Again, until a 3rd party auditor steps in and blesses what management is saying this stock will have trouble mounting any charge. The risk is, the 3rd party auditor comes in and says the fired controller is correct. However, inventory valuation is a bit of an art, not a science especially in this specific case (how much of the scrap silicon is use-able? up for debate - there is no scientific answer) But what Wall Street hates is uncertainty, over bad news (see how these financial companies go UP once they put a number to their losses, even if the losses are in the multi billions). So uncertainty rules right now and the lemmings are rushing off the ship.
So it's a risk but the stock is a more an animal of emotion right now and those who got on for the ride without knowing much about the industry are getting bucked off. That said, unfortunately Trina Solar (TSL) is seeing damage from this news too.
Long LDK Solar in fund; and (again) long in personal account
2 comments:
Interesting to see your take on this, we just took a 25% stake in our portfolio on this particular company based on the (similar) idea that a successful audit will put the wind back it it's sails.
Regards.
Yes it should provide a heck of a buying opportunity in the long run - you get a few opportunities like this a year; heck we just had one in Garmin (GRMN) - not quite to the same degree. Granted it is a risk pending the audit but again people think all of accounting is black and white, when in fact 70% is black and white, and 30% is firmly grey. So both parties can be 'correct' in some fashion on this name on their assessment (management and the fired controller). A year from now this (I believe) will be a gift. Right now the stock has been moving on herd mentality - pack mentality - and panicked mentality. Hence I swoop in ;)
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