Is Wall Street Manipulating Solar Stocks?

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Contributor Since 2011

I'm an investor with experience in the technology and finance industry.

Solar companies have soared in revenue, profits and guidance.

Yet, in the past 1-2 years, there have been a lot of short selling, downgrades, negative press and bearish articles pushing solar stocks down to unbelievable levels, especially for the Chinese solar stocks.  Their share price is lower than it was in 2007, but their 2010 revenue is approx. 300% higher.  What gives?

There is a lot of frustration amongst solar investors with these Wall Street analysts, rating agencies, publications and short sellers.  They claim that there is stock manipulation.  Are they right?

In this article, I talk mainly about the Chinese solar stocks because their valuation is even more oppressed than for the American solar stocks.  I use data about JA Solar (JASO), but several Chinese solar companies have similar data.


JASO’s Q4 release showed that they grew by 211%, faster than almost all other growth companies including Apple, Netflix, Baidu, Google, Amazon, and Akamai.  According to this article, JASO, with a P/E of 5.3, reported 59 cents EPS, beating expectations of 48 cents.  Nevertheless, S&P downgraded JASO to a “strong sell”.

S&P is the same company that gave AAA ratings (thru CDOs) to homeowners with no income, no job and no assets.  This supported Washington’s goal of getting every American to buy a home.  Yet, S&P wouldn’t give AAA ratings to most Canadian banks, which made billions and were amongst the most solid companies.

Value companies have flat revenues and low P/Es.  Most Chinese solar companies have lower P/Es than value companies.  But the Chinese companies are Growth, not Value companies, and they are growing faster than most growth companies.

Revenue growth from 2009 to 2010:

JASO: 211%
Netflix: 30%
Akamai: 19%
Amazon:  40%
Apple: 52%
Google: 24%
Baidu: 78% 21%
Oracle: 15%

Also, JASO expects 2011 revenue to increase by 50% and says that 90% of the 2011 sales is already under contract (Q4 release).  How many other companies can say this?

Net Income Margins:

JASO: 15%
Netflix: 7.4%
Akamai: 16.7%
Amazon:  3.4%
Apple: 21.5%
Google: 29%
Baidu: 44.5% 6.2%
Oracle: 22.9%

Trailing P/E ratios:

JASO: 4.68  (based on price of $7.09)
Netflix: 74
Akamai: 44
Amazon:  66
Apple: 19
Google: 23
Baidu: 78 246
Oracle: 24.5

The P/E range, for the companies growing slower than JASO, is 19 to 246.  Using this P/E range, JASO's price should be $28 to $372.  However, JASO is growing MUCH faster than these other companies and their 2011 guidance of 50% growth is almost guaranteed because 90% of the 2011 sales are under contract.  Few companies can give this kind of guidance for 2011.  Therefore, JASO's price should be much higher than $28 to $372.

First Solar (FSLR) is an American company with a P/E of 19, while most Chinese solar companies have P/Es that are half of that or less.

According to Nasdaq, 16% of JASO’s stock is shorted.  This is much higher than for the average stock.

Chinese solar stocks were slammed on March 3, 2011, but not the American ones (First Solar, GT Solar and MEMC).

Wall Street’s publications, such as Barron’s, Investor’s Business Daily and TheStreet, have published numerous negative articles about solar.

China Daily and Anhui News published articles stating that JASO and Hefei Government are investing 13.5 billion Yuan ($2 Billion) to build the world’s largest 3GW integrated solar production base because JASO’s CEO expects the solar market in China to grow several times to several hundred times in the next 5-10 years.

However, the Wall Street publications won’t publish this news, even though I brought it to the attention of Barron’s and TheStreet’s Eric Rosenbaum.

Last year, Wall Street media said that European subsidy cuts will hamper solar revenues by latter half of 2010.  Many of the solar companies grew like crazy nevertheless.

Wall Street used declining gross margins as a reason to downgrade JASO.  However, there’s no mention of JASO’s net income margin growing significantly.  Also, some publications erroneously reported that JASO missed EPS expectations when it had beaten it.

Now, Wall Street is saying that revenues in 2011-2012 may be flat.  How do they know, when they were wrong about 2010’s revenue?  Even if it is flat, so what? Value companies with flat revenues have much higher P/Es than many Chinese solar companies.

However, many solar companies expect revenue to increase, and increase significantly.

Micron Technology, JDS Uniphase and NVIDIA are three of the fastest rising stocks this year.  However, many of the Chinese solar companies’ 2010 revenue grew much faster than any of these three companies, and their 2011 revenue is going to grow much faster.

Yet, Wall Street’s analysts continue to downgrade Chinese solar stocks, such as JASO. 

Wall Street lost all credibility in the 2008 meltdown.  Have they lost credibility again?


Money is a motivation to manipulate, as short sellers can make money doing this.

SeekingAlpha user “sail.rick” explains why the oil industry and the Republicans are motivated to oppress alternative energy.

Also, since Obama’s campaign in 2007, he has wanted to build a green industry in the US.  Recently, he passed a law requiring the Dept of Defense to buy solar panels from NON-Chinese companies.  Here’s one of the articles describing this.

At his state of the union speech, Obama said:

"… Just recently, China became the home to the world's largest private solar research facility..."

CNBC is using the above clip to advertise their episodes on China vs US.

Washington wishes that the fast growing solar companies are American and Wall St knows this clearly.  Wall Street is more than happy to help Washington squelch the Chinese solar companies for quid pro quo.

Quid pro quo is confirmed in the movie “Inside Job” and this article which states:  “financial house might alter stock ratings in exchange for company business”.  As you should know, Washington spends millions on fees to Wall Street, such as dealing with stocks from AIG, Citigroup, etc.  A little quid pro quo may go a long way to getting more fees, relaxed regulations and bail outs.

In 2007, JASO and other Chinese solar stocks had much less revenue and profit and had a higher share price than today.  Ever since Obama came into office two years ago, the reverse has happened to Chinese solar stocks.


Obama passed a “buy American only” law for solar panels.

There was a raging debate when Obama tried to pass a “buy American only” law for the stimulus package.  Luckily for the US, this was rejected for good reason.  “Buy American only” is protectionism, which is anti-free trade.  If you believe in free-trade where you want other countries to buy your products, such as GM cars, IBM computers, Cisco routers, Android phones, iPhones, iPads, Boeing planes, Caterpillar trucks, etc., should you ban the purchase of their products in your country?  Is this hypocrisy?

Besides, the worst part is that protectionism can make each country poorer.  When countries saw their GDPs contract and unemployment go up in the early 1930’s, they passed protectionist laws, which reduced trade between countries, which helped bring on the Great Depression.  In 2009, all of the experts in the US agreed that the US should not adopt protectionism, for its own good in the long run.


Oscar Best Documentary award-winner Charles Ferguson began his acceptance speech by reminding us that three years after our worst financial meltdown, the subject of his movie, "not a single financial executive has gone to jail."

His movie “Inside Job” documents the massive fraud and corruption on Wall Street and Washington, how the two are in bed with each other and showing that even the supposed unbiased economic professors, such as Larry Summers, are in the back pocket of Wall St.

According to CNBC’s “House of Cards” and CBC’s documentary “Meltdown”, Wall Street is rife with crooks.

Ben Graham, Warren Buffet’s mentor, wrote about the unethical “shenanigans” and “manipulation” that he witnessed during his 40+ years on Wall Street.  This did not end after he died.  In 2008:

  • S&P, Moody’s and Fitch gave AAA ratings to CDOs
  • Bear Stearn’s hedge fund told investors to buy when their internal emails said it was imploding
  • Goldman Sachs promoted and sold CDOs while they shorted it by buying CDSs from AIG
  • Taxpayers bailed out AIG so that Goldman Sachs can cash in on all of the CDSs
Quid pro quo is very common on Wall Street.  Most firms have Investment Banking, which is the bread winner, and Research.  They are supposed to maintain a “Chinese Wall” (not related to Chinese stocks), which is supposed to separate the information and operations of these two departments.  Sometimes the research department will downgrade a company that is a client of the investment banking department, to a “hold” or “sell”.  This infuriates the client, which comes down hard on the investment bankers, which come down hard on the research department.  Consequently, the research department may change the rating to a “buy” or “hold”.  For non-clients, they would have no issue downgrading.  The ratings are suspect at best and unreliable quite often.  Therefore, if firms want to use their downgrades as a tool to manipulate, it is quite easy.

Even with SEC’s reputation for incompetence, they charged several firms with Insider Trading last year.  One can imagine how many charges there would be if SEC was competent.  Recently, SEC charged Gupta, a former Goldman Sachs board member for insider trading.  Berkshire Hathaway told GS that they were going to invest $5 Billion.  Gupta told the manager of a hedge fund, that he has invested in, about this tip.  Hedge fund manager buys 175,000 shares of GS before news is released.  Gupta profits $900K.  Others related to this, profited $13 million.

Insider trading happens all the time and always will.  If Wall Street can do insider trading, then stock manipulation is child’s play.

Imagine this scenario.  A ratings agency, analyst or media publication tells his proprietary trading desk, hedge fund manager or cousin to short a solar stock.  Then the ratings agency or analyst issues a downgrade, or the media publication publishes some bogus negative report, such as the recent article about the Italian subsidy cap.  Their downgrade or report is read by thousands or millions of people.  (Your tiny little posting on a message board is barely read.)  Stock drops.  They profit.

Stock manipulation always happened and always will.

This report on short selling found that
“…on trading days when there is an abnormally high level of short selling, there is a heightened level of negative news about the issuer in the non-trading hours that follow”
“…where an issuer is the subject of negative news in the non-trading hours between one trading day and the next, the share price reaction when trading resumes is less pronounced where there has been an abnormally high level of short selling the day before.”
“An analysis of our findings suggests that three news related types of short selling - traders who sell short after obtaining confidential information that an issuer is about to make a negative announcement, traders who sell short and then spread false stories, and traders who, by collecting and analyzing publicly available data, detect that an issuer’s share price exceeds its fundamental value, sell short and then truthfully spread their conclusions…”

For the above second scenario, does the short seller have to spread false stories?  What about spreading news of possible Italian subsidy caps that never come?

Nevertheless, some short sellers do spread false stories, such as the case with UAL, which caused their share price to plunge 75%.  That would have been very profitable for the short sellers.

Somebody with a pen (or computer) can steal way more from you than somebody with a gun.


Well, we all know about the SEC’s track record.  They didn’t detect Madoff’s ponzi scheme even though George Papadopoulos warned them three times.

Some media can be good, but some can be quite unreliable.  Think of Fox News or CNN during the Iraq war.  The founding fathers said that democracy can only work if the media acts as a check and balance, by criticizing and verifying the government’s claims.  That is a critical role for media.  However, during the Iraq war, there wasn’t one piece of criticism.  Instead, Fox and CNN were beating the war drums and acting as spin-doctor mouthpieces for Bush.  They helped Bush brainwash 70% of Americans into believing that Saddam Hussein was involved in 9/11.

The media is supposed to work for you, the reader.  They are supposed to do investigative reporting to “keep them honest”.  After CNN was criticized and censured, they adopted the “keeping them honest” mantra.  How often has the media on Wall Street, such as Barron’s, TheStreet, IBD, etc., kept them honest?  How many insider trading or stock manipulation cases have the Wall Street media exposed?

Barron’s and TheStreet published articles on possible Italian subsidy caps.  So what?  The cap is a proposal, which didn’t say how much of an effect it would be, and if passed, it wouldn’t be in effect until 2012.  Next day, Italy announces that there is no cap.  I suggested to them that they investigate and write about the bizarre P/E ratios of Chinese solar stocks.  No response.


The big advantage of buying a stock where there is a big short interest, is that if the price goes up, there will be a big short squeeze, which pushes the price up even more.

The AAA ratings of CDOs from S&P helped boost the prices of homes.  However, fundamentals and truth usually prevail in the long run.  Households making $40K cannot afford $400K homes.  The fundamentals do not support this.  Prices came down.

The same could happen with JASO.  The price seems likely manipulated and oppressed by short sellers.

If Wall Street is manipulating the Chinese solar stocks, they can’t keep them down forever.  The pressure will continue building until the foot cannot keep it down anymore.  JASO’s P/E is now 4.68, which is outrageous.  In 3-6 months, when JASO’s earnings continue growing and their P/E goes down towards 3, any Wall Street firm that downgrades JASO will appear like they are manipulating and short selling.

The Chinese solar stocks are similar to what Michael Burry buys and what Ben Graham recommends, as they like to buy a stock that is temporarily or unjustifiably depressed.  They believe that the fundamentals and truth usually win in the long run.  This happened with S&P’s AAA rating of CDOs.  This might happen with S&P’s downgrade of JASO.

When the fundamentals eventually prevail, this is how Burry, Graham and Buffet profit immensely.


Please help spread awareness of this blog.  Click on the “Recommend” button.  Tell other investors.  Complain to the SEC.

As mentioned previously, those who control the media, control the opinions and beliefs of the masses.  Fox and CNN were able to help Bush brainwash 70% of Americans into believing that Saddam Hussein was involved in 9/11 through spin.  Small-time radio stations tried to clear up this brainwashing, but nobody hears a mouse squeak in a hole.

Wall Street media rarely publishes anything positive about the Chinese solar stocks.  Even if they do, it’s not loud enough to quell the downgrades and short selling.  Besides, the founding fathers said that the media is crucial to the success of democracy.  They said the role of the media is to keep the authority in check and balance by exposing anything unethical.  How many times have the Wall Street media exposed stock manipulation?  How many Wall Street professionals have the media helped put behind bars?

SeekingAlpha articles get picked up by Yahoo Finance.  SeekingAlpha will not publish my blog as an article until I send them 2-3 writing samples, which I hope to work on shortly.

If you like this blog, we need all the help we can get.  It’s David versus Goliath.


If you agree with this blog, then you should write to these people:

The reporter at Barron’s who wrote about the Italian subsidy caps that never came, is Ray Tiernan at  His editor is  His editor-in-chief is

The reporter of the Bloomberg article about Gabelli shorting JASO, is Ben Sills at The editor is Reed Landberg at

The Forbes Editor, in regards to Eric Savitz’s blog, is at

Below is what I wrote to them.  You can copy it if you like, but if you modify it, you’ll likely get more attention from them.


I read your article about _____________________________.

Is Wall Street Manipulating Solar Stocks? Please read:

Please tell me what is wrong with the above blog's argument.

These Wall Street ratings based on European subsidy cuts are getting old and boring.  Wall Street has been using them for over a year to beat down solar stocks, yet solar companies have grown faster than almost any other growth company.

Revenue growth from 2009 to 2010:

JASO: 211%
Netflix: 30%
Akamai: 19%
Amazon: 40%
Apple: 52%
Google: 24%
Baidu: 78% 21%
Oracle: 15%

Revenue growth from 2007 to 2010 (approx.):

JASO: 337%
Netflix: 79%
Salesforce: 121% (Fiscal YE is on end of Jan)
Apple: 165%
Amazon: 131%

Net Income growth from 2007 to 2010 (approx.):

JASO: 338%
Netflix: 141%
Salesforce: 251%
Apple: 301%
Amazon: 142%

Share price change from end of 2007 to end of 2010 (approx.):

JASO: -70% (that’s right, minus/negative seventy percent)
Netflix: 560%
Salesforce: 111%
Apple: 63%
Amazon: 94%

JASO said revenue will increase by 50% in 2011 and 90% of 2011’s sales is already under contract. How many companies can say that?

Yet, Collins Stewart, Stifel Nicolaus and S&P downgraded JASO.

S&P is the same company that gave AAA ratings (thru CDOs) to homeowners with no income, no job and no assets. Yet, S&P wouldn’t give AAA ratings to most Canadian banks, which made billions and were amongst the most solid companies.

Imagine this:

A company’s revenue is dropping by 50% per year, losing money and gives you guidance that their revenue and losses will get worse in the next year and this is guaranteed because 90% of their customers have already committed by law that they won’t buy anymore. Then a Wall Street firm gives the company a “strong buy”.

This is the kind of rating that Wall Street gives.


Ben Sills at replied with this:


we actually did report the new JA Solar plant


I replied with this:


Is that the only part of the blog that you dispute?

Why didn't you report about JASO CEO's comment on China Daily's and Anhui News' articles, that the CEO expects the solar market in China to be several times to several hundreds times in 5-10 years?

If that is the only part of the blog that you dispute, then you agree that the rest is possible and maybe likely?

Why don't you do some investigative reporting into this?  Why don't you investigate and write about the bizarre P/E ratios, and how even with these ridiculously low P/Es, Wall Street still spreads FUD (Fear Uncertainty and Doubt)?  (FUD was a common strategy by sales people to beat competitors.)

Isn't the media supposed to work for their readers?  Aren't we your end-customers?  Or, do you work like Fox?  The documentary "The Corporation" showed how Fox works more for its advertisers than its viewers, and hence covers up negative news of their advertisers.


Disclosure: I am long JASO.

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