Regarding MSN News article on IFUE:
Chuck back paddles - says "This is not a stock for small investors, like the ones I write for."
He is right this time…It seems only the small investors found his article to have merit.
For those interested, please read on...
Shell Oil executives give International Fuel a boost By Lene Johansen
St. Louis Business Journal
Updated: 8:00 p.m. ET June 5, 2005
The addition of two executives from Shell Oil is giving International Fuel Technology Inc. the credibility to take the company to the next level.
Clayton-based International Fuel recently hired Jayne Winfrey as president and chief operating officer and Gary Hirstein as executive vice president and chief financial officer.
Winfrey has worked with Shell since 1978, most recently as a general manager of fuels and convenience retailing. Part of her job was to develop Shell startup ventures, so the step from multinational corporation to a company emerging from its research and development phase is not as big as it seems.
Hirstein started with Shell in 1977 and last held the position of manager of property and planning. He has worked closely with Winfrey since 1996. They were both interested in working with a smaller company.
"You don't have the deep pockets of Shell, but there is no big bureaucracy, and we're not competing with other ventures for access to the deep pockets either," Hirstein said.
International Fuel posted a loss of more than $1 million on $48 in revenue for the first quarter of this year. However, analysts covering the company are excited about its prospects because it has more than $1 million in cash and no debt.
Total invested capital in the company is about $180 million, and estimated market opportunity is set at $5.5 billion for the fuel additive the company developed.
St. Louis lawyer Rex Carr is on International Fuel's board and is the largest individual shareholder, with 27 percent of the company's stock.
"The additive increases fuel efficiency by about 7 percent," Carr said. "The way I see it, we increase the world's oil supply by 7 percent."
Both investors and analysts are extremely optimistic about the company's product. The challenge for the two new executives is to take the company to the next level by commercializing the product and creating a sound financial structure. Many of the opportunities the company has developed globally are in the industrial market, including energy companies and other high volume users, such as transportation.
"Our biggest challenge is to increase volume and satisfy demand," Winfrey said. "International Fuel has done a tremendous job turning out global opportunities, now we need to transform those into actual sales."
She is not yet ready to put out revenue projections or timelines.
Chuck Jaffe, a columnist with Dow Jones MarketWatch, said International Fuel's biggest challenge is to prove the product delivers on its promise. The benchmark tests could provide the company with revenue, or end in a situation where the benchmarks are too good to be believed.
"Customers will say 'You are so far out of the norm, let me see you do it,' again, and again," he said.
Jaffe said the challenge for the executives is to turn what looks like a good product into good stock for investors. The two executives are careful to characterize market opportunities as opportunities, rather than actual sales.
"There is a general feeling among fuel consumers that the additives industry makes a bunch of claims they can't follow through," Hirstein said. "We need to convince the consumers that our product works."
International Fuel already ordered additional tests from Southwest Research Institute in San Antonio, Texas, and at Prodrive in the United Kingdom. The company also initiated benchmark efficiency trials with major fuel consumers in India, the Philippines, and with the Indiana Railroad here in the United States.
International Fuel issued a press release Wednesday to address the recent volatility in the stock. On May 25, the stock hit a low of $0.72 and 1.15 million stock were traded -- that is more than 10 times the average trading of the stock. Jaffe wrote a column on May 27 criticizing International Fuel investor Dion Friedland for using his position as a respected hedge fund manager to tout the stock in a press release five days earlier.
"The company has an extremely interesting product, but we know that the average investor bails out with a price movement of 25 percent," Jaffe said. "International Fuel moves more than that in a day. This is not a stock for small investors, like the ones I write for.
Friedland recently started Fuel Technologies Ltd., which will distribute the product in Africa, the Indian sub-continent and parts of Europe. He projected that his distribution company will start generating revenue within the next six months and defends his press release by saying he wanted to make people aware of the distribution possibilities.
International Fuel's chairman and chief executive, Jonathan Burst, said no executive officer or director has sold International Fuel stock in 2004 or 2005.
"We have committed financial backers that believe in International Fuel Technology," he said. "Our technology works, our distribution channels are in place, and we are working on signing contracts that will lead to revenue. We expect to sign a number of such contracts in 2005."
AI
