Finally, the world seems to have caught on that Obama will save solar. These stocks, which we've been waiting to catch Obama Fever, are finally flying - maybe Obama whispered something about them yesterday. I have been waiting for some big move so I can get the heck out of dodge on some major losing positions with "less" of a loss.
On the flip side, A-Power Energy (APWR) is a Chinese infrastructure play that is just starting into wind turbine mfg. However, US investors have cast it as an "alternative energy" stock so it trades with solar stocks. Unfortunately.
We literally just did this trade a week ago but we are getting the chance again - amazing. Last Wednesday in the "Thanks Obama entry"
Cutting A-Power Energy (APWR) from a 3.4% stake to 2.4% stake (taking 30% of position off the table) as the stock rallies to $5.20s. Note, I believe fair value for this stock is far (FAR!) higher but this is just a trading call - when the stock gets back over its 50 day moving average this will be a far larger stake in the fund as I think fair value lies in the $20s+. The market disagrees with me. Much of this was bought in the upper $3s to lower $4s, so we have about a 30% gain on that batch (still at a large loss on the overall position) Obama is so powerful he even impacts Chinese infrastructure stocks.
Two days later the stock was back down in the $4.60s...
Obama loves wind energy - he is so powerful he can even cause Chinese wind power to blossom. I sold 1% of the A-Power Energy (APWR) position Friday in the $5.20s (down from 3.4% to 2.4%) and now can return in the $4.60s so I shall (we'll take it back up to a 3.6% stake). On any breakout over $6.50 I might make this a 6-8% position like the old days when we actually held stocks in such large positions, instead of hiding in ETFs and cash. But for now all we can do is trade it below resistance levels. This is about 11% below where we sold it, 48 hours ago.
It fell to the $4.30s yesterday so I added a touch more to make it a 4.0% stake. So we've now had two round trips in a week on this name. Again, incredible.
Since I think the solar stocks have do not have "Obamatism" built into their price they could fly much higher once people who obviously do not read his speeches realize he loves alternative energy, so I don't want to sell quite that much of A-Power. Which again has nothing to do with solar except in the stock market view. So we're going to take another 1% off the table here, down from 4% stake to 3% selling in the $5.20s (again, just like a week ago today). If we can rebuy in the $4.50s Friday (like last week), we'll keep repeating this round trip time after time until someone realizes this stock should be $20.
The 50 day moving average is falling rapidly and now is around $6. My hope is once this stock (if ever) breaks over that level we could have a serious move up. Hence why I am hesitant to cut this position back to a 1-2% stake - eventually someone will wake up to the valuation here and a triple could be had in a few weeks. This company has gone up 55% in 1 day before - so if you are out, you miss it [Oct 13: A-Power Energy Up 55%] This is a company on track to make $2 EPS next year and has a whopping 2x forward PE (less if you exclude cash on balance sheet). The valuation is a joke and has been for months. But it seems to be a prisoner for now - stuck in the solar stock arena.
Again, Obama hearts solar - now that I see no one notices things until Obama says it explicitly (see people ignoring Obama hearting infrastructure until he said it explicitly for the 82th time on Meet the Press) we have to wait for Obama to say "I want a solar panel on every house in America" and then all solar stocks can rise 500% in 4 sessions. Honestly the more I read about what is going on in solar - the long term commoditization I feared happening "later" (2010-2011?) looks much closer than I assumed a year ago [Jan 3: The Long Term in Solar] - so I like the sector in a macro sense (the demand for solar shall grow) but these companies are going to rip the hearts out of each other trying to make profits - and many will die along the line. So it's tough to invest in. But I believe Obama hype alone can drive these stocks at some point - and when they move, they can double in a week.
APWR on the other hand, while trading like a solar stock, has none of those issues. So I actually like it on something other than Obama hype.
So in summary - solar is a cut throat business, and 2009 will be a tough year but Obama hype should cause these stocks to skyrocket at a few points through the year. APWR is dirt cheap and people think its a solar stock for some reason. Or trade it like it is. APWR sould be $20+. Once it breaks the 50 day moving average, we'll make it a serious position and ask Obama to mention it in a speech.
Long A-Power Energy in fund and personal account
