Wednesday, February 27, 2008

Bookkeeping: Adding more Foster Wheeler (FWLT)

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As Foster Wheeler (FWLT) continues to suffer from overreaction to yesterday's report, I continue to layer in positions. Adding more here around $64.

The stock's 200 day moving average is just north of $62, which is also the January spike down low in the worst of the market conditions so I would be expecting a move there. How it reacts there will be tell tale.

Again, nothing has changed for 2008 - we had some quarter specific issues that affected earnings, not revenue or contracts or any of those things that matter to an infrastructure stock. That said, we're taking a big hit here, but from these over reactions come good profit opportunities if the thesis is correct. This is almost a carbon copy reaction to what happened last summer in the name. Split adjusted it went from $85 to $150 in a manner of 2 months, once the panic subsided. If we can get half that this time around I'd be thrilled. But that's the logical take - logic never got in the way of a good hype or fear moment. So we'll see how it goes. If the stock breaks the 200 day moving average than I'll probably cut back (not out) and wait for money flow to return to this name.

Foster Wheeler is now a 5.1% position


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