Wednesday, May 28, 2008

The Light At The End Of The Tunnel at Updown

Here's a great rundown of LDK and FSLR from Updown.com.

Found by Parabequ of Yahoo.

Cramer and LDK, my interpretation.

Cramer said some time ago "I hate Chinese," yet he seems to be turning around. It seems that alot of things are coming together for LDK, and Cramer's statements are right in line with this. At the very least, I think that Cramer's statement today in particular, is a bit of an "all clear" for otherwise interested Investors who might have been concerned about swimming against the current, by investing in a company with such a large Short Interest and complicated history. My guess is that the big players, those that surround Cramer, at least, are in a position that they're happy with, and are prepared or preparing to let the price rise.

Cramer again on LDK... Interesting.

"I think people know that I have been too conservative perhaps, in talking about Chinese stocks. I will tell you that LDK Solar Co.Ltd., SOLF... These are the big solar plays. I'm not going to fight anybody who wants to put one-fifth of their Mad Money... after they've put away their S&P Index money... into a speculative name, of which this is just as good as any."

http://www.madmoneyrecap.com/daily_recap_lightninground_052808.htm

Tuesday, May 27, 2008

Cramer on LDK. Interesting...

"LDK - LDK has done well... it's done it without me. I have been liking First Solar (FSLR). That has stalled. And I like Applied Materials (AMAT) as a hybrid tech play. I'm sticking with those two, and have not wanted to go down the food path to the Chinese names, but you're doing with that, and bless you for it."

From http://www.madmoneyrecap.com/daily_recap_lightninground_052708.htm

Thanks to Dannymeetsworld of Yahoo for the link.

Saturday, May 24, 2008

Peak Oil on CNBC.

Robert Hirsch of the Hirsch Report.

Wednesday, May 21, 2008

Here's how I often spend my days... Battling in Livejournal.

The Livejournal Conservatism Community is always alot of fun. I was a bit more agressive this time around, because the particular original poster, Writerspleasure, is a particularly disagreeable individual. He appears to live in Britain, but seems to get maximum joy from convincing Americans that it would be a great idea to tear down their Government for Laissez-faire Capitalism.

Today's notes. ZAAP, LDK.

I bought some ZAAP today. It will probably not be a long term hold. They seem to be a mixed bag. They do seem to have picked up some support from the UAE, and they're rolling out a couple of new products at the end of the month. I talked to a buddy who once worked there. He's extremely smart and knowledgable on the subject of electric vehicles, and he recommended against buying. It was a very brief email, I'll be following up next week over beers. I'll take the risk right now, because the last he's heard appears to be two years ago, and they do seem to have made some progress, and the market is powerfully in support of their product right now.

I'm also buying LDK; it certainly appears to be taking off. I don't know where it's going to go, but it's got alot of room to move. The burden of many thousands of high strike price, out-of-the-money calls will be gone as of June Expiration, which may help to take the lid off, as will as an extra million short shares as of the most recent report.

Tuesday, May 20, 2008

Obama - 05/20/08 - Change.

"Change is an energy policy that doesn't rely on buddying up to the saudi royal family, and then begging them for oil*.


Change is an energy policy that puts a price on pollution and makes the oil companies invest their record profits in clean, renewable sources of energy, that will create millions of jobs, and leaves our children a safer planet."


-Obama 05/20/08

Market tanks, oil blamed. Time to ponder.

Stocks stumble on record oil, inflation worries


It's a day like this when investors and market watchers are reminded of the importance of affordable energy to their future. It's not a bad thing to be reminded of.

Oddly enough, Solar was mixed (See below).




A basic Reminder: when we think "Inflation," we must think "Energy Supply." When we think "Energy Supply," we must not just think "Oil," but also "Coal." Both of these primary sources of Energy are at risk of runaway prices. Therefore, when we think of either of these two forms of Fossil Energy, we must think of the "competition." This should lead us right to "Solar," "Wind," and "Geothermal." We need to stop thinking about Energy only in terms of "Burning Things."

Energy is Conserved, and energy from Fossils is ultimately the same as Energy from the Sun, or the Wind. Yes, the form is different, and the technology required to make use of the different forms of Energy are different, but given that one form of energy is increasing in scarcity, it is incumbent on those who have concern for the Economy to develop additional sources of available Energy. There is simply no choice in the matter. There is no Economy without Energy.

Sunday, May 18, 2008

Thinking Ahead - ASTI Solar.

Promotional Video on Ascent Tech, by Norsk Hydro


When you think thin film, think this: ASTI is integrating into building materials, and will be going up in locations that are impossible to serve with any of today's Silicon-based Tech.

Asti is moving into niche of their own, which is a powerful advantage in a rapidly developing market.

BTW: If you're looking for a brief on what ASTI is all about, here's an Investor's Presentation from last year. It's good stuff.

Thursday, May 15, 2008

TSL vs. STP.

Note that I haven't been paying too much attention to Trina since I was in it for awhile last year, but looking it over right now, I'd say it's sure looking good compared to STP (for earnings purposes, anyway).

Looking back on Q1 news, Trina shone, while Suntech Power looked to be running into obstacles. Plus, the recent Akeena Earnings may be in part reflected in STP's results as they are trading partners. I'm not sure of Trina's geographic distribution, if anyone's got it on hand, I'd love to see to compare.

I'm also pleased that Trina gave up on their poly plans, as they really didn't make sense so late in the game.

I don't own any of either one.

Monday, May 12, 2008

A couple of points: LDK: Regional Distribution, and 1000MT Plant.

Point 1:

From the CC:

34% China
30% Asia / Pacific
33% Europe
3% North America

This is exactly the kind of distribution that we want to see, in the case of a weakening US Economy.

Incidentally, we know that AKNS got creamed the other day, specifically as a result of the Mortgage Meltdown. LDK doesn't look like a candidate for this.

In fact, if you look at their annual report, you'll see that while they hold net debt in Dollars, they have net assets in Euros. Seems like a bet on a further weakening Dollar to me, and seems likely a good bet (nevermind the recent noises that the Dollar was going to Strengthen; I don't believe it).


Point 2:

During the CC, Jesse had questions about the 1000 MT plant, and the impression that he left was that he was somewhat confused by the fact that at the end of Q2 LDK wouldn't actually have that plant COMPLETE. Well, I'll admit that I was confused, too, as also, it sounded like, was one of the other analysts (Kim-Chong Tan, UBS).

The LDK Speaker (Lai?) stuttered alot on the answer. I think he was confused by Jesse's use of the term "mechanically complete."

Answer found.

On November 15th of last year, LDK described EXACLY how it would go. See http://www.ldksolar.com/11-15-07.html

"In line with plans for construction of the plant, LDK announced that it expects to receive the two readily available Siemens technology-based reactors and related plant equipment from Sunways in the fourth quarter 2007 and will begin installation soon thereafter. The Company expects to start trial production of the equipment by the end of second quarter of 2008. Delivery of GT Solar reactors and other long-lead equipment and reactors is expected to commence in the second quarter of 2008 through 2009."

First, I'm not sure what source Jesse is referencing to suggest that LDK claimed "mechanical completeness" of the 1000 MT Plant by the end of Q2.

Looking up "LDK 'mechanically complete'," I get references to the Flour deal for the 15,000 MT plant.

Maybe Mr. Pichel did have a source for that term, and since "mechanically complete" is a somewhat generic term for a benchmark and handoff to the owner for production (as far as I can tell anyway), it could very well have been used to describe the state of just the two Sunways Reactors at the end of Q2.

In any case, there's no foul at all, everything adds up perfectly.

McCain on Wind... Wonk Room

From the Wonk Room.

Lots of Info on McCain's Failed Record on Wind Energy.

LDK Solar Goes into Earnings 5/12/08. Basic Info Round-up.

Short Interest is still a factor in the Short Term Response to LDK Earnings.


Short interest is at a record high, 14,645,718.

Max Pain is $30 - $35.

This says to me that there is still strong downward pressure on the stock. Short interest doesn't like being squeezed. They will work to either protect their shorts by selling or shorting, or by releasing bogus analysis to a willing WS media. They may have already bought up shares to dump on the market at an opportune moment*. Naked Short Shares also play a part**.


A Battle Wages. Who will win the day, Longs, Shorts, or will it be a Draw?


Of course, an overriding factor to the below possibilities will be the quality of LDK’s Quarterly Results. Considering LDK’s current incredibly low valuation, however, even if they just meet expectations, there remain plenty of arguments to support a “Buy.” However, spin shouldn’t be underestimated as a factor over the next few days.


Possible Scenarios.


If Short Interest succeeds in spinning LDK's earnings and plant update negatively, and can create a self-sustained sell-off by dumping shares, then they win the day. This would be a scenario like we saw at the end of December last year. As mentioned below*, I think that they are in less of a position to manufacture this event than they were in December. For one thing, the price is down about 45% from that period.

If, on the other hand, shorts lose control, then we could see the squeeze of a lifetime; 14+ Million Shares Short (and some additional Naked Short Shares) on about 35 Million Shares of Float. This is the kind of event that could send the price back up to new highs by week’s end. Beware of the turnaround, though.

Of course, a draw is possible. Between all of the factors, it could be that the Stock just stays in range. I can’t help but think that this isn’t the mostly likely result.


LDK has come a long way since December (in brief).


LDK has long cleared themselves of the Situ mess (The SEC has favorably concluded their enquiry), and has gained additional credibility by their continued capacity development and new business contracts (See Below).

They've released their first Annual Report, and so there is clear and detailed information out there for Professionals to study.

LDK may have some buying power of its own, with which to protect, or to advance, its price through earnings, and even if they don’t do so, those who recently invested $400 Million in Convertible Bonds now have a stake in this fight, and could get involved in protecting their investment.

With the support of Fluor Corp, LDK continues in the implementation of their grand-scale plans to realize their own poly production. This is a large component of LDK's fundamental value. Much will depend on any updates that they give on the progress of these production plants.

As the US Economy continues to show weakness, LDK has continued to develop Business Relationships with diverse Companies from elsewhere in Asia and Europe. Since December, they’ve announced deals out of Taiwan, India, S. Korea, Canada, Greece, and Germany. These are in addition to the pile of contracts secured by LDK prior to December.

LDK has gained new visibility by its addition to the Nasdaq China Index. By way of this Index, LDK is now clustered with the “who’s who” of US Listed Chinese Companies, and stands to benefit by this association.


Bottom Line.


If LDK beats expectations, then the costs and risks to Shorts of keeping the price down increases. Today will a good day to test their resolve.


__________________________


* Comparing today’s upward movement to December’s, in December during the 30 days prior to the peak, total volume was around 147 Million Shares, the vast majority of which were bought along the very steep rise over about 15 days. On the other hand, during the most recent 30 days from 5/9/08, total volume has been around 121 Million Shares. The majority of this volume was generated a month ago. What this says to me is that we’re likely in a much more tightly held state now than we were in December, as daytraders have had more of a chance to sell out since the move to $39 around 4/7/08, and they are in less of a position to take part in a major sell-off / “correction”, such as occurred in December. See Graph Below.




** See http://americansolareconomy.blogspot.com/2008/03/new-data-on-naked-shorts-ldk.html and http://americansolareconomy.blogspot.com/2008/03/naked-short-analysis-ldk.html for graphs and speculation on the Naked Short situation in December.


*** For a very good Presentation on the Basics of LDK, see LDK’s March Investors Presentation.


Disclosure. The Author is long on LDK.

Note: You are responsible for your own Investment Decisions and DD. Don’t take my word for it.

Saturday, May 10, 2008

New Nasdaq China Index!

Includes LDK, STP, YGE.

This will help to draw invesment over the long term.

See Components on Yahoo

Related Businessweek Article

This is great! LDK is now bundled up with some great Chinese US Listed Companies like BIDU and PTR.

Thursday, May 8, 2008

GUNTHER Portfolio: Timminco Limited: O Canada! Solar Grade Silicon, Eh? – Part 1

GUNTHER Portfolio: Timminco Limited: O Canada! Solar Grade Silicon, Eh? – Part 1


For those on Canadian Exchanges, check out Timminco. It's being sold by an LDK Short as Competition in Poly, and they do seem to have quite a good start in the business.

Saturday, May 3, 2008

Foreign Exchange and some Mental Strain.

I wrote this as an email to a coworker from Accounting. I'll post this in mostly unmodified form to this group, because I think it brings up some interesting issues. I'd love to hear your thoughts on the facts or theories behind the issue, or on my conclusions about the issue.


Some time ago, we talked about going over a balance sheet, so I could learn a little bit about how to read one.

Well, this is a doozy. It's the 20F yearly report for LDK Solar. Not particularly a good one for a beginner, so I'm just wondering if you can take a look at the following excerpt and think about it. If you can come up with a good way to understand it, I'd love to hear. Don't worry about the specific numbers. I'm thinking along the lines of trying to work out the relationship between stock price in US Dollars and the relative valuations of the Dollar, the RMB, and the Euro, where the RMB and Dollar are largely pegged, and the business assets are split between all three currencies.


Note: I think I'm starting to get it. I'm putting some notes at the bottom of this email.


From: http://www.sec.gov/Archives/edgar/data/1385424/000114554908000792/h02099e6vk.htm#118


Here's the Relevant Section:


-------------


ITEM 11. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK


Quantitative and Qualitative Disclosure about Market Risks

Foreign currency risk

Our financial statements are expressed in U.S. dollars but the functional currency of our principal operating subsidiaries, Jiangxi LDK Solar, Jiangxi LDK PV Silicon and Jiangxi LDK Polysilicon, is Renminbi. To the extent our principal PRC operating subsidiaries hold assets or liabilities denominated in foreign currencies, any appreciation of Renminbi against such foreign currencies denominated assets or depreciation of Renminbi against foreign currencies denominated liabilities could result in a charge to our income statement. See note (2)(c) to our audited consolidated financial statements for more information on foreign currency translations for our financial reporting purposes under Item 18 in this report.

A significant portion of our sales is denominated in Renminbi. Our costs and capital expenditures are largely denominated in U.S. dollars and euros. The Renminbi is not freely convertible into other currencies and conversion of the Renminbi into foreign currencies is subject to rules and regulations of foreign exchange control promulgated by the PRC government. In July 2005, the PRC government introduced a managed floating exchange rate system to

allow the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of foreign currencies. The PRC government has since made, and may in the future continue to make, further adjustments to its exchange rate system.

Generally, appreciation of Renminbi against U.S. dollars and euro will result in foreign exchange losses for monetary assets denominated in U.S. dollars and euro and result in foreign exchange gains for monetary liabilities denominated in U.S. dollars and euro. Conversely, depreciation of Renminbi against U.S. dollars and euro will generally result in foreign exchange gains for monetary assets denominated in U.S. dollars and euro and result in foreign exchange losses for monetary liabilities denominated in U.S. dollars and euro. Fluctuations in currency exchange rates could have a significant effect on our financial stability due to a mismatch among various foreign currency denominated assets and liabilities. Fluctuations in exchange rates, particularly among the U.S. dollar, euro and Renminbi, affect our operating and net profit margins and would result in foreign currency exchange gains and losses on our foreign currency denominated assets and liabilities. As of December 31, 2006 and 2007, our monetary assets denominated in U.S. dollars and euro were primarily related to cash and cash equivalents, pledged bank deposits and prepayments to suppliers, and our monetary liabilities denominated in U.S. dollars and euro were primarily related to short-term bank borrowings, long-term bank borrowings, advance payments from customers, trade accounts payable and other payables. Our exposure to foreign exchange risk primarily relates to foreign currency exchange gains or losses resulting from timing differences between the signing of the contracts and the settlement of the contracts. As of December 31, 2006 and 2007, our principal operating subsidiaries held the following amounts of monetary assets and liabilities denominated in U.S. dollars and euro:


[TABLE REMOVED, See Link, Page 121]


We incurred a foreign currency exchange loss, net, of approximately $1.3 million and $1.7 million for the years ended December 31, 2006 and 2007, respectively. Since 2007, we have entered into certain foreign exchange forward contracts to reduce the effect of our foreign exchange risk exposure. However, we cannot assure you that we would be able to effectively manage our foreign exchange risk exposure.

Without taking into account the effect of the potential use of hedging or other derivative financial instruments, we estimate that a 10% appreciation of Renminbi against U.S. dollars based on the foreign exchange rate on December 31, 2007 would result in net gain of $11.6 million (2006: net gain of $0.4 million) for our assets and liabilities denominated in U.S. dollars as of December 31, 2007. Conversely, we estimate that a 10% depreciation of Renminbi against U.S. dollars would result in net loss of $11.6 million (2006: net loss of $0.4 million) for our assets and liabilities denominated in U.S. dollars as of December 31, 2007.

Without taking into account the effect of the potential use of hedging or other derivative financial instruments, we estimate that a 10% appreciation of Renminbi against the euro based on the foreign exchange rate on December 31, 2007 would result in net loss of $2.5 million (2006: net loss of $0.9 million) for our assets and liabilities denominated in euro as of December 31, 2007. Conversely, we estimate that a 10% depreciation of Renminbi against the euro would result in net gain of $2.5 million (2006: net gain of $0.9 million) for our assets and liabilities denominated in euro as of December 31, 2007.

We cannot predict the effect of future exchange rate fluctuations on our results of operations and may incur net foreign currency exchange losses in the future.


-------------


End of Relevant Section.


Other thoughts:


If you go to page 121 of the linked document, and look at the table that's removed (due to formatting) above, you'll see that, for one thing, their net exposure in Euros is positive, while their exposure in Dollars is very negative. By this they appear to be betting on a strengthening Euro.

Where they say that an RMB appreciating against the Dollar or Euro may cause "foreign exchange losses for monetary liabilities denominated in U.S. dollars and euro." This one is hurting my brain.

Here are some cases that I'm guessing at:

1: If the RMB appreciates against the Dollar or Euro, then given constant operating costs in RMB, all of their operations in China effectively cost more Dollars or Euros to perform, is it that simple? Ok, so over the last couple years, the RMB has appreciated (per a chart somewhere else in the 20F), so their costs are increasing. They've already stated that they've taken over a million Dollars in Foreign Exchange losses.

2: Now, the RMB is largely pegged to the Dollar, so unless the Chinese Government changes the rules, the RMB will float with the Dollar against the Euro. This means that if they sell their product and hold assets in Dollars or RMB, and then those currencies weaken against the Euro, then LDK loses (offset by their gains in the value of their Euro Denominated Exposure).

3: In the case of a catastrophically-falling Dollar against the Euro, it strikes me that one thing that could happen is that China would unpeg the currency from the Dollar in order to protect it's value. In this case, the cost of doing business in China using RMBs would increase dramatically in the number of Dollars that this represents, and the value of their existing contracts in Dollars decreases dramatically. However, those Chinese workers in reciept of valuable RMB have increased their buying power dramatically incomparison to American Consumers in the World Market. In other words, RMB (and Euros) will buy Energy and Food on the World Market, while the Dollar approached worthlessness. Americans in this case will be laboring for Dollars that buy little, but a few Euros or RMB will buy alot of American goods.

4: In the case that the Dollar appreciates against the Euro, then so does the RMB, and at this stage, LDK would benefit by this as they are still largely Dollar Denominated. In this case the real value of their Dollar denominated debt would increase, but so would the value of their Dollar Denominated Signed Contracts (of which there are many).

5: If the Dollar falls to the Euro, and China remains Pegged, then China remains a very cheap producer of goods, but Inflation cuts into the Buying Power of Chinese Workers. Euro Denominated Assets increase relative to RMB and Dollar assets, and the cost of debt in Dollars decreases in relation to the net exposure to Euros.

DOH! It's late. I'm going to pause there for now. Feel free to let me know if I'm thinking about this in the wrong way.