Tuesday, June 10, 2008

Okay Mr. Smarty Pants, What About Trina Now? (TSL)

Don't let the sun go down on me.*
As I type this, TSL is trading at $38.00 right back where we first mentioned it two months ago**
Well, long was right, then long was wrong. So what now you ask? Still long. Here are a couple perspectives, the first from Trader Mark at Fund my Mutual Fund:

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"....

...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...MORE

And from Jack Yetiv, posting at Seeking Alpha, some comments on the conference call (under each bolded head he has a short paragraph of explanation):

Further Thoughts on Trina Solar and the Solar Space

Let me summarize what I found so interesting in the TSL conference call, and discuss how this information is useful even to investors who do not hold any TSL:

1) TSL re-affirmed 2008 revenues guidance to between $770 million and $808 million....

2) More importantly, TSL’s operating margin guidance was also re-affirmed for this year—at 15-17%....

...I believe that the analysts will go through the same math I have just done and that earnings estimates for both 2008 and 2009 will be increased by at least 10-15% (to over $3.50) in the next few days.

Therefore, to me, TSL at $41 is a strong buy, not a sell. This does not mean, of course, that TSL may not be able to be bought at $40 or even less. I do not have a crystal ball, and can’t say if TSL will drop further to $40 or even less. What I can say is that TSL has very good support at $40-41, so I think downside risk from there is pretty limited (but anything is possible in the solar space).

But if the analysts do what I expect them to do and upgrade this stock based on increasing 2008 estimates, TSL is far more likely to go up than down from $41.

3) Some parts of the conference call were far more interesting than the above, and have relevance to the whole solar space, not just TSL....

There's quite a bit more and I'm in agreement with just about the entire analysis.
Here's the whole thing

*Here's Elton John and Billy Joel live, you can open it in a new tab to play while you read. The song starts at 1:25 of a seven minute video.

**Trina Solar: Cowen Ups Ests Way Above Consensus (TSL)

Our post from the night before the earnings release:

Thursday, June 5, 2008
Earnings Reminder: Trina Solar 8:00 A.M. EDT June 6

The street consensus is $0.48, the high est. is $0.54, from Cowen, we think they have a shot at $0.75*.
Do not buy or sell a stock based soley on what you read on a blog. That would be dumb de dumb dumb. Here's the conference call info and some of our previous posts. This is the last of the solar's to report this cycle and the earnings pop play may have overstayed its welcome, plus it's up 8% today. The only people who are sure are liars and fools and manipulators, as for me:

"All which a man without authority can give--His unbiased opinion, his honest advice, and his best reasons."
-Edmund Burke (1791)

*Disclosure: We bet on the Germans during the Big One (it looked promising in May of '40)
Oh, we're long too.