Bought more FSLR at $105 today. Now holding a 2/3 position in FSLR, and a 1/3 position in JKS, YGE, TSL.
Reasons:
1. recent news indicates the U.S. government will support FSLR (national champion in solar), with cheap capital for their Systems. This levels the playing field, versus Chinese solars supported by their government, and TOT backing SPWRA. The survivors in this industry will all be backed by Deep Pockets.
2. FSLR's Systems, mean they can expand capacity, run at 100% capacity utilization, and not pile up inventory. Over the last year, I have become more convinced, Systems are a crucial advantage in this industry.
3. recent guidance on 3Q11 gross margins, indicates FSLR will maintain the highest gross margins. Everyone is dropping 10 points, so the ranking remains the same.
4. recent news of companies cutting expansion plans, making GAAP EPS losses, gross margins falling to single digits for some big companies, are all events that tend to happen at a trough in fundamentals, in commodity industries. So I am a bit less worried, that industry fundamentals won't trough till 2H12. But not enough to go all-in; I am still 80% cash. I can still buy in increments, all the way down to below the 2008-9 lows. |
