Interesting blogpost from Bronte Capital describes think process on why would they short Trina Solar. Excerpt:
Red flag number 1: the people at Trina Solar
What originally attracted us to Trina Solar as a short were people. Top of the list was Peter Mak – the head of the Audit Committee of Trina Solar. For those with a lurid sense of voyeurism this is Peter Mak dancing on his (I think 49th) birthday.
Video of Mr. Mak:
Red Flag number 2: matching capital expenditure with capacity
The next problem we had with Trina Solar was that we found it hard to reconcile their capital expenditure with their capacity. The company has been massively expanding their capacity and that would normally take some considerable investment in machines and other infrastructure. There however appears to be little correlation between capacity investment and capacity.
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Full blog post: http://brontecapital.blogspot.com/2011/08/trina-solar-somebody-got-luck…
"Markets can remain irrational a lot longer than you and I can remain solvent." from A. Gary Shilling, Forbes (1993) v. 151, iss. 4, pg. 236.
This one is all about time horizon. Short-term, it probably declines some more because of lack of demand. Long-term, looking at the P/E and growth, you have to think it's going to do well, especially if traditional energy prices spike like I expect. The company is real as far as I can tell, and you really have to be predicting some crazy stuff to say it's going to zero.
Disclaimer: long TSL (currently about 0.5% of my fund, so it's a small position)
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