Andrew Ling

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    • Wed Apr 30th 13:37 PM | Rating: 0 0
      Commented on:
      First Solar and SunPower: Competitors With Synergy
      They came in right between my estimates and analysts estimates but unfortunately there were no new contract or factory construction announcements. I went into earnings fully margined and came out with a 10% buffer for price fluctuations which is my standard position. I may have to reduce the position further soon as my annual 3 months in Europe approaches.
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    • Wed Apr 30th 13:26 PM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      Steve you made an excellent point regarding intellectual property. It makes for a simple illustration of why PE doesn't work. FSLR is not worth the sum of it's factories. It's factories are worth only 1.4 Billion produce 200 million in earnings. If they had 2.8 Billion they would have over 400 million in earnings (more than double due to economies of scale). However, the company would certainly now have double the market cap! Doubling their assets would double their earnings but not double their market cap because there is immense value in the company's proprietary technology, as proven by the fact that AMAT has far inferior manufacturing and yet so many customers.

      With a return on assets of 15%, imagine you could buy a hundred dollar bill machine for $700. 1 bill a year. It would be a great deal. But what would the company that could make the machine be worth? If there were no other limitations, about $100 Trillion. The world energy market is worth a similar amount.
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    • Wed Apr 30th 13:11 PM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      Jack, I already answered all those questions in previous posts. I don't specialize in specific earnings estimates but I know they will beat the analysts. The reason they sell for $2.45 is to build a customer base. Jens has said they are not trying to squeeze their customers for every penny. As raw material costs go up and ASPs go down margins will be squeezed for the near term but will improve in the long term. FSLR has stated that the return on energy investment for their product is 6 months. No other company in the world has this type of return short of perhaps the energy savings from Compact Fluorescent light bulbs. So when energy prices go up FSLR is the most leveraged to benefit since only about 5% of costs are energy related whereas nearly 100% of product value is. The problem is current revenue doesn't reflect this since those contract were set at past fixed prices. New contracts will better reflect this. Read my article from last year which I wrote when oil was about $70 predicting $200 oil and how FSLR is positioned to benefit. It's even more relevant now.

      seekingalpha.com/artic...
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    • Wed Apr 30th 12:54 PM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      Good point greencapitalist. The margin declines are due to a lack of new contracts to counteract the falling ASPs. Rest assured new contracts will be at higher relative prices due to the exchange rate. These old contracts were secured mostly around $1.30/E. Keep in mind the government subsidies are paid in xEurocents/kwh making FSLR product more valuable as the Euro appreciates.
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    • Wed Apr 30th 12:45 PM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      frankola I seriously doubt you "know what you're doing" at 18. I thought I knew what I was doing when I was 18 but really didn't and lost what little money I had. 12 years 2 million hands of poker and many investments later I'm retired. BTW if FSLR goes to 0 I will end up ahead as long as it happens after the end of this year. I have been using the margin account to cover my living expenses thereby slowing withdrawing from it.

      The point is the spread between the bid and ask is huge relative to the price of the contract. Imagine if you made a trade with a broker that charged $10000 a trade yet you still made a net $10000 off the trade. It would still be a bad trade because you should've made $19995.
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    • Wed Apr 30th 12:38 PM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      Jack, the market is forward looking. But to the market 2008 is already in the rearview mirror. With clarity through 2009 "forward" really means 2010. I agree that 2010 looks worse today than yesterday since there were no new announcements. The stock should sell off as it did at 4:30 a.m. However, the market is not perfect and is still impressed by "backwards" looking 2008 estimate increases. The market has figured it out somewhat and sold off of the highs. I sold off about 5% of my position today because that's the amount I was willing to pax taxes on.

      But for the long term todays or any single days events have little effect on the companies performance. For the long term you have to look at Y/Y growth instead of Q/Q and Y/Y is still nearly triple. The second derivative (growth in growth) seems to have peaked mid last year but that is to be expected. The relative second derivative is still quite strong compared to companies it's age and size. The first derivative (growth) is still strong. The 0 derivative (earnings) is backwards looking. The 3rd derivative is useless unless the market is focused on the 2nd derivative.
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    • Wed Apr 30th 12:28 PM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      frankola due to the thin volume of puts you'll probably lose half of your expected gains on the spread alone. Also there is complicated time decay and volatility math involved that any serious investor needs to know. That's the main reason along with taxes that I rarely trade options. Although for an inexperienced investor puts are a MUCH better bet than shorting. Still, it's like telling a gambler to play non card-counting blackjack instead of slots. You still lose in the long run just a bit less.
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    • Wed Apr 30th 12:22 PM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      Exactly, Steve. If PE's determined the value of a stock we would have have computers instead of people as market makers, and we wouldn't have speculators only banks. I don't know what FSLR's earnings will be in 2012 but I sense it will be higher than the market expects therefore I'm long. In the same way that when I'm playing chess I might sense there is a mate in 6 in 2 seconds and then calculate for a half an hour to find it.

      BTW to date I have seen no research indicating that low PE stocks outperform high PE stocks. There's also no reason to think that low PE stocks are "safe investments." Financials and homebuilders in 2006 were all trading at half the PE of the general market. Even so far this year in a down market "value" mutual funds have performed identically to "growth" funds. Warren Buffet doesn't just pick stocks with low PE. The main reason for his success is his emphasis on "durable competitive advantage" something that FSLR has achieved to the extent possible at such an early phase.
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    • Wed Apr 30th 11:30 AM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      If doubling of annual revenues and earnings isn't considered hypergrowth I don't know what is. It's totally relevant when I started buying because people said the exact same thing at $40. In fact, right before I bought I read an SA article written by an India guy with a long name I can't remember. He had shorted the stock in the $20s. Luckily for me I'm stubborn and rarely ever listen to anyone else's opinion. The arguments for and against FSLR haven't changed whatsoever in the last 18 months, and as long as they dont the stock will keep on chugging along. I decided back then I'd own FSLR as long as they had the #1 PV product. It looks like they'll have that secured for the next two years, which is the furthest into the future I can predict. If they no longer do I'll invest in the company that does. Cramer's point was basically the same as mine. The longer they stay #1 the more unstoppable they become like Intel in the late 80s/early 90s. PV plants are just as capex intensive as Intel Fabs.

      Mike Ahearn stated that quarter what I had suspected for some time. At a 20% installed discount to the market FSLR sells it's product below what they potentially could in order to build a wide customer base and ensure future demand. In other words they aren't even trying to maximize profits at this point, only to reduce costs. If you want to assign PE it had better be for 2012 and beyond when their tax holiday is in effect and demand reaches equilibrium with supply. But have you have stated before estimating earnings that far into the future is not an exact science. The human brain is deficient in calculation skills but compensates with it's knack for intuition. This is why humans still stand a chance against chess computers.
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    • Wed Apr 30th 11:04 AM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      Why GE? The fact that they are so late to solar shows how they are mismanaged. Even with all those wind turbine sales they still missed estimates!
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    • Wed Apr 30th 10:25 AM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      BTW, Jack, what should every other thin film solar company such as ESLR and ASTI be worth? They have infinite PE as they have 0 earnings. ASTI has forward revenues off 200X which makes it 10X as expensive as First Solar. Nobody in their right mind would try to value ASTI based on revenues. First solar is a more mature company but since it isn't fully mature it doesn't make sense either. A true value investor can't put a price tag on FSLR until earnings growth slows and becomes predictable. That's why value investors miss out on all best performing stocks of the last 30 years. If you've never read William Oneil's book "Investing in Stocks" I suggest you do so. Tiger Woods was worth a fortune to Nike and others long before he even made $1 on the tour.
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    • Wed Apr 30th 10:16 AM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      Jack, I already said this was the worst quarter FSLR has had so far, but for none of the reasons you mentioned. If you want to use valuation metrics on this company you have to use a combination of revenues earnings and the growth rates of the two. The key to all of these is new manufacturing capacity. It's very disappointing that there were no new manufacturing announcements. The reason the stock is trading up is because the greater than expected throughput gains of 3% will reflect on near term revenues and earnings. Personally I'm more concerned with 2009.

      100X this year's income is a worthless measure for a hypergrowth company. When I bought the stock is hadn't made a penny. The next day it was trading at 500X income, and $40/share. The key is the growth rate. Although my growth expectations are now lowered, the analysts who are constantly behind the curve may actually raise estimates. That explains today price movement.

      As for using quarter over quarter comparisons, maybe you couldn't decipher Jen's German accent but last quarter he clearly stated that the margins were an anomaly not to be expected in the future due to factors such as the exchange rate and ramp up expenses. Similarly, although the lack of efficiency gain was disappointing it would be far more disappointing to have two consecutive quarters without gains. As he said these gains are event driven and don't necessarily occur every quarter. You can't conclude that 10.6% is the limit based on the fact they made 0 gain this quarter.
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    • Wed Apr 30th 09:22 AM | Rating: 0 0
      Commented on:
      The Tellurium Supernova
      Mark, how did you get access to that AsianMetals price chart? Did you get the 7 day trial? I'm considering paying the hefty subscription fee since I can't find any way to get free quotes on Te.
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    • Wed Apr 30th 09:09 AM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      BTW, if you want to know how a full time investor who has been buying FSLR for the last 15 months thinks check out my SA articles at

      seekingalpha.com/autho...

      Don't neglect the articles from last year on capex and high energy prices they are still relevant today!
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    • Wed Apr 30th 09:01 AM | Rating: 0 0
      Commented on:
      First Solar's Future: Bright or Dim?
      You have some delayed quoted it's $303 right now. Although I became less bearish long term due to no capacity expansion, short term the situation is bullish. Anytime a stock rallies on high volume it's a reat bullish technical, especially when to new highs.
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