To say the least, the financial markets are a disappointment at the moment. There are, however, always opportunities that arise from a dynamic shift within an economy. Rapid and significant movements of capital allow one capital holder to withdraw, due to circumstance, and another to move in with capital to replace it.
As we are now witnessing, a market based economy does not allow for voids in capital flows. One way or another capital must fill the void or problems erupt until the void is filled (hence today’s issues.) An astute investor is one that is willing to make his bets and fill a void, where it exists, to better his position at another’s expense. Finding that void and opportunity is all that is required to profit very handsomely.
Broadwind Energy Inc., a manufacturer, marketer and servicer of steel infrastructure products and components, works to provide heavy steel products and components primarily to the energy industry. The company’s primary focus involves the manufacturing of wind power towers, associated gearing systems and service programs.
Operating through five subsidiaries, the company has been focusing a majority of its efforts on building wind turbine towers, gearing systems and associated wind generation elements to make wind systems work. This generally involves the manufacturing and installation of the wind turbine tower and gears that make the system operate. The company, however, does not operate at the exclusion of other markets that may be able to take advantage of its gearing products.
Oil and gas drilling operations use many of the same component elements that wind tower systems use, leading the company to sell into the energy markets as a whole rather than specifically focusing on one particular portion of them. From a particular point of view, this calculated decision enables the company to effectively play “both sides of the fence.” Domestic oil exploration and reclamation dictates the maintenance and replacement of heavily used drilling equipment while higher energy prices generally points to advancing alternative energy. Ultimately, the company’s business model rests on the fact that the world will need alternative energy sources and that mechanical equipment relying on gearing systems will break down and need to be serviced or replaced.
With available cash of $34.4 million and a reasonable debt load, Broadwind Energy has been actively assembling a solid full service company oriented toward becoming a leading player in the new energy paradigm that is forming. Wind energy and the continuing need to search for domestic sources of oil and gas have presented an interesting opportunity in how a company transitions from one form of energy that is quickly being consumed to new forms of energy directed at the future. Broadwind Energy has made the calculation that it can operate in this dynamic by keeping one foot in the present while working toward the future. It is this present and future choice that has generated opportunity for potential company investors.
Tontine Partners LLP, an early and large shareholder (48.7%) has opted to make an orderly move away from the company. Although unfortunate to say the least, this decision does not appear to be associated with any company activity, but rather as a result of current market conditions and Tontine Partner’s other activities. Ultimately, a void is about to be created and an opportunity to fill it exists with a company that seems ready to become a leader.
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