First Solar And SolarEdge Technologies: A Pair Trade

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About: First Solar, Inc. (FSLR), SEDG
by: Energy Solutions Partners
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Energy Solutions Partners
Deep Value, long only, special situations, hedge fund manager
Summary

Both equities have been hammered due to the short-term policy change announced by the Chinese National Development and Reform Commission (NDRC).

We believe the market is overreacting, and currently both equities look attractive.

We will look into the possible scenarios for the solar industry over the next few years.

A paired trade will be evaluated, with buying both equites and selling covered calls for income.

Wow, what a wild week for solar stocks! The recent announcement by the NDRC to slow down solar development in China has sent solar module stocks down by 20-30%:

As we can see, both First