the points you’ve made, and this could turn out to be a poor long-term investment. But because your points are so vague and built on assumption, I just don’t think they’re really very actionable. Nor do I think they can realistically be confirmed. So in the end, they mostly just serve to create fear, uncertainty, and doubt (FUD). Again, bringing up the concerns is valid; but I think it’s overreaching to state that we’re being actively misled.
Neil
Long PFIE
I appreciate your appreciation, Neil. To your point, Denny (over on the Hounds board) thought I focused too much on flaring. I offered a clarifying comment.
As I’ve stated several times, I don’t have an ax to grind, nor a dog in this hunt. I’m simply offering food for thought for those who are willing to invest their personal, hard-earned funds in this enterprise. I suggest that it behooves the investor to think long and hard about the whys and wherefores of that investment.
Has PFIE developed a “better mousetrap”?
Certainly interesting but satellite photos only show the well flares that are burning, not the ones that have been temporarily put out. Granted most flares have too much gas flow to be put out easily, but smaller or more intermittent ones can be snuffed by wind or a temporary interruption in gas flow. Since methane is lighter than air that’s maybe not so much a danger if it is from a tall stack, but it is a violation of the law. Laws which will get tougher due to the fact that methane is a very active greenhouse gas.So an automatic relighted might be worthwhile. In any case this isn’t their main business.
But I agree that there must be competition, perhaps more than they say . And that separation ignitors / thermostats will wind up as a commodity business, or maybe already is one.
Hi Putnid,
I’m not sure if you are intentionally trying to mislead people or what, but you are basically saying that there is no market for what Profire is selling. This about a company whose revenue went up 68% last quarter and whose quarterly revenue has gone up from $5.3 million to $15.7 million in the past six quarters, almost exactly tripling (up 200%). And their largest, and over 10% customer is Chesapeake, a major player.
Since you must be aware of these facts, your attempts to scare less knowledgeable people into thinking that they have a useless product that no one wants seems rather suspicious.
Saul
Putnid has described concerns over PFIE potential market stating that only new wells will have a need for BMS.
Management claims their systems replace human labor currently used to control heating of liquids to optimal temperatures for storage/transport.
Saul’s supporting info of recent sales growth and Chesapeake as a 10% customer support management.
So long as PFIE BMS cost less than the human labor currently used, there seems to be a vast market opportunity. The cost of human labor needs to take into account insurance claims/premiums and loss in energy efficiency as well.
Putnid - Do you disagree with management that manual labor is currently being used in lieu of BMS? Or do you think manual labor is more efficient/less expensive than BMS? Or is there some other reason you are dismissing the market opportunity?
As you, I have no skin in the game. Just interested in the discussion.
Take care,
AJ
Putnid - Do you disagree with management that manual labor is currently being used in lieu of BMS? Or do you think manual labor is more efficient/less expensive than BMS? Or is there some other reason you are dismissing the market opportunity? - AJ
I question the premise that manual labor to ignite burners constitutes standard/majority practice in the oil and gas industry. I’ve no doubt that some oil/gas producers rely on manual labor, but I point to the wide variety of auto-ignition products currently being offered by a wide array of vendors as proof that the industry, in large part, has modernized this function.
If anyone has any data regarding the actual ratios of manual ignition versus auto-ignition, I’d love to see that information (as I’m sure any investor would).
My brother and has four kids, went to Auburn University
Sorry my previous should’ve been a private reply to driller Jim. War Eagle is a greeting used by people who went to Auburn University. I’m sure it is odd if you don’t know that.
Putnid,
I question the premise that manual labor to ignite burners constitutes standard/majority practice in the oil and gas industry. I’ve no doubt that some oil/gas producers rely on manual labor, but I point to the wide variety of auto-ignition products currently being offered by a wide array of vendors as proof that the industry, in large part, has modernized this function.
If anyone has any data regarding the actual ratios of manual ignition versus auto-ignition, I’d love to see that information (as I’m sure any investor would).
I’m not sure how I will find an answer to our question, but will research and report if I uncover anything of value.
Regards,
A.J.
If anyone has any data regarding the actual ratios of manual ignition versus auto-ignition, I’d love to see that information
I’m not sure how I will find an answer to our question
A.J., this is discussed in the latest conference call. The CEO said: “we believe the entire niche as far as Burner Management technologies is well under 5%.”
Also, in the investor presentation, it says under the “Without BMS” column: “Worker must discover and reignite the extinguished burner flame, then restart the application manually.”
So no BMS means manual re-ignition, and management estimates that less than 5% of existing wells have a BMS. If you’re wondering what those wells are using instead, that’s also addressed in the presentation: “Most companies use pneumatic (air- or gas-driven) valves to provide basic temperature control. [This] requires dangerous & inefficient manual re-ignition and costly maintenance.”
So unless management is outright lying or wildly incorrect (like an order of magnitude incorrect!), it seems pretty clear that the market opportunity is large.
Neil
Long PFIE
Putnid,
If anyone has any data regarding the actual ratios of manual ignition versus auto-ignition, I’d love to see that information
I’m not sure how I will find an answer to our question
A.J., this is discussed in the latest conference call. The CEO said: “we believe the entire niche as far as Burner Management technologies is well under 5%.”
Also, in the investor presentation, it says under the “Without BMS” column: “Worker must discover and reignite the extinguished burner flame, then restart the application manually.”
So no BMS means manual re-ignition, and management estimates that less than 5% of existing wells have a BMS. If you’re wondering what those wells are using instead, that’s also addressed in the presentation: “Most companies use pneumatic (air- or gas-driven) valves to provide basic temperature control. [This] requires dangerous & inefficient manual re-ignition and costly maintenance.”
So unless management is outright lying or wildly incorrect (like an order of magnitude incorrect!), it seems pretty clear that the market opportunity is large.
I’m interested in your take on Neil’s comments above.
Take care,
A.J.
I’m not sure if you are intentionally trying to mislead people or what, but you are basically saying that there is no market for what Profire is selling. This about a company whose revenue went up 68% last quarter and whose quarterly revenue has gone up from $5.3 million to $15.7 million in the past six quarters, almost exactly tripling (up 200%). And their largest, and over 10% customer is Chesapeake, a major player.
Since you must be aware of these facts, your attempts to scare less knowledgeable people into thinking that they have a useless product that no one wants seems rather suspicious.
Wow, I am sorry to see you take the low road like this. No one else in this conversation has made it personal. Kudos to putnid for ignoring your comment.
Rich
CED