Small Cap Ocean Power Technologies (OPTT) Fires the CEO “For Cause:” Now What? ORA, BWEN & MY

Small cap Ocean Power Technologies Inc (NASDAQ: OPTT) just sank 34% on news that they have fired their CEO "for cause," meaning its worth taking a closer look at the stock to see if there is anything to salvage (shares were rising more than 6% in after hours) plus take a look at the performance of potential renewable energy related peers like Ormat Technologies, Inc (NYSE: ORA), Broadwind Energy Inc (NASDAQ: BWEN) and China Ming Yang Wind Power Group Ltd (NYSE: MY).

What is Ocean Power Technologies Inc?

Small cap Ocean Power Technologies is a leading renewable energy company specializing in cost-effective, advanced and environmentally sound wave power technology. Specifically, Ocean Power Technologies's PowerBuoy® system integrates patented technologies in hydrodynamics, electronics, energy conversion and computer control systems to extract the natural energy in ocean waves. The result is a leading edge, ocean-tested, proprietary system that turns wave power into reliable, clean and environmentally beneficial electricity.

As for potential performance benchmarks in the renewable energy space, Israel based Ormat Technologies has over four decades of experience in the development of state-of-the-art, environmentally sound power solutions, primarily in geothermal and recovered energy generation; Broadwind Energy is involved in everything from gears and gearing systems for wind, oil and gas and mining applications, to wind towers, to comprehensive remanufacturing of gearboxes and blades, to operations and maintenance services, and industrial weldments; and China based China Ming Yang Wind Power Group Ltd is a designer, manufacturer, seller and servicer of megawatt-class wind turbines and integrated solutions of clean energy.

What You Need to Know or Be Warned About Ocean Power Technologies Inc

On Tuesday, Ocean Power Technologies announced that it has terminated Charles F. Dunleavy as CEO, effective June 9, 2014. He has also been removed from his position as Chairman of the Board of Directors. The Form 8-K noted:

(b) On June 9, 2014, Charles F. Dunleavy was terminated, effective immediately, as the Chief Executive Officer of Ocean Power Technologies, Inc. (the "Company") and as an employee of the Company and its subsidiaries. His termination was for cause, and Mr. Dunleavy will not receive any severance payments under his employment agreement with the Company.

The press release about the firing noted:

Today the Company also announced that the Board of Directors has appointed a Special Committee, composed of outside directors and the Interim Chief Executive Officer, to conduct an internal investigation into the agreement between Victorian Wave Partners Pty Ltd, a project-specific operating entity wholly-owned by the Company's subsidiary Ocean Power Technologies (Australia) Pty Ltd, and the Australian Renewable Energy Agency, and related public statements concerning that project. The Special Committee will retain outside counsel to assist in this investigation.

And:

The Company does not believe any issues the Special Committee will investigate will affect its previously filed financial statements. The Company does not anticipate restating any of its financial statements, and the Company anticipates it will file its upcoming annual report on time.

Naturally the firing has attracted the attention of so-called shareholder rights law firms who are already issuing press releases about lawsuits. However, its very difficult to have a clear picture of what is going on, but firing the CEO "for cause" will help to put some distance between the company and whatever funny business he might have been involved with.

Aside from the firing, it should be noted that in early April, Ocean Power Technologies issued 3,800,000 shares of its common stock at a price of $3.10 per share. Ocean Power Technologies has also granted to the underwriters a 30-day option to acquire an additional 570,000 shares to cover overallotments and the company was expecting to receive net proceeds of approximately $10.8 million, assuming no exercise of the overallotment option.

Otherwise, it should be mentioned that Ocean Power Technologies has reported revenues of $3.62M (12 months ending 2013-04-30), $5.74M (12 months ending 2012-04-30), $6.69M (12 months ending 2011-04-30) and $5.10M (12 months ending 2010-04-30) along with net losses of $14.68M (12 months ending 2013-04-30), $15.14M (12 months ending 2012-04-30), $20.44M (12 months ending 2011-04-30) and $19.17M (12 months ending 2010-04-30). At the end of April, Ocean Power Technologies had $20.37M in cash/short term investments to cover $5.63M in current liabilities and $0.25M in total long term debt. 

Share Performance: Ocean Power Technologies Inc vs. ORA, BWEN & MY

On Tuesday, small cap Ocean Power Technologies sank 34% to $1.63 (OPTT has a 52 week trading range of $1.50 to $7.01 a share) for a market cap of $28.62 million plus the stock is down 15.1% since the start of the year, down 8.9% over the past year and down 76.5% over the past five years. Here is a look at the performance of Ocean Power Technologies verses that of Ormat Technologies, Inc, Broadwind Energy Inc  and China Ming Yang Wind Power Group Ltd:

As you can see from the above chart, all four have pretty much been losers for investors.

Finally, here is a look at the latest technical charts for Ocean Power Technologies, Ormat Technologies, Inc, Broadwind Energy Inc  and China Ming Yang Wind Power Group Ltd:

The Bottom Line. On one hand, investors should give credit to Ocean Power Technologies for taking action. On the other hand, the company has not been profitable nor has the stock or its renewable energy peers been great performers. For those reasons, investors who aren't traders should stay on the sidelines until there is more information about exactly why the CEO was fired.