Wednesday, November 07, 2007
I was making so much money today, going short my own positions; I ended up doing the running man and the cabbage patch dances-- late in the day-- thanks to sheer happiness.
Seriously, I was dancing on graves, while spitting at my trader/servant.
Fuck, down 370 points. Gee, life is great.
As you know, us short sellers deserve this shit. I'm short every financial, both private and publicly traded, while long gold bricks and other shit.
God willing, HANS will miss earnings and gap down $40.
This is it boys, the market is done.
Long live Bob Pasani.
NOTE: During the composition of this post, "The Fly" was restrained at his local mental institution.
Fuck CSCO APPL RIMM GOOG
solar all the way!
SHould have known ... that was JJ's trade du jour to short FSLR before earnings
“It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.” - William O’Neil
No you look here pal, the credit default derivative is much bigger than just Citi. It's bigger than any of you understand. 200 trillion WW. Its shaking, get ready.
Ah well... such is the life of a trader.
Should that happen, guys like me will head out west, armed to the teeth, seizing trailer parks, near the GOM.
PV is walking - jogging, lately - on a treadmill. Because the PV industry is dependent on subsidies, the price to end users plateaus at a level determined by those subsidies.
Let's say an unsubsidized system would have an installed cost of $7.50 per watt (all the dollar amounts I'm using come from the air, not actual data.The government provides a $2.50/W subsidy, bringing the net cost to $5.00/W.
Guess what happens when a PV company manages to cut costs by $0.50/W? In most subsidy programs, the amount of the subsidy declines over time. Now we have a system with an unsubsidized installed cost of $7.00/W. But the government subsidy has dropped to $2.00/W, leaving the net cost at $5.00/W.
What's worse is that even the $5.00/W exceeds the pure economic value of the system for most users, meaning that there is some user subsidy involved as well. A few users in some programs might be able to claim that the net cost provides a reasonable rate of return, but that will be the exception.
A too-generous subsidy is quickly swamped by users. Arizona once tried to promote use of natural gas in automobiles. The state provided a subsidy that was several times the cost of installing an NG tank and fuel system. The program had to be quickly halted when tens of thousands of people applied to install tanks that they had no intention of ever using.
Now, how can you build volume over the long term if the price isn't dropping? You can build volume if funding for subsidies grows, as is currently happening in Germany and other locations. But almost any program I've seen has at most a few years of generous subsidies, followed by an eventual phase out. There is a lot of political risk in a large subsidy program, too. When Germany reunified, the government cut funding for PV work by something like 75%.
The other way you can grow volume is if your unsubsidized cost becomes economically competitive. PV is far from competitive in areas that have grid power. You can install systems here and there that are economic because of the value of some extra-energy impact such as allowing a utility to defer upgrades of some distribution equipment. That's an exception, however.
Another problem facing the PV companies as their production facilities grow larger and they continue to slowly reduce PV module costs. The modules are a decreasing portion of the overall system cost, and other important costs (such as system specification and installation) are not falling as rapidly as module costs are (which isn't that fast to start with).
Governments and investors both have growing interest in PV power due to high fossil fuel prices and concerns about greenhouse emissions and air qualiy. But there are cheaper options - notably wind power. So, even where governments create "portfolio standards" that mandate a certain portion of power production from renewable sourcs, PV systems face competition from cheaper options.
I haven't looked closely at FSLR's SEC filings, but I suspect that, even if FSLR is able to delver on revenue growth expectations for a couple years, the margins and net income will soon disappoint investors who thought they were hitched to a growth rocket.
One thing I do remember from a quick glance at prior FSLR SEC filings is the incredible degree of dependency on the German market - in excess of 90% of sales. It has become a huge PV market - about a third of the global market and about 7 times the size of the US market.
Once the rapid ramp-up in PV insstallations ends in Germany, as it must, FSLR will find it very difficult to maintain a high growth rate. There are plenty of other markets, but no individual markets with that kind of size. Japan is big, but has tough local competitors. The US could eventually be huge, but our electricity is still too cheap and our Federal policy is to pretend that Global Warming is still an intense scientific debate.
I do not have a blog spot. Anyone trying to be me will catch herpes from lilldog.
You can see me at thehun.com
Go IIG, Go ISWI
Also short FSLR today, before tomorrow's earning's report. FSLR is a CdTe solar panel company. Judging from the maximum possible production capacity by now, they could not possible go any where near, let alone, beat the street consensus. No way.
The growth potential of FSLR is capped by extremely limited tellurium supply of the world. When they run out of the world's tellurium, they have to shut down production. Tellurium is more scare than platinum and palladium.
Call me a tellurist if you want, my favorite metal is now tellurium. If you have as much money as you boast, you can short FSLR and single handedly knock down this $12B company, buy simply spend some of your coins to hoard up tellurium. You could make 100 folds on your tellurium hoard as well. No kidding."
Oh man....don't worry JJ, its only up 30 bucks....OUCH!
It was a bad decision to short FSLR, but it was a very rational one. Judging from all available information I simply could not believe that they would have the production capacity or profit margin to beat the estimate.
How did they do it? Look at the previous 3 quarters, cost ratio steady goes up to 63.26% and now it suddenly drops to 48.4%.
There is something fishy here. But if they do expand productivity that fast, they will hit a tellurium brick wall very very soon. The world produces only 215 tons a year, they need 135 tons per GW product. Pretty soon they will have to import tellurium from another galaxy.
So buy some physical tellurium. You could make 100 to 200 folds. I am in the process of finalizing some tellurium purchases.
I am hurting a little bit. But the hurt is only 1/5 of my pain on monday when SWC dropped. So I am OK and will hold on.
What I said last night is still true. FSLR still uses a rare metal called tellurium. The faster they grow the sooner they will hit the tellurium supply wall. The price of this metal already shot up from $4 a pound to recent $100 a pound. The way they are going they will drive it to platinum price, $1500 per ounce.
Interested in buying some?
anyone notice that call options on C BAC COF AIG WFC AXP MGI dated in 09 haven't moved in price and the stocks are down 30% a month?
I got short because the leadership in this market is dwindling... we're down 360 today and I just didn't see the stock rallying 30 in AH... I figured they could beat but that it might be a sell the news type event (see DRYS). That's been pretty common lately.
Anyway, I didn't risk too much. I've lost a couple grand in far worse stocks than FSLR.
I read something somewhere that indicated you were shutting down your blog?
I hope not.
I don't think their numbers are real. On the other hand, the tellurium thing is very real. Go buy some physical tellurium whether you short or long FSLR. If they expand production they will drive the tellurium metal price much higher. I think making 100 folds in 3 to 4 years is very conservative. Spread the good words about tellurium.
I go overseas for a spot of the R&R, and come back with the market bleeding out like a gutted Romanian goat.
Can't I leave anything in your capable hands?
BTW -- true story, two extremely hot interestingly accented waitresses at our restaurant last night.
Point of origin?
Romania. Odd, not?
So much for field research.
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