Jim Chanos At It Again, Bashing Green Energy: First Solar (FSLR) & Vestas Wind Systems (VWSYF)

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07:41:47 pm on May 26, 2011

Jim Chanos has been increasingly vocal about his bearishness on green energy, particularly solar.  In April he was quite vocal about his short interest and the issues at First Solar (FSLR)According to the WSJ, he also highlighted Vestas Wind Systems (VWSYF) as a company that could go much lower.  Both stocks continued lower today with First Solar taking out another key support area around the $120 level.

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In a presentation titled Alternative Energy: Does Solar + Wind = Hot Air? Chanos said wind and solar are not capable of cost effective ways of meeting energy demands.  First of all I’m surprised he doesn’t include ethanol and second of all the view is short sighted as the technologies will continue to improve and provide one of many ways we must eliminate the dependence on foreign oil.  Let’s keep in mind Chanos has large short positions he must defend. 

He indicated Vestas changed its accounting and auditors and believes the company has questionable accounting.  The company said it didn’t change auditors, just policy.  On First Solar, he says the company is seeing a deterioration in quality control as well as operational problems which include negative cash flows.  He also cites the exodus of top management and heavier insider selling as concerns.

You have to admire Chanos for sticking his neck out in a big way and going against the grain not only with green energy but China.  He’s also been calling for a big bubble burst in China for more than a year.  His claim to fame is shorting Enron, but I think longer term he’s wrong on wind and solar particularly as technologies improve and  the cost of oil continues to skyrocket now and in the long run.  Time will tell on both green energy and China. 

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Comments  

Chanos is a douchebag. It amazes me that he’s allowed to manipulate markets for his own gain without the SEC saying a word.

 

Perhaps Jim is right! The main media seems to be blind to this technology.

The US government has been working on it for 10 years.
Please take 15 min and explore the links provided

Andrea Rossi has given three demonstrations so far including with professors from Bologna University and the Swedish skeptics society and the Chairman of the Swedish Physics Union. This is an directory of Rossi efforts http://peswiki.com/index.php/Directory:Andrea_A._Rossi_Cold_Fusion_Generator. This is a link to the LENR site where detailed information about cold fusion efforts is available. http://www.lenr-canr.org/News... The US Naval Research lab has been working on this with positive results for over 10 years and has confirmed it existence. Yet the major scientific magazines refuse to touch this issue since it was purportedly discredited by some researchers and an institution that stood to lose 10s of millions in funding per year in hot fusion.

Rossi has announced a 1MW Cold Fusion facility to be opened in Greece this Oct. Still top line periodicals have yet to publish even one article. This will change the economics of the world lifting many people out of poverty and it will also threaten many vested interests.

http://pesn.com/2011/05/17/9501827_Ampenergo_Amps_Up_Rossis_Energy_Catalyzer_in_America/
“..Ampenergo was founded by Karl Norwood, Richard Noceti, Robert Gentile and Craig Cassarino. It is important to note that Robert Gentile was the Assistant Secretary of Energy for Fossil Energy at the U.S. Department of Energy (DOE) during the early 1990’s. This helps confirm Rossi’s claim that tests of the E-Cat have been observed by the U.S. Department of Defense and the DOE. It is very likely that at least certain individuals in the DOD and DOE are aware and interested in the Energy Catalyzer. However, their silence is deafening.

It is unknown if any military or secret government research is taking place, but there are unsubstantiated rumors floating around the internet of the US Navy using a nickel-hydrogen cold fusion reactor to power a submarine. Although the rumor is not likely to be true, if they have known about the technology for a couple of years, it is possible testing is taking place. Trillions of dollars go missing from the DOD budget on a regular basis, and the money is obviously being spent on something…”

 

I “admire” Chanos for his hard and big head, he will say aloud anything due to his biased anti-china views. Sometimes he say inconsistent and illogical comments. Those who believed in him in 2010 and until recently should have lost a lot on their bearish bets on China. Soon he will become a nuisance when his nonsence start to be overblown – signs of a frustrated losing punter.

 

Joe’s comment about market manipulation reflects a widespread but EXTREMELY ignorant and misinformed view.
The deck is stacked against short-sellers. The vast majority of investors are long-only, so shorts fight against the weight of money. Their return profile is skewed against them (max 100% upside, unlimited downside if they’re wrong, the opposite of a long-investor). They have to borrow stock from a long investor, who can recall the borrow and force the shorts to cover their position (a “short squeeze”).
He doesn’t have the same access to companies that most investors do, because investors know he runs a short-only fund and as a result don’t want to talk to him.
Add in rules like the up-tick, and disclosure on the value of shorts in a company, and the stage is set for the longs to manipulate the shorts, not the other way around.
What all of this means is that a guy like Chanos has to do MUCH more thorough analysis and have MUCH higher conviction than a typical long investor before making an investment. Lack of access to company insiders means he has to be more creative about how he conducts his research as well.

Add all of the above up, and you see that a guy like Chanos has to genuinely believe – based on a lot of detailed research – that his view is right to make an investment. It is a simple fact that he will know a hell of a lot more about the companies and industries in which he invests than virtually any long investor.

Maybe (just MAYBE), it would be worthwhile taking the time to consider his very considered and well-researched arguments on their merits rather than mindlessly labelling him a market manipulator and climate sceptic, even though the latter is far easier to do and more satisfying for someone who doesn’t wish to think.

A final point on the silly comment about market manipulation. Chanos runs a $3.5B fund. First Solar is a $10B company. Even if he had 10% of his fund in FSLR – which would be a HUGE bet on such a volatile stock when you’re short – he would be short just over 3% of the outstanding stock. It hardly gives him scope to “manipulate” the price.

If or when Chanos gets proven correct (and after a couple of decades posting 20% per annum returns, it’s fair to say he usually is – eventually) and FSLR tanks, it will be because of flaws in FSLR’s business model, not because of anything Chanos did. He (and other short sellers) just spots the flaws, he doesn’t cause them

 

Short Interest and Ratio in some solar stocks are way of the charts and crazy,

Q-Cells (ETR:QCE) in germany has a short interest ratio of about 50%,

while SMA Solar (ETR:S92)has a short interest ratio (Days to cover) floating between 50 and 150 (Shorted shares is 4.5 Mil , Volume ranges from 30k to 100k)

even FSLR has about a short interest of 20% and days to cover ratio of 8,

I cannot imagine how much more shorted can the stock get without experiencing some form of a short squeeze in the next few mths,

 

@ac
I completely disagree with you.

First, most of investors do not even know there stocks are used for short positions, and even if they know, they would not know how to “kick” out the shorter.

Short squeezing is done by the shorters them self. They have to less money to cover the margin that is required to keep there position when the stoc makes a move up, and are forced to sell it by there broker.

And I think it is simply wrong to “do” short. It is in fact betting. Go to a casino if you want to make a bet. Investing is buying a peace of a company.

 
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