Sunday, June 21, 2009

A couple of funny things... LDK Solar

Last week we heard that UBS downgraded LDK to sell at $14, down from $22. Of course, what they mean by this, considering that their sell price is above the current selling price, is unclear. Well, such is the way of the Wall Street Analyst. They work in Mysterious ways.

Next, though not given a PR, LDK filed a Shelf Offering of up to $200 Million in Ordinary Shares and ADR's, Preferred Shares, Debt Securities, Debt Security Guarantees, Warrants Options or other Rights, Stock Purchase Contracts, and Equity-linked Securities. No Underwriters were mentioned.

WTF?

These guys don't do anything the way you'd expect. LOL!

Note that the following is pure speculation / guesswork. It's based on the assumption that the Poly Plant first line is near production, and the company is preparing to rise to a next level as a Global Company.

Well, they suggested that they may offer shares at the end of their June 9 presentation at UBS, prior to the huge Wednesday runup on the 10th. Now, it appears that they're serious about this, and they've got a plan.

Honestly, I can't imagine that they think that $200 Million Dollars is so critical that they will be forced to offer shares at such a low price. They've got solid Bank financing to get them by in the short term. What they do have, though, is a Short Interest in the area of 40%, and a quite illiquid float. While Shorts can't get out without driving up the price, neither can big fish on the long side buy in to any significant extent without similarly driving up the price.

So, it seems to me that where the big fish want liquidity, Mr. Peng is preparing to give it to them; presumably at a "fair" price.

We'll see how it goes from here. As usual, if nothing else, it will be interesting. :)



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