I am selling the last 200 shares in the $39.70s and taking a loss of $1700 in total on this position. Luckily I had dropped the exposure to 0.7% before yesterday's swoon, and the stock bounced from $35 to $40 or so.
Suntech Power is still holding to the party line for revenue for full year 2008, but it is now very back end loaded, which increases risk. Further, a lot of things they said in last Qs conference call (mid November) changed in the back 6 weeks of the quarter (through Dec 31, 2007), which makes me uneasy. Last, the polysilicon shortage is taking much longer than I thought to work through and the glut of small Chinese (non public) PV makers who produce at any cost is hurting the more conservative companies who are actually trying to run a solid business.
Last point, the next time the market gets into Kool Aid mode for more than 3 days I am sure the solar speculators will return and drive these stocks up for no good reason 50% in 3 weeks. But I don't want to rely on Ponzi scheme for investing. We have a few more polysilicon based makers reporting in the next week or two so I am curious what they have to say. But right now, I cannot model STP's 2008 estimates - it could be $1.30, $1.60, $1.90 or $2.30. Too many variables. So I will leave it for the short term speculators. Between now and next quarter will be a lot of uncertainty, so I don't want to have this money sit wasting away for 90 days. The best I see to the upside is $45 and downside could be low to mid $30s so I'll take this near $40 price point.
No position
2 comments:
Hi Mark
As one who failed to sell at higher prices, i am a long term holder of STP now.
I did not like the fact that STP had not hedged for a falling US dollar - it is no secret the the US dollar is being revalued against the yuan -STP now only haved decided to hedge using Euro.
STP for me did not clarify for me why there ASPs had fallen.
Analysts also rate STP very highly with outperforms, for my mind it is far to much optimism in a company that so underperfomed.
The jury is still out on STP for me.
I only hope Dr Shi keeps STP ahead of the curve in Solar technology against a crowded space of compeditors and developing technologies/
Mike, I was disappointed especially since their last guidance was half way through the quarter since they report so late, and their results were so far off what they "said" they'd do. I do believe size and scale still matter and in the long run, STP will be one of the survivors. I just think solar is a difficult space to invest in for next few years as the shakeout happens but I am also sure the next time the market rallies for even a few weeks, many of these stocks will have huge runs as speculators cannot help themselves and will run to old favorites. As I've repeated many times solar was much easier to invest in about 12-15 months ago than now... and I think will be much easier in about 3-4 years after this industry shakeout finalizes ... too much capacity is coming online and I believe we are headed for a period where the capacity of today would be fine for 3-4 years down the road and that dislocation is going to cause some pain. We'll know better when the bottleneck of polysilicon eases, and see how quickly production is ramped.
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