Wednesday, August 30, 2006

Force Protection--A Cult Following

Charles Bradlaugh (1833 – 1891), a colorful freethinker and political activist in England, said: “Without free speech no search for truth is possible... no discovery of truth is useful.”

When I posted the commentary on Force Protection yesterday, I did not know that I was stepping on a landmine—planted by the ‘longs’ in the Common Stock! According to, the days to cover the open short interest in Force Protection (FRPT) is only 1.2 days (779,931 shares shorted). Looking at the comments left on my blog, however, the BULLS believe that my posting is part of some concerted ‘SHORT’ conspiracy to test their faith:

  • “I think if you had a son over in Iraq you would be begging for him to be in a Cougar. Your little write-up about FRPT seems suspicious at best. You sound more like a short.”

[Ed. reply: You are correct—if I had a son in Iraq, I would want him to travel in a blast-protected military vehicle like the Cougar. It is the policy of the 10Q Detective to fully disclose whether or not I or any of my staff has a position—long or short—in any stock that is posted on this blog. To be honest, I wish that I established a long position in the Common Stock of Force Protection—nine months ago when the share price was still trading at the $1.00 per share level. That said—I’m sorry, but the current valuation—given MY ASSUMPTIONS—is ahead of the fundamentals.]

  • “Please!....U are missing the big picture of FRPT....I suggest U continue to do greater DD [sic. Due Diligence] via contacting Marc Robbins at Catalyst Financial(its obvious U didn't!), and read the FRPT Ragingbull message board(there is some really great info there).”

[Ed. reply: I spent more than fifteen hours—yes, 15 hours, doing the necessary due diligence sufficient to write a ‘balanced’ report.]

[Ed. Response: And speaking of Full Disclosure: Force Protection is paying Catalyst Financial Resources $6,000 per month for 12 months for services rendered.]

  • “FRPT pps [sic. Price per Share] will be north of $20+ next year (conservatively)....why?? The demand for FRPT's products are staggering World-wide….”

[Ed. Reply: Even if the demand is outstripping supply, where do you come out with a $20.00 valuation? The Company’s (factory) capacity utilization cannot put out enough Cougars on a monthly basis to justify such an exorbitant P/S ratio. And remember-the DoD can cancel any contract at any time. If a Democrat—like H. Clinton is elected in 2008—watch out saith the Republicans]


[Ed. reply: You are correct. As long as man has the capacity and the free will to kill—he will. War is not going away. Read my recent posting on Halliburton Corp. WAR—What is it good for? P-R-O-F-I-T-S!]

  • "…you were remiss by failing to mention the Force Protection / BAE alliance which is supplying Cougars for the Iraqi police (over 1,000 vehicles).”

[Ed. Reply: Force Protection is the subcontractor on a BAE Systems agreement to supply (up to) 1,050 Light Armored Vehicles to the Iraqi army. The Iraqi Light Armored Vehicles are similar to the Cougar armored vehicles and will include Force Protection's V-shaped hull designed to deflect the force of explosions away from passengers inside the armored hull.]

  • “I would like to know in all of your analysys [sic. Spelling] why there is no mention of the contract with the U.K. This in itself shows that the companies [sic.] future is looking much brighter and has not only the need to expand but is gaining the capitol [sic.] to expand. If you decide to revise your review you might want to add that part in.”

[Ed. note. This contract announcement was mentioned in the posting: [See Investment Risks & Considerations. Force Protection markets its products to a limited customer base…. As previously mentioned, the Company did just receive a contract with the British government for 85 Cougar armored vehicles.]

  • Are you part of Al Qaeda? Only Al Qaeda has a beef with Force Protection….Be sure and tell Osama those IED's aren't working on the Cougar's and Buffalo's. Maybe you should ride in one of those Humvee's over an IED and you might have a different prospective on FRPT. Better yet, interview a young soilder [sic] sitting in a hospital missing an arm or leg because he wasn't provided a Cougar. You should be ashamed Mr. Phillips!
  • “Dude, this analysis isn't even on a 3rd grade level. Did you actually recommend paying a defense lobyist? Right...great idea…..”
  • “I just would like to remind everyone what a schmuck and bad stock picker Cramer is. THIS GUY ONE OF HIS BITCHES.”

[Ed. note. Yup. Ad hominem argument wins me over every time! Who is the research analyst/firm making $72,000 for coming out with a bullish report on Force Protection? The 10Q Detective does not receive remuneration for any posting—good news or bad.]

A famous line from an ode by Horace goes—"Dulce et decorum est / Pro patria mori," (meaning "It is sweet and proper to die for the fatherland")—I guess the same goes for a cult.

As I said in my original posting: (For the BULLS)—A turnaround at Force Protection is well underway…(Now one for the BEARS)—but lingering concerns on future contract wins will likely put a ceiling on further multiple expansion….(And, now one for the BULLS)—A step-up in new product flow coupled with new contract wins—especially Humvee replacement orders—are the necessary positive catalysts for additional short-term trading gains in the price of the Common Stock….And, now to Duck and Cover—The 10Q Detective, however, prefers to stay on the sidelines….


Anonymous said...

I am going to hold you personally responsible if FRPT's share price goes down! LOL!!!!!!

Anonymous said...

Not a cult, just a bunch of shareholders that like to see all the facts reported instead of a select few. You never did disclose your motive for writing on FRPT did you?

Anonymous said...

You did answer the question if you are part of al queda or not?

Zforce said...

David....I'm one of the 'cult' longs, in FRPT since early 2004, and I think you did a reasonable job in your analysis. And there are a number of others at Raging Bull who feel the same. MANY of us were told by more traditional investors that FRPT was a bad investment. And for about two years they were right. For many, it was simply an act of faith to stay in....and we've been rewarded.

What your due diligence doesn't necessarily uncover is the knowledge of how well the original founders did their R&D homework, developing and constantly improving vehicle prototypes in the Iraq....working closely with the DOD. The end user has had an enormous input on the design of FRPT vehicles...and as a result the end users (our troops) have created a great hue and cry for more of the same, because the results have been not one fatality in three years using FRPT vehicles.

Many of us stuck with this stock DESPITE poor management, because we recognized the value of the technology....and that no matter how badly the business side was managed....the end goal was to save the lives of our troops, and of people assigned to clear minefields in other areas of the globe. We had faith that the value and realization of the technology would ultimately be of great value to us as investors. The originaly founders may not have been great businessmen, but they certainly achieved what they set out to do....and the prospects continue to look great to 'the faithful'..... :)

Anonymous said...

Dear Mr. Phillips; I thank you for your research and opinion on frpt, and thank you for your civilized response to the comments on your original article.

Anonymous said...

10Q has a motive, why in the world would this guy go to all this trouble posting such a detailed analysis and then respond like a woman to all the replies. There is a motive here boys and it will play out in due time. This guys isn't Mr. Nice as he would have you believe.

Anonymous said...

I think you are incorrect surrouning the political environment in addition to other inaccuracies and ommisions in your report. Do you really think the Democrats would stop funding for blast protected vehicles for which there have been NO casualties in 3 years. Talk about political suicide...

Anonymous said...

You wrote, "[Ed. Reply: Force Protection is the subcontractor on a BAE Systems agreement to supply (up to) 1,050 Light Armored Vehicles to the Iraqi army. The Iraqi Light Armored Vehicles are similar to the Cougar armored vehicles and will include Force Protection's V-shaped hull designed to deflect the force of explosions away from passengers inside the armored hull.]"

What you fail to mention is that although FRPT is the subcontractor, they retain all rights to the design, they have exclusive rights to the underlying technology from South Africa. FRPT also gets all the service and support work for this contract. In the long run, that is the most profitable part of the project.

BAE had their own vehicle but made the choice to go with the force protection vehicle. There was a good reason for that decision.

Anonymous said...

I appreciate your report and the publicity/outcry you have created. Thank you for your DD and informative information. I might be considered one in the cult, but do not disregards the negative aspects of a company. The risks you have identified with this company are spot on. If you had been researching this company for the last three years, as most people complaining in their posts have, you may have answered some of your own questions and perhaps provided additional information that new investors would find valuable. Hope you have enjoyed some of the responses and take most of them with a grain of salt. Like others have posted, the ragingbull message board has perhaps some of the most well-researched investors of any stock I have ever looked into. I believe in the short future you will be seeing some additional information to follow up on: Major listing, new orders, new board members, auditor change, PR stating increased capacity, and many other improvements.
Irrelevant of buy/hold/sell recommendations, FRPT is certainly a fun story to watch, especially for a small growing company. Again, thank you for your report.

Anonymous said...

David, Bud you sound dumber by the minute. Just who are you trying to help here. A small "American" start-up company with life saving technology, the private investor, shorts, or do you want a better entry price. Everyone has a motive, what's your's dude. Do you make a living doing this (half ass) kind of due diligence on companies and then sending it out and don't expect a responce. You need to stick to index fund investing because you'll never make money buying common stocks. You've been "bitched slapped" and all you can say is "cult".

Anonymous said...

Cult this Asshole:

Sit your pompous ass in a Humvee over in Iraq and you will have a little different tune.

Anonymous said...

No cult David, just, I'm going to say, 90% former or current military. So yes we are very passionate about Force Protection. Goes alittle deeper than you will ever know. I'm guessing by your profile that you never served for your country. Most of us have been "takened" someway or another by college boys like yourself. Has a feeling of someone trying to steal our shares. But trust me, "longs" have strong hands. A person like yourself will never shake them out. What little money I have is all invested in FRPT. Thanks for trying to help us out with our investment, but your opinion means nothing to us. I can't find anything better to put my money into than "Force Protection". Giving my brothers and sisters in our military the access to these vehicles by supporting this company is the noblest thing for us to do. Maybe we make some money also. Who deserves it more? US or you. GOD BLESS OUR TROOPS! PS: Watch out for our land mines.

Anonymous said...

I talked with the Street.Com today. They assured me they will never publish anything from the 10Q Detective again on their website. They said they have received several complaints.

Anonymous said...

If I was considering investing in FRPT (I'm not), the sort of comments I see here would scare me away.

Investing is not about joining a fan club for the company you are investing in. I'm never annoyed by people posting negative articles about a company I own, particularily someone like David. One of the worst flaws an investor can have to to ignore negative opinions.

You don't have to agree with David, but consider what he has written, do your research (which should be more than reading postings on Raging Bull) and decide if you want to continue to hold the stock. Simple as that.

trustthetape said...

Some of my issues with David's evaluation of FRPT is that he was inacccurate and incomplete in so many respects. Some of these include the following:

There was also some information that I found either missing or inaccurate:

1. Revenue is projected to double in 2007 to approximately $455m with earnings of $.95/share:

2. Company has a competitive differentiator in the South African V shaped Hull technology and the South African blast protection wheel technology. There are various other competitive differentiators relative to armor and vehicle occupant protection but due to its sensitive nature I'll not mention them here.

3. Production capability is being tripled and that expansion supports projected revenue growth:

4. Company is debt free and with recent capital raise of approximately $40m is well positioned for future growth

5. In addition to the Marines, ARmy and Brits, the Iraqi's are also a customer. The work with Iraq is being performed thru BAE where BAE opted to use FRPT products instead of their own and is paying FRPT a license fee for each vehicle produced for the Iraq forces.

6. Accumulated deficit of $48.9m will result in favorable tax treatment of gains in future years

7. There are approximately 140,000 Humvees (no 14,000 as David states) and all indications are that FRPT is well positioned (but not guaranteed) to capture this market.

Unfortunately, when David was made aware of his research shortcomings he chose to take the low road (e.g., FRPT has a cult following) as opposed to addressing his own shortcomings. I would have thought that the "10Q Detective", having spent 14 hours performing due diligence on a company would have been more accurate and complete in his work.

Regardless, I hope he continues to follow the company and offer his opinions. Perhaps his work will improve over time. Whether he ever buys the stock or stays on the sidelines indefinitely is not of my concern. I'm just seeking the truth. As his quoted Bradlaugh stated "Without free speech no search for truth is discovery of truth is useful". C'mon David rise above the rest and focus on the truth instead of your BS "cult following" focus.

Anonymous said...

Nice response. Facts usually has a way of rising to the top.

Anonymous said...

I have read many of Davids posts. He has always been fair. But I think on this one he just missed some stuff. Anyway he brought this amazing company to my attention and now I am a proud shareholder of great american company saving american troops lives. These shares are selling at such a bargain right now anyone not buying is missing a huge opportunity. This company is going to skyrocket in the very near future. Again thanks David, I look forwar to more posts and I wouldnt sit on the sidelines much longer on this one!

Anonymous said...

Looks like the 10Q likes to short these small companies after reading his picks summary. I just hope he shorts FRPT, after reading his write up it looks like he did. It will not be pretty for him over the next year as a short. GO FRPT!!!

Anonymous said...,,12389-2348816,00.html

Repoman75 said...

$16.24 closing price on 12/05... HAHAHAHAHAHAHAHAHAHAHA. Nice work detective. You couldn't find your way out of a paper bag. Do your subscribers pay you to LOSE money???

Stick to birdwatching... stocks are not your forte!!

Anonymous said...

I do not understand why the FRPT officers have sold all their stock and will not buy back in if the outlook is promising.They must know something they will not reveal or they are not very smart. In other words put your money where your mouth is.

Calex said...

Holy Shite, David. You sure did drump up a lot of hate mail from the FRPT analysis. With the amount of enemy fire you are taking from the FRPT piece, you would think you had actually gone to Iraq and bombed US soldiers yourself. Your blog is excellent. It's one of the better that I read, and I read a helluva lot of them. Keep doing what you are doing. When so many people are hating your perspective, you know you are doing something right.