Bookkeeping: Trina Solar (TSL) Missed It's Chance for Glory

I am really gritting my teeth at this missed opportunity for Trina Solar (TSL) management to finally reward its shareholders... some of which have been sticking with (or around) them since last summer, only to be disappointed time after time. My long term thesis on this name has not changed, and I believe the 2nd half of the year will be explosive. It still trades at a huge discount to the group, which most likely is (a) management discount - a leadership team that loves to surprise us with new adventures that no one else in the group embarks upon - Wall Street however hates surprises and (b) potential dilutive equity offering to fund 2009 operations coming later in the year. While most people would be more concerned with (b), I am more concerned with (a). Last year they surprised the Street with a big annual bonus to management that knocked the earnings per share off kilter mid year and we are approaching the same time frame next quarter - so that could be the next "surprise".

This one really has me conflicted - I could see this as a triple digit stock by early 2009 (or earlier if the management would stop pulling these surprises and let the momentum sheep jump onto the back of this story), but the solar sector is one of those groups that will not hold up if the market sells off, and Trina's huge discount to the group won't matter much; it will sell off with peers.

So this is my game plan for now, and I'll let technicals guide me more than anything. 200 day moving average = $45, 50 day moving average = $42. (exponential on both, simple shows different numbers) We just broke through the 200 day moving average so if the stock does not rebound by late in the day, we have a negative situation. If we break that $42 level, then it gets much more negative in the near term, and I'll have to cut back more, awaiting a sign of strength. The problem with this sector is when it falls out of favor, the stocks do not drop 6%, they drop 26% - and it can happen in 2 sessions. Valuation be damned. If Trina Solar drops to $40 or below it will start getting comical, forward PE ratio of 10 for 100% growth. But no one said the market was logical...

So for now I'm cutting this stake back (it remains as #1 position) from 10% to 6.1%, with sales here in the low $44s. This reverses my purchase from Friday in the $45s/$46s (plus a bit more) - yes I flip flopped. Most of my purchases are in the low to mid $40s so overall it's ok - basically we've just given away all our gains as the stock peeked its head into the low $50s last Thursday, but we should of had a $60+ stock if management hadn't decided it is time to play the forex game. So our unrealized gains all washed away into the ether. If we break below that $42 we'll be forced to cut back a bit further. One day we'll look back at this and laugh but right now (and for the past 4 quarters) this company has simply been an exercise in frustration - especially considering the rocket moves in some of its peers. I don't want 10% of my portfolio weighted to a management team who apparently doesn't have consideration for communication with its investors or analysts (unless the chart tells us otherwise). This is yet another quarter where they missed their chance - that's 3 out of the last 4.

Long Trina Solar in fund and personal account; short the "innovative" management team