Lululemon... for Poseidon Interesting debates regarding our big-little maker of revolutionary water handling "packages."
Will the share price appreciate? Will they continue or increase the dividend? Is competition rampaging
down the gang plank to wipe the industry clean? Will the US and all nations ban hydraulic fracing and
push oil and gas prices through the atmosphere......?
Life is so full of unknowns, and that is why it is such a joy to have a market to trade in. We all have our own beliefs, and draw our conclusions from various inputs on a day to day basis.
One of the inputs I have taken from the markets over the years was my experiences with a Vancouver based company named Lululemon Athletica T-LLL. You might be familiar with the company, as you may have noticed just how nicely these garmets fit their customers, especially when you are standing in a coffee shop line.........Wow, a company with stellar growth projectiles, and yoga was just seeming to become "The next big thing." When they went public, I bought a bunch of shares, and the SP went up from about $16 to $25 and the company came under serious fire from the analysts and many of the big talking heads on TV. There were talks of competition, unsustainable growth, manufacturing in China (OMG!!), quality concerns, why no dividend, and of course the bashers came out to throw their Fear and Fudd....
From a peak of $25, and I did sell a bunch of our position, they got pounded down to just under $3 during the peak of the financial crisis, when the Honda Moms and Funky Fathers weren't buying $100 pants and $60 athletic bras. Then things turned around, and I wish I had kept my $25 shares, as Little LLL is trading just north of $70 a share. Was there competition? Certainly, what country and company out there doesn't make athletic wear, or yoga focussed clothing, it is all over the market place. In my opinion, what LuLu and PSN offer, is a very high quality, albeit higher priced products/services to ensure that the customer's experience is great. I still have a pair of LLL pants from 2006, and they look and feel virtually brand new.
I have seen a frac job where there are dozens of 400 BBL tanks plumbed together, hauled two by two on trucks to site, heard about leaks, heard about having to suck sand and guck out of the bottoms of all those tanks. I have spoke to alot of people in this industry about PSN, and everyone I have spoken to thinks it is amazing. Does it work - 1000 jobs and no failures or leaks (I am not certain 100%, but as of a couple of months ago there hadn't been any) seems to indicate that these guys have a slick, high quality service that is in the right place, right time. Competitors will come, some margin pressure will appear, but if the whole industry is shifting to these tanks, ALL the tanks in the industry are going to be booked, and why cut throats to get business when it is everywhere????
Oil and Gas Companies don't want to own their own junk. They have service companies for that. A few companies own drilling rigs, and the odd service or two, but they tend not to have the drive, experience, or urgency that a third party has......because they can be fired.....or not given the next contract etc.
I think Friday is going to be great, the biggest concern I have is.....how many more tanks can you build, and how fast can we get them build with VERY high quality components so that there isn't a tank failure, or a leak, or a problem that makes PSN look bad. GFS has an image problem, and even if it wasn't their issue, their image is tarnished. The last thing you want is 40000 barrells of product (water or fluid) blowing all over a pad, and the industry laughing at your swimming pool leak or blowout. I think PSN has a superior product, has the network, has great relations with their customers (they are saving them BIG $$$), and have a ton of blue sky ahead of them.....
Gotta run, and do some yoga.......