Thursday, September 11, 2008

Solar: No Fun In The Sun: Solar Shares Extend Swoon As Collins Stewart Cuts Estimates, Calyon Chops Price Targets (but likes 'em here)

One of my mentors* used to say "Stocks are smarter than Analysts". He also said (in no particular order):
Stocks are smarter than Investment Bankers
Stocks are smarter than Fund Managers
Stocks are smarter than Brokers
He was skeptical of human nature and cynical about human arrogance. He was very rich. Had he lived to see my cyber-punditry I am sure he would have added "Stocks are smarter than bloggers".
Having said that, he would probably agree with Mr. Ries' assessment as do I.
(hence all the harping on Trina and the dollar. Macro, baby, macro)
From Tech Trader Daily:

Here we go again. Solar stocks are off to another difficult morning, as a pair or analysts issue downbeat reports on the sector, citing concerns about the impact on earnings of the weakening Euro - and adjusting for a reduced investor appetite for the shares in the face of retreating oil prices.

Collins Stewart analyst Dan Ries this morning notes that the Euro has weakened 6% against the dollar since mid-August; the current rate of about 1.42 Euros to the dollar is down 10% from a Q2 average 1.56. That’s trouble for the solar industry, which as Ries notes generates 70% of its sales in Euros. (Thanks to lucrative subsidies, Germany and Spain remain the largest single markets for solar products.) Making things worse, Ries notes, is the fact that most U.S.-listed solar stocks have costs denominated in dollars or Chinese RMB. “With ASPs declining while costs stay constant, there will likely be pressure on gross margins and EPS,” he writes.

Ries notes that solar stocks are already down about 24% this month, and that while he is lowering his estimate to account for the currency factor, “we do not want to perceived as having a negative outlook at this point, as we believe the current share prices of solar stocks reflect a far worse demand environment than we believe is likely to occur” in 2009. He adds: “We believe we are near a bottom in solar shares!”>>>MORE

*From "Sell 'em All, They Aren't Worth the Paper They're Printed On"

I've mentioned* that one of my mentors was the best trader I've ever met. Creative, intelligent, disciplined (and bankrolled).
From time to time though, he would lose his mind and run around the floor screaming

"Sell 'em all, they aren't worth the paper they're printed on"....

From *"Can you trust the First Bank of Nigeria?"

*One of my mentors, and one of the sharpest traders I ever met, had the most common flaw of students of markets, hubris. In his case it was non-fatal, more of a cost of doing business:
1) He had somehow ended up with some of the
Boston Chicken-Einstein/Noah bagel bonds. We know how that worked out:
...Short-sellers got teary-eyed this week following word that old faithful Boston Chicken (Nasdaq: BOST) finally bit the Chapter 11 bankruptcy dust. Though hardly unexpected, Monday's announcement dropped the stock to $0.50 a share, down an astonishing 97% from its 52-week high near $16.
Source (scroll to "A Chicken Autopsy")
He knew it was a finance scam "but the debentures paid 11%"

2) He got into a rigged blackjack game in Yugoslavia. Lost half-a-mil. Said he started to think it was was fixed when he was down a couple hundred.
Wife: "Then why the hell did you keep playing?"
Him: "I thought I could beat it".