Seeking Alpha
Profile| Send Message|
( followers)  

Barron's jumped on the bandwagon this weekend to trash LDK Solar (NYSE:LDK). I mentioned in the comments section of this post how there was no real support until 40-45 as this name had run so far so fast, and it was a bunch of momentum trading folks who didn't know much about the stock other than it was "Chinese," "solar", and "going up fast."

Now those people have exited the building and the stock has been decimated down to $40. While not calling 'a bottom', I will take a stab and add more here as its near the bottom end of that long range support. So I am buying here in the $40-$41 range.

Again, until a 3rd party auditor steps in and blesses what management is saying this stock will have trouble mounting any charge. The risk is, the 3rd party auditor comes in and says the fired controller is correct. However, inventory valuation is a bit of an art, not a science especially in this specific case (how much of the scrap silicon is use-able? up for debate - there is no scientific answer.)

But what Wall Street hates is uncertainty, over bad news (see how these financial companies go up once they put a number to their losses, even if the losses are in the multi billions). So uncertainty rules right now and the lemmings are rushing off the ship.

So it's a risk but the stock is a more an animal of emotion right now and those who got on for the ride without knowing much about the industry are getting bucked off. That said, unfortunately Trina Solar (NYSE:TSL) is seeing damage from this news too.

Disclosure: Long LDK Solar in fund; and (again) long in personal account

Source: Buying More LDK Solar In Spite of Barron's Bearish Comments