Power Solutions International, Inc. (PSIX): A Bear Case Theory

We came across a bearish thesis on Power Solutions International, Inc. on Waterboy Stocks’s Substack. In this article, we will summarize the bulls’ thesis on PSIX. Power Solutions International, Inc.'s share was trading at $103.72 as of September 26th. PSIX’s trailing P/E was 21.56 according to Yahoo Finance.

Power Solutions International (PSIX) has seen its stock surge nearly 4,500% over the past thirty months, but insiders are now selling heavily, raising concerns about aggressive accounting practices. The company, once led by former CEO Gary Winemaster—charged in 2019 with accounting fraud for inflating revenues—appears to have shifted control to Chinese majority owner Weichai Power.

Today, the board is dominated by Chinese executives, with longtime director Kenneth Landini recently resigning after criticizing governance failures, risk oversight lapses, and the refusal to reward management with equity compensation despite extraordinary share price gains. His departure leaves only one U.S. director, Frank Simpkins, who sits on the audit committee and has signed off on PSIX’s unusual revenue trends.

PSIX designs and sells clean-fuel engines for industries including agriculture, construction, and energy. While reported revenue has remained flat, moving from $481 million in 2022 to $476 million in 2024, the composition has changed sharply. “Point in time” revenue from traditional sales has declined steadily, while “over time” revenue tied to customer-controlled assets surged 155% over two years, coinciding with the arrival of CFO Xun Li in 2022. Over the same period, EBITDA more than doubled, rising 123% to $88.3 million, despite stagnant overall sales.

The company attributes its performance to growth in data center and energy markets, yet the absence of earnings calls for five years, reliance on opaque accounting, and governance dominated by foreign control fuel skepticism. With insiders exiting and margins appearing artificially inflated, PSIX’s rally may prove to be more financial engineering than operational success.

Previously we covered a bullish thesis on Power Solutions International, Inc. (PSIX) by LongTermValue Research in April 2025, which highlighted its pivot to AI datacenter power, margin expansion, and discounted valuation. The company’s stock price has appreciated approximately 300% since our coverage as the thesis played out. The thesis still stands, while Waterboy Stocks shares a contrarian view emphasizing governance and accounting risks.

Power Solutions International, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held PSIX at the end of the second quarter which was 13 in the previous quarter. While we acknowledge the potential of PSIX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.