Tuesday, November 13, 2007

Hmm, LDK Solar (LDK) Down 9% While Rest of Sector Bounces

I don't have any special insight on why this is, but LDK Solar (LDK) is down 9% as the rest of the sector bounces 2-8% from it's enormous sell off. This is the type of price action that is quite scary. I exited the last of my position in the solar mania of ... .last Thursday? (oh how quickly things can change) and reinforces the Wall Street adage - sell your losers. I took a 12.4% loss in the position. [Selling LDK Solar in the Mania the is Solar]

I still think this is name that could spike 40% in an instant if the "all clear" signal is sounded, but each week that passes where we don't hear about the 3rd party audit makes me more concerned. Should be one of the most interesting earnings calls of the quarter - potential for a move either way of a huge magnitude. For riverboat gamblers, a great stock. For me, not so much.

However, it it does report some issues and the stock trades down heavily (err, even more heavily) post announcement - it could create a good opportunity for long term investors. Their business is still legit, and in a nice place in the food chain of the solar industry - and even if their true gross margins are low 20%s instead of low 30%s, they have a booming business. But until we hear from the horse's mouth (3rd party auditors) it's too much risk. My assumption was that they would get those 3rd party auditors in immediately, and we'd have results within a few weeks. Since that did not happen, I chose to take the low risk route and exit.

Seriously, were these stocks really that much higher last Thursday? What a sector - manias are so interesting to watch ;)

No position

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