Westport Innovations Should Make Investors Wary

by Peter Cohan | July 13, 2011 10:41 am

Westport Innovations Should Make Investors Wary

The smart money has been buying up shares of pollution technology maker Westport Innovations (NASDAQ:WPRT[1]). Nasdaq.com reports that 2.4 million net institutional shares that were purchased in the second quarter amounted to 7.5% of Westport’s 32.2 million outstanding shares[2].

And the stock is trading well above its moving averages — specifically 14.6% above its 20-day moving average, 11.7% above its 50-day moving average, and 30% above its 200-day moving average. So far in July, the stock is up 17.7%.

Westport Innovations is a money-losing company, but the stock’s momentum reflects two facts that appear to be fueling institutional
interest:

But betting on Westport requires you to ignore its financial track record. Here are three negative issues:

This stock is a classic momentum play – it’s rising on press releases about future deals and big-name investor involvement. Once Soros gets out, all bets are off. So if you know the day before that he is going to dump his shares, get into the stock and sell when he does.

For everyone else, be wary of Westport.

 

Peter Cohan has no financial interest in the securities
mentioned.

Endnotes:
  1. WPRT: http://studio-5.financialcontent.com/investplace/quote?Symbol=WPRT
  2. 7.5% of Westport’s 32.2 million outstanding shares: http://community.nasdaq.com/News/2011-07/investing-101-green-stocks-being-snapped-up-by-institutional-investors.aspx?storyid=85027
  3. SeekingAlpha: http://seekingalpha.com/article/278235-analyzing-george-soros-s-top-holdings-part-2?source=msn
  4. GM: http://studio-5.financialcontent.com/investplace/quote?Symbol=GM
  5. Weichai Westport JV: http://www.worldnews.se/news/52252/westport-reports-fourth-quarter-amp-year-end-financial-results/
  6. 134 million in stock during the year ending March 2011: http://moneycentral.msn.com/investor/sec/filing.asp?symbol=wprt

Source URL: http://investorplace.com/2011/07/westport-innovations-should-make-investors-wary/
Short URL: http://invstplc.com/1fpCKCS