Wednesday, May 14, 2008

Bookkeeping: Been Building Trina Solar (TSL) this Week

While I've cut back on my other solar positions, the best fundamental value in this space remains Trina Solar (TSL) - only the technical picture has lagged on this name. We had a nice trade in this stock after a big spike (which it gave back) in mid April [Apr 15: Bookkeeping - Locking in Trina Solar Gains] so I keep waiting for "the" (sustained) move which I still believe is coming. I've been building this stake throughout the week, and the stock now approached a critical juncture.... after literally building a base in the $40-$45 range for 1 month, it looks poised to make a very serious move (the longer the base, the bigger the move). The only question is direction of said move. Could be down, could be up - earnings will probably determine it more than anything but last quarter's earnings, were in my opinion, the best of the entire polysilicon group. [Mar 4: Long Suffering Trina Solar Finally Gets some Relief] And the stock did not get rewarded for it.

The 200 day moving average is just under $46 which is where the stock has moved up to today. So it's a headwind for now. Tomorrow's earning reports in the sector will affect Trina Solar because investors clump all these names together, but my fair value for this stock is substantially higher... the stock has simply not responded in kind like its more speculative peers. But once it moves, I think this is one that will really punch the lights out.

I've built Trina Solar (TSL) back up to a 3.3% stake Monday through this AM, and if/when the stock breaks above its 200 day moving average I'll be adding more (could be later in the day). Frankly this stock has been a sizeable loser for the portfolio, despite a good trade about a month ago, but I believe the back half of 2008 will be this stock's time to shine. And 2009 will be even better. Now if it could only break through resistance...

So essentially I've kept my "sector allocation" to solar pretty consistent, but I've shifted heavily into this name versus the other two we hold.

EDIT 11:30 AM: $46 is now breached so raising allocation from 3.3% to 5.9% of fund.

Long Trina Solar in fund and personal account

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