Bookkeeping: Adding more Trina Solar (TSL)

I added more Trina Solar (TSL) today and in fact it has now moved to my #2 position. Just like that - from zero to #2 position in 26 hours. While the solar sector in totality is way over run with speculation, the charts are very overextended, and the valuations stretched - I like Trina Solar for the reasons I explained yesterday [Restarting Trina Solar]. Today, the technicals actually confirmed a near term positive outlook. Before the sector got hit, the stock had made a new (recent) high (surpassing the December 5th high), and a higher high and higher low from yesterday. Even after being hit, it still retained those qualities and as I stated yesterday I wanted to see this stock hold its 50 day moving average (moved up to $50.30 today) which it has.

Now the headwinds are against most of the sector, so it's struggled and while a market I don't trust could work against it, if the market can just hold flattish and the sector as well, I think this stock is poised to make a substantial move. Unfortunately, this has been the red head step child of the group in the past half year, so just when it is ready to "run", both the sector and the market take a hit. But that's ok because it let's us build a large position.

Again, if market / sector forces work against it, and it breaks down below the 50 day moving average I will quickly lighten my position but from a fundamental basis, Trina Solar is many times superior than much of the junk speculators are running up 50% in a week's time in the sector. As one simple example, while there is hand wringing about Trina's gross margins falling below 20%, other companies in the sector of similar ilk have posted gross margins of late in the 5-15% range (and these stocks have run up over 100% in the past month) - while Trina has lied like a dog hit by a car on the side of the road since all investors (at this point in this sector) care about is revenue growth and not profit margins. Once capacity comes online for this stock it should be able to prove the naysayers wrong but this might take some time. But unlike some of the junk that speculators have run to (some of which have just a dream of reaching Trina's level), one can sleep at night knowing this is a viable business with real fundamentals underneath. Now we just hope the market (perception is reality) is coming back to this story. If so we should see a print north of $60 sooner rather than later.

Trina Solar is now up to a 4.4% position.

Long Trina Solar in fund and in personal account