Tuesday, December 1, 2015

SunEnergy's TerraForm Yieldco Jumps 40% on News Appaloosa's Tepper Has A Position And Is Not Happy (TERP; SUNE; GLBL)

Think there was a bit of a short interest here?
TERP is currently up 38% at $9.52, Global is up 11.66% and SUNE is up 8.5%.

From Business Insider Australia:

David Tepper sent out a rare angry letter about one of his undisclosed stock positions
Billionaire hedge fund manager David Tepper sent out a rare, public letter to the board of one of his holdings, TerraForm Power (TERP), a company that owns and manages solar energy projects.

Appaloosa, Tepper's fund, holds TerraForm Power stock and senior notes, according to the letter.

TerraForm Power's stock surged 22% in trading on Tuesday on Tepper's disclosure of a position in the company.

The basic crux of the letter is that Tepper is upset about TerraForm Power's relationship with its parent company, SunEdison, a solar power manufacturer.

SunEdison created TerraForm Power as a yieldco — a company that buys solar projects from the sponsor company and manages them like an MLP does for oil and gas companies. These deals are called drop-down transactions.

SunEdison stock is down 83% year to date. TerraForm Power is down 72% over the same period.

Drop-down transactions
In his letter, Tepper accuses SunEdison of pushing low-grade projects onto TerraForm Power through the drop-down transactions. He also accuses SunEdison of stacking TerraForm Power's management and board with SunEdison loyalists during a shake-up last month.

"Thus, it is obvious that the deterioration in TERP's security prices and credit profile this month results from (among other things): (1) the transmission of financial stress related to its "Sponsor's" ambitious growth objectives  and over-extended  financial commitments;  and  (2)  TERP's incomplete  and selective disclosures," Tepper wrote.

What's more, Tepper discussed the event that triggered the precipitous fall in SunEdison's stock price in July — it's announcement that it would purchase residential solar company, Vivint.

To Tepper, the deal signaled that SunEdison was moving toward lower-quality assets — assets that would then be passed on to TerraForm Power....MORE
The 40% move is waaay over on the right side of the chart:

TERP TerraForm Power, Inc. daily Stock Chart