Raser Technologies (NYSE:RZ) did not get the hoped-for DOE loan guarantee. The company still has good long term prospects, but the short term upside chances are much weaker, prompting me to sell in the hope of buying back in after a general market sell-off.
Raser Technologies dropped from $2.10 to $1.95 on September 1st, prompting a regular reader to leave a comment asking me if it was time to sell on the original Raser article. (Because he's a regular, he knows my policy of preferring to answer questions posed as comments on the blog to email comments: At the time, I did not see any new news, so I assumed the 7% drop was just part of the general sell-off on Monday.)
The news broke Wednesday morning: The DOE had denied a loan guarantee application for Raser's East Thermo project. This does not mean that the project is dead (as Raser hastened to point out), but the reason I had bought Raser was the hope that one of Raser's attempts to gain funding would pay off quickly. I thought the DOE loan guarantee was the best prospect for a quick upside move.
With the loan guarantee no longer an option, there are still plenty of other possibilities, such as receiving ARRA funding, or working out some sort of customer financing arrangement, like the pre-paid PPAs Raser has been working on. I think these may take some time to come to fruition, and in the meantime, I'm still worried about a general market decline, which should hurt Raser as well.
I sold the majority of my positions at $1.78 on Sept 2 (a 12-13% loss). I'm going to wait and see what happens to the stock over the next few months before I buy it back, just like the other 39 stocks on my Clean Energy Shopping List. I do still own a few option positions on Raser, because options are much less liquid than the stock itself, and they're harder to sell in a hurry.
Disclosure: Tom Konrad and/or his clients have long positions in RZ.