What to Do About Plug Power...

Grrrrrrrrr....

It has been rough lately, sufficiently so that it has been hard to think about posting on any subject, least of all my suffering portfolio.

For at least the fourth time in the past week, the Dow is in the green and our positions are significantly in the red. Tesla has lost 10% since we bought it and Plug Power is down 50% since late January. The mood on the business is...clouding over. What one analyst shrugged off as an insignificant revision of two-year-old taxes has spun into...well, still not really anything. The concern seems simply to be that the bad news will continue snowballing, which it shows no sign of doing.

Perhaps the tax revision will reveal the lie in some statement of fiscal surety the company has given previously, perhaps that lie will be really big and scandalous and not just some accounting technicality that any idiot would assume every company in America would determine if it served their business interest to look more profitable.

The taxes will be revised, the numbers will change. In the end, the question will be 'can this company fulfil the contracts it has announced, which have driven all of the excitement about it?' If it can, great, it might not recover all of the valuation we had once hoped to see it move onward from, not this year, but it should recover, and if it does, it will likely grow value in future years. If, on another hand, the company cannot acquit its contracts...well, the reason will, it appears, be solely financial, they will take some loans, their stock won't look as cherry-red desirable, but it should recover some of its value.

This means that you are calculating two most-likely outcomes that make the stock a 'hold' rated position.

But our strategy is not to follow ratings, I have tweeted in the past that I very rarely buy or even find myself holding stocks rated better than 'C.' Ratings are low-risk. We're not trying to go 'all-in' on any position, but we're on a higher tolerance setting than 'ratings.'

So, in some sense, this is one of our test cases. Now is not, unfortunately (or perhaps the opposite), the time to be abandoning our chosen mounts, after their first winding, if you're going to follow the metaphor of a horse-race. Our picks have it in the tanks, they'll surge back eventually, and the only question is...is Plug going to be among them when they do.

It basically comes down to whether you think this athlete has elite 'stuff,' or is just a high-school Team Captain.

And look at the sport. What makes a player elite in Professional Lacrosse, which is a thing...that exists...I've even seen it on television at the worst of the pandemic sports drought...what makes a player elite in that paid professional league is not as high a bar as what makes a player elite in...Bowling, for instance.

Why didn't I say Baseball? Or basketball? Even football, for the most athletic international sport? Because that's not what I'm saying, that in the elite sports you need to be an elite athlete at global scale. What I'm saying is that when your sport is both tertiary and relatively underdeveloped, a dentist might also moonlight as the best player on the planet, whereas, even though Bowling is less popular than Basketball, an elite bowler is among the most coordinated in the necessary muscle-groups of any human on the planet, a global scale talent.

Plug Power can actually still afford to be a dentist for a little while longer. They don't have larger direct competitors. I see them roaring back next weekend. Which makes them playoff bound (metaphoring again...), which makes them cup favorites.

With the clear understanding that the purpose of this blog is to take risks and to evaluate the effects of those risks, I'm recommending a small buy.