Wednesday, April 2, 2008

Bookkeeping: Adding some LDK Solar (LDK) as a "Hey you Forgot Me" Play

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I've increased my exposure to LDK Solar (LDK) as it is in exactly the same technical position Trina Solar (TSL) was last night.... below the 50 day moving average but in a more risk loving market, prone to be taken up with the crowd. It is "only" up 7% today ;) - so it's been forgotten in today's monster rally in the group. Now the danger is the solar rally is getting long in the tooth and some of the major tier 1 names now face serious long term resistance but these secondary plays could have some pull to them. I own these 2 names because they are "value" plays that been beaten to death. They are both dirt cheap relative to most of the sector. If we get continued good mood LDK Solar (LDK) could take off tomorrow... but we'd want to see a move over $31 to feel confidant. So I am going to begin to add some exposure to this small stake and then see how the sector reacts tomorrow. I've added today in the $29s and taken the exposure back up to 1.2%. A move above $31, and I'll add in size. (technically the correct action is to actually short LDK here as it approached $31, with a stop loss over $31.50 or so, but when animal spirits enter solar land, technicians get destroyed)

Unfortunately these 2 stocks always move towards the end of the solar sector rallies so they only partake in the last part of the move, and then fully partake in the selloffs. So as each day goes by, this sector move gets a bit long in the tooth and more risk arises for the near term - but again, both stocks are the "value" names in the sector in my opinion so even 10-20% higher would be "cheap". I also have an eye on returning to JA Solar (JASO) as well, but frankly the value proposition in Trina Solar (TSL) is simply the best in the group so I'm sticking with her for now instead of branching out.

Long LDK Solar, Trina Solar in fund; long Trina Solar in personal account


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