FRPT

[ScottishTrader]

I'm with you - filled at 17.58

[TerryG]

Volatility aside. Going sideways until confirming we are at a bottom.

Next milestone. 2006 Q4 report is always approximately six weeks or mid February. It always rallies on good news, or the waiting for execution to turn into performance.

Looks neck and neck about the stock market reality and the management reality.

Also long.

[Melf Elf]

Bought FRPT at 17.52.  Stop: 16.69.  Risk: a loss of 4.7%

Sold FRPT at 16.90.  Loss: 3.5%.

My plan after our weekend discussion was to buy FRPT 16.80 - 17.00 on an early selloff, then look for a takeout of Friday's 17.60 high.

Instead, we did the reverse.  Opened high, and sank.

Friday's 15.70 low probably is good, but I don't like the way that this trade went.   We could get a test of the 50DMA tomorrow, below my 16.69 stop, or even lower. 

16.80 - 16.81 "could" get re-established as support here, but I don't like the trade well enough at this point to hold it.

I threw it in.

[traderjbr]

Corrections can take time..

[TerryG]

The problem with the market reality and management reality is the speculative risk, raising the risk to reward ratio.

The risk is expansion, 50 vehicles in December, 60 vehicles in January, some money and vehicles under MRAP in February. Force Protection said it expects to be churning out 200 vehicles a month by the middle of 2007, and up to 300 a month in 2008.

The reward would be the MRAP contract to go along with the risk of expansion.

So the fundamental dilemma is do you believe in the risk, reward, or somewhere in between.

It is a typical Aerospace Feast or Famine contract announcement, another incremental MRAP order, or execution and performance reflected in the 2006 Q4 report.

Pre-NASDAQ any of those three would a guaranteed bull rally. Or did the rules change with the NASDAQ listing?

Or the risk of famine?

http://www.forceprotection.net/news/news_article.html?id=146
Force Protection, Inc. Marks Major '06 Milestones, New Vehicle Production Record in December
Publisher: Force Protection, Inc.
Date: 01/04/2007

Force Protection's workforce has increased to more than 700, up from 300 in January 2005. The company delivered more than 50 vehicles in December 2006 alone, a 300% increase from December 2005.

http://www.forceprotection.net/news/news_article.html?id=153
Force Protection, Inc. Announces New Production and Delivery Records in January
Publisher: Force Protection, Inc.
Date: 02/05/2007

Ladson, SC – Force Protection, Inc. (NASDAQ: FRPT) today announced that its vehicle production and delivery numbers again reached record highs in January. The leading armored vehicle manufacturer delivered more than 60 vehicles to the U.S. government last month alone.

http://www.stockta.com/cgi-bin/fund.pl?symb=FRPT&page=news&mode=stock

But capacity would have to dramatically improve first. With General Dynamics' plants in Ohio and elsewhere, Force Protection said it expects to be churning out 200 vehicles a month by the middle of 2007, and up to 300 a month in 2008.

With capacity at its Ladson plant nearly maxed out, the company is looking for a new facility to manufacture its Cheetahs.

[ScottishTrader]

Yeah tricky one Melf, I really thought first thing we'd get that reversal, but it looks pretty ugly right now.  I'm going to stick to the plan though and look for 16.80 support to hold.  I will set me stop a little lower though, as it will probably be choppy with it in the  morning.  Still, if it breaks down again, Nullz may be onto the right idea on this one.

[TerryG]

With one or two weeks (sometimes longer) for the 2006 Q4 report I do not doubt the below 16 sag. Just when the report is coming to the rescue. If Nullz is right. Sliding and sagging until good news has been my observation, and I have been following it since the reverse split.

I have one big let it ride.

Nullz the group in Congress voting for withdrawal or reduction is small, but you are right the market does not believe that yet.

[nullzero]

When we get closer to the 2008 presidential election and if the situation in Iraq doesnt get better and there is more public disapporval of the war this stock will suffer more. Boeing suffered greatly after the end of the first gulf war and they are much more diversified then other defense related companies. Below is an interesting article on the financial troubles Boeing encountered after the end of the first engagement in Iraq and after 9/11.

quick quote from the article

"The "last time" was the industry downturn that came after the 1991 Gulf War, when Boeing slashed production and laid off thousands."
http://seattlepi.nwsource.com/business/42812_boeing15.shtml

Granted the article is more geared toward the slow down in airplane orders after 9/11 but it has historical data on the last slow down from the gulf war. its known

Some commentary I posted on a politic/current event forum.

/////
It is widely known that wars create short term economic stimulus. Government prints more money and gives money to soliders and business which in turn comes back to the U.S. and spurs consumer spending in the short term. Once the war in Iraq ends the slowdown in the sectors related to the war will be huge. Take a look at just BOEING and how many jobs they layed off after the first gulf war and do the math yourself.

"When Boeing did that the last time, in 1996 and 1997, after the Gulf War downturn, its assembly lines became so snarled that the company lost money for the first time in nearly a half century.

A clearer picture of what may be in store for the commercial business will emerge Thursday, when Boeing announces third-quarter earnings and for the first time provides more specifics about airplane deliveries in 2003. Boeing has said it hopes to deliver about 500 planes this year and around 400 next year, though those numbers could change. Boeing has not made any predictions about 2003. But many analysts are forecasting that Boeing will deliver only about 300 planes that year, perhaps fewer.

Last week, Boeing began notifying the first 9,000 of what could be as many as 30,000 workers who will likely lose their jobs by the end of 2002 because of the current downturn. Many of those laid off work in the Puget Sound region.

During the last downturn, Boeing's employment fell steadily for five years, from 161,000 to 105,000 by the end of 1995."
http://seattlepi.nwsource.com/business/42812_boeing15.shtml

Thats over a *35%* reduction in work force after the gulf war slow down for Boeing.... Next down turn is going to be much worse because the engagement is much bigger and longer with much more resources not to mention engineering and construction companies will see layoffs due to the pull out from Iraq.

Here some numbers to ponder, number of employees in some of the top U.S. defense related companies publicly traded.

120,000 NOC
153,000 BA
140,000 LMT
81,000 GD
80,000 RTN
5,100 AH
18,600 COL
59,500 LLL
116,00 HON
222,200 UTX
300,000 GE
106,000 HAL

Over 1.4million people employed just in the publicly traded defense and Iraq reconstruction related companies. Add in the private sector and others that I failed to list we are easily talking about +2 million people that have job security directed tied to the War in Iraq. A 50% reduction would be 1 million high paying jobs lost if we were to assume a massive layoff and slow down across the defense industry from the pullout of Iraq... I doubt we would lose that many but for the sake of things I will be conservative and say 25% of those workers get layed off from slow down in business (end of Iraq War). Thats still 500,000 people layed off and it can have a big effect across the nation not to mention jobs being lost in the Auto and Construction industries.

The storm is brewing just wait and see., the real estate slow down will just make matters worse. Also take into account the massive amount of people that will soon be retiring and taking rather then giving into the system, we have some major economic problems to deal with. ///////

To sum things up FRPT is not diversified to stomach a end of the Iraq War, at least thats what I see from my viewpoint. Almost all the contracts that add significantly to most of FRPTs profit and bottom line are contracts for anti-mine vehicles. A democratic president elected in 2008 will just seal the coffin for the big profits in defenese related stocks. FRPT I believe has peaked from my newbie point of view.

[nullzero]

Also like to add that FRPT has a foward PE of 28.58 which is on the high side for this company. GD has a foward PE of 15 and is much more stable defense play with more diversification. I think FRPT is going to be a sell the news stock for the upcoming months and quarters, it may see a pop every once in a while but I believe the fundamental trend is down from here. The continued insider selling doesnt help either its telling me that Insiders think its time to get out.

Just trying to speculate on future events and what they would hold for FRPT and the market, im no pro but I dont believe the market has came to a decision and reality on how the War in Iraq will end. I believe the chances for a withdraw from Iraq in 2 years from now is very likely, and the end result will be a disaster in Iraq and a financial troubles for us after the fall out.

[TerryG]

I am a skeptic at this feast also, but the trend went past 18 and left a hanging man back there, which means nothing right now.

The fundamentals and the market professionals have been skeptics since 10, but new contracts, and increased production have gone hand in hand until now. People are sobering after this feast so far, myself included.

My plan was to ride this through the Santa Clause rally, the NASDAQ listing, positive earnings, the end of production expansion, and a positive outlook on contracts and future contracts. All that in 2007. So yes I am also a skeptic at the feast.

This has been a wild ride. One expansion plan after another, with the Pentagon buying or contracting for every vehicle they can build. Which is true now with a backlog of a few months. I am seeing the peak when the contract for this final expansion comes through.

I am not so arrogant as not to see the famine, but the feast is promising one more course. I am an Aerospace enthusiast.

[TerryG]

We all agree this is looking for a bottom. I think the next peak will be Bears pumping to dump and get out. The market skeptics are sobering the bulls, but there has been a bull rally every time good news comes out.

The market reality is this could keep going down and a few things could cause it.

[la-onda]

amstocks82 update:
FPI, Ramping Up To MRAP

FPI (Force Protection, Inc.) began the process of increasing their internal production by 300% back in June of 2006. They began with 1 production line and production pods for Buffalos. The goal was to build 3 lines with the capacity of building 25 Cougars per month per line with one shift.

FPI's planned to add the additional two lines, and then to go back and rebuild their original production line with new equipment and processes to speed production. My timeline based on comments from the company in the past for getting all three lines finished and upgraded was December/early January. After that, they would require a month or two to get to their targeted production speed.

With three lines running, FPI can build 75 Cougars per month with one shift. FPI employment advertisements have been for workers willing to work various shifts. Once FPI has additional shifts running, they will be able to build more than 75 per month.

The Joint Venture with GDLS (General Dynamics Land System) and the agreement with AH (Armored Holdings) added even more capacity allowing FPI to build even more than is possible with their 3 production lines. One of FPI's main issues with the ramp-up has always been getting qualified welders. GDLS and AH already have a large number of welders and are able to more easily add welders to their staff than can FPI.

The Joint Venture with GDLS created a new company called Force Dynamics. The agreement creates a company that is 50% owned by GDLS and 50% owned by FPI. Under the terms of the agreement, GDLS and FPI agree to divide the work and benefits equally and they shall whenever possible act as the exclusive subcontractors:

http://www.sec.gov/Archives/edgar/data/1032863/000110465906083305/a06-26313_28k.htm

The agreement does not preclude FD (Force Dynamics) from naming other subcontractors to do work that is not practical for either party to do in the time given.

The new process for splitting the work to manufacture MRAP Cougars has not been announced. In my opinion, the fastest ramp up would be a process where GDLS gets the shells, preps them with some initial welding doing the bulk welding that needs to be done. From there, the prepared shell gets shipped to Spartan and they do the Chassis work and then it gets shipped to FPI's facility for final assembly and preparation before delivering them to the military. If they get more work than either party can do, then part of the work may get sub-contracted out to Armored Holdings to do final assembly and automotive integration.

http://www.sec.gov/Archives/edgar/data/1032863/000110465906076576/a06-24231_38k.htm

With the work split between General Dynamics and Force Protection as the main subcontractors, FPI's existing lines will be finishing vehicles that are already partly complete. Instead of a line manufacturing 25 vehicles per month, they will be able to manufacture 50 or more per month.

FPI has existing orders for ILAV and for Mastiff Cougars for the British military. I expect that FPI will leave one line dedicated to the ILAV and probably complete the British order prior to getting the MRAP contract. This will allow FPI to dedicate two lines for the MRAP contract. If FPI is doing mainly the final assembly and preparation work, they will able to ramp up much more quickly. FPI can hire and train assemblers and painters much more quickly than they can welders. With two lines dedicated to the MRAP working two shifts, FD can deliver 200 vehicles per month to the military. But that is not the end of the production ramp-up. It is likely that FPI has already started the work necessary to expand further their manufacturing capacity. In another three or four months, they could have a forth or even fifth line up and running.

It took more than a year to design the HEV Cougar. Since then, FPI has created other versions of the Cougar such as the ILAV Cougar, the Mastiff Cougar and the JERRV Cougar. FPI has been adding changes requested by the military and has replaced parts that were not holding up well in the field with more reliable parts. They analyzed blast damage and added additional protection where required. Other vendors without a battle tested vehicle are years behind FPI.

The two main criteria for Vendor selection for the MRAP contracts are:

1) The Contractor or Contractors vehicle systems that demonstrate the best overall performance in PVT testing (with survivability being the highest priority)

2) The Contractor or Contractors that demonstrate the greatest capability to produce and deliver vehicles with the shortest ramp up time and greatest maximum production capacity, in order to meet the urgent delivery requirements for these vehicles

http://www.sec.gov/Archives/edgar/data/1032863/000110465907007291/a07-3406_2ex10d1.htm

FPI's vehicles have demonstrated in combat that they are the most survivable vehicles. FPI has already been ramping up for more than a year to build Cougars. The joint venture with the GDLS the largest Defense contractor gives FPI additional advantages. They are simply able to ramp-up faster than any other vendor.

The Government has already ordered the first two vehicles from FD for testing. However, the Cougar is battle tested. The government previously reserved the right not to test proven vehicles. They also stated, "Due to the urgency of the requirement, the Government need not wait for all test vehicles to be delivered and tested before deciding to execute additional delivery orders." This means new production orders could come anytime in the next few weeks or even tomorrow.

&

Today's 8-K: "There's good news tonight"

As TTT says very clearly, this statement by the company re; MRAP Cat. II is very significant...

"we are the only contractor among those selected that has an existing production line for vehicles with a demonstrated record of performance in combat conditions."

This is an official SEC filing folks.
This company never blows a hollow horn.

"Only Contractor" means only. No other.
"Existing production line" now, not yet to be built, not planned, will be...but Now.
"Demonstrated record of performance in combat conditions" means just that.

Cat. II = 2600 vehicles and ~$1.2 bil. of orders.
Then there is ILS and 600 Buffalos.
And it is likely FRPT will get some of Cat. I as well.

[Melf Elf]

Yeah tricky one Melf, I really thought first thing we'd get that reversal, but it looks pretty ugly right now.

Scotsman,

Ver-ry tricky.

When I pay up for a stock like that, I don't want to see it tank all day, like it did.  As it turns out, my stop at 16.69 would have been hit this morning anyway, so that just plain didn't go well.

If FRPT had started down yesterday morning, I would have been fine, entering at 16.80 - 17.00, and using something a little below the 50DMA as a stop.

That's the way it goes sometimes, though.

CURSES!!   

I'm going to stick to the plan though and look for 16.80 support to hold.  I will set me stop a little lower though, as it will probably be choppy with it in the  morning.  Still, if it breaks down again, Nullz may be onto the right idea on this one.

I'm glad to see that it came back this afternoon for you guys.  Good luck!

[ScottishTrader]

Well when I was updating my trades after the close yesterday I was putting in my stop for FRPT (at 16.60 as it so happens) and inadvertently put in a limit order instead o a stop order!  Fortunately it filled immediately at 17.15 (and not 16.60)  but that was that.  Oh well.

I've been pretty busy and not around for the open lately so its hard to catch these things when I want to.  but as far as FRPT, 17.60 is still immediate resistance.  I may try a re-entry if it gets above there, but I'm also looking to close out most of my trades this week and next (going on holday and don't want to be thinking about bloody STOCKS!!), so its foolish to be jumping in without a clear indicator of the short term direction.  It does look like it has found some support at 16.60-16.80, but now too far away to happily use that 16.60 low as a stop agian.

[nullzero]

Nice rebound today, sorry about your loss on FRPT Melf. FRPT is looking good maybe near the end of the week for a short if it rebounds into the 18s and stalls at resistance.