Deepak Kumar

Long only, value, medium-term horizon, solar
Deepak Kumar
Long only, value, medium-term horizon, solar
Contributor since: 2013
This is certainly the biggest issue here. David Tepper is fighting for the shareholders. I think, an activist along with low prices reduce this risk for now.
1. Yes IDR are important but I think at current levels this is not the key factor for TERP and GLBL. ABY and NYLD don't have IDRs.
2. I agree that ideally these should be priced at a discount to runoff value, but that is difficult to calculate. I tried EV/EBITDA and on that basis also I reached similar conclusion.
3. But do they really need to grow at any cost? I think for time being they can use the debt capacity to grow, but if yieldco's cost of equity is more than their return on equity they can not and should not grow. In that case they should just run off the assets.
I think they might cut the dividend to use the cash to meet their commitments of buying the projects from SunEdison. Given that most of these projects are in emerging markets, you also need to look at the value of these projects after the depreciation in currencies. But it could be interesting play.
Shares might get cheaper, but I think risk-reward is quite attractive at this point of time especially with David Tepper actively protecting TERP shareholders. Also looking at Abengoa Yield, I am not sure if shares will necessarily get cheaper with SunEdison going under. It will certainly remove significant downside risk for the stock.
Yieldco investor psychology is certainly quite negative at the moment and that is a good thing if you looking for bargain in this sector. More negative news in short-term is possible, but question is at what level you are comfortable with the risk-reward of the position.
I have bought it on Xetra and price tracks closely the Korean prices, of course including the currency exchange rate.
I agree on the credibility of Mr. Musk and Solarcity's management. But as an investor key question for me is, how much premium I can give on that? You can pay lot of money to buy sound management, but only if underlying business is also very sound.
I agree on the growth of solar industry, but am sceptical on how much value SolarCity can capture in that. Competition is intensifying and without subsidies there will be limited windfall profits for installers. Solar will continue to grow but end-users will capture more of the benefits. Goal of 1 million customers by 2018 (almost 7-8GW of solar capacity) is far-fetched in my assessment.
Yes that is absolutely true and is another factor with downside potential.