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Technology Stocks : American Superconductor (AMSC)
AMSC 56.25-7.2%Nov 4 3:59 PM EST
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To: Lawrence Burg who wrote (880)5/31/2018 11:26:10 AM
From: Art Bechhoefer  Read Replies (2) of 973
 
Buying or holding AMSC for future profit from a tax loss carry forward is an interesting idea, but I'm not sure that a mere tax loss would make the company desirable either as an acquisition or on its own. To assume that Sinovel ends up paying nothing is not likely, for several reasons. One main reason is that China cannot afford the stigma of one of its companies failure to honor a foreign debt at a time when China is trying hard to become a major power producing its own, home designed products.

I would suggest a more balanced view. Sinovel ends up paying at least a part of the judgment, which as you point out could result in a sudden boost in earnings per share, and an increase in price per share augmented by a short squeeze. And AMSC becomes one more part of a trade deal between the U.S. and China, where China agrees not to place tariffs on U.S. commodities like soybeans, in return for the U.S. not putting ZTE out of business because the company sold equipment to Iran, which equipment contained components made in the U.S.

I suspect none of these possible scenarios will take place immediately. Given the unpredictability of U.S. trade policy, especially at a period when people are thinking about the November elections, it's really impossible to predict an outcome that would result in a huge, short term benefit for AMSC. On the other hand, it's safe to say there is little downside risk at this juncture.

Art
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