I wrote up the "article" below to Seeking Alpha, but it was declined by editorial staff as too "short and general". Oh well. I thought it was a decent effort.
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AMSC’s fundamentals doesn’t impress me all that much as a growth play, or leader in their space. There have been many years of subsidized green energy and if you haven’t been able to exceed in that time what does that say. It’s a well positioned and intended endeavor, and recovering after the intellectual piracy caused by Sinovel, but until they track into the green, I’m not that interested as a long term play.
I had AMSC on a back burner for a long time. Waiting for the piracy claim against Sinovel to wend its way through trial. I thought that the conviction on January 24, handed down by the United States Western District Court in Madison, https://www.justice.gov/opa/pr/chinese-company-sinovel-wind-group-convicted-theft-trade-secrets would make a bigger impression on the markets. Not that the first move from $3-5 is anything to sneeze at, but where was the full appreciation for the 100s of millions of revenue dollars claimed and discussed during trial?
With only 20M shares outstanding, even a $100M judgement and sentence represents $5 cash on the books....so.....what's going on? Well, there it is. Sinovel. The convicted company is pretty much run into the ground. Their enterprise appears to be failing. Valuation is shot. So any fiscal sentence handed down in Madison is going to yield....well, nothing, for AMSC.
But.....what I'm seeing is a paper sentence. And a paper loss. In which case, the IRS has provisions https://www.irs.gov/forms-pubs/about-publication-535 which permit the claiming a loss for uncollectable debts. So worst case, assuming Sinovel is unable pay damages, AMSC has a loss carry forward handed to them by the Court. This would give them ability to offset earnings and potentially show profits.
Another possibility is the acquisition of AMSC specifically for this loss carry forward on their balance sheet. A more profitable enterprise, with deeper fiscal strategies would find this to be a valuable asset for engineering their finances.
So I see AMSC as a buyout target for their IRS tax loss carry forward. It’s a target before any value is defined by the court, which is scheduled to sentence Sinovel on June 4th. |
