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Hedge Funds Short Clean Energy as Goldman Pares Stakes (Update1)
2010-12-01 08:45:56.632 GMT
(Adds short positions on First Solar, SunPower in last two
paragraphs.)
By Ben Sills
Dec. 1 (Bloomberg) -- Hedge funds increased short selling
in U.S. renewable energy stocks to the highest level in a year,
boosting bets against First Solar Inc. and Tesla Motors Inc. as
government support for low-polluting technologies faltered.
Seventeen percent of the freely traded shares of the 35
U.S. stocks in the WilderHill New Energy Index are sold short,
compared with 16 percent in October and 15 percent in August,
data compiled by Bloomberg show. That's almost four times the
4.4 percent short ratio of the Standard & Poor's 500 index.
In the run-up to this week's global climate talks in
Mexico, short sellers targeted makers of wind turbines, solar
panels and electric cars whose sales also were undermined by
cash-strapped European governments cutting subsidies. Goldman
Sachs Group Inc. and Deutsche Bank AG trimmed long positions in
renewable-energy shares in the third quarter, filings show.
"The lack of an international agreement on climate change
and short-term uncertainty on policy support across the globe
makes the sector fairly susceptible to predatory trades from
hedge funds," said Krishnan Shakkottai, a market analyst at
Bloomberg New Energy Finance in London. Republican gains in U.S.
mid-term elections are "a huge deal," he said.
President Barack Obama said he may be unable to reduce U.S.
greenhouse-gas emissions after Republicans regained control of
the House in Nov. 2 elections. Republicans say they will seek to
roll back Environmental Protection Agency rules limiting carbon
venting, ease curbs on coal mining and may try to block billions
of dollars in federal subsidies for clean power.
Zoltek, American Superconductor
Uncertainty over future subsidies already cut installation
of new wind turbines in 2010, the American Wind Energy
Association said. The industry added 395 megawatts of capacity
in the third quarter, the least since 2007, the AWEA said.
Zoltek Cos., a maker of carbon fiber for blades used in
wind turbines, and American Superconductor Corp., whose
converters connect those machines to power grids, were among the
most-shorted stocks, according to the data, which doesn't
include investor names.
Investors borrowed 4.4 million Zoltek shares to sell, 16
percent of its float, according to Bloomberg data. American
Superconductor has 27 percent of its traded shares loaned to
short-sellers, who promise to buy back the stock at a later
date, hoping to acquire them at a discount to the price they
received. At First Solar, which is 25 percent shorted, spokesman
Alan Bernheimer declined to comment.
Goldman Sachs sold 178,441 American Superconductor shares
in the third quarter, reducing its stake by a third while
Deutsche Bank cut its holding by 5 percent, according to
regulatory filings. The stock has since gained about 8 percent.
Tesla Ranks Top
Goldman Sachs's London-based spokeswoman Fiona Laffan and
Deutsche Bank's Mayura Hooper in New York declined to comment.
Spokespeople for Zoltek, First Solar and American Superconductor
didn't return calls seeking comment.
The most-shorted stock was Tesla Motors, the California
electric carmaker headed by Paypal Inc. founder Elon Musk, which
gained about 60 percent this month after it sold a $30 million
stake to Panasonic Corp.
Investors had shorted 65 percent of Tesla's free-float as
of the latest data compilation, dated Nov. 15. Almost 90 percent
of the company's stock is controlled by major shareholders
including Musk, Toyota Motor Corp. and Abu Dhabi Water &
Electric Authority. Tesla's press office didn't respond to an e-
mail seeking comment.
Solar panel makers are also suffering as European
governments, struggling to contain the fallout from the
financial rescue packages requested by Greece and Ireland, curb
rates paid for power from photovoltaic panels.
Weaker Demand
"We are just coming off a period of strong fundamental
performance and we expect demand to weaken sharply," Robert
Clover, global head of clean power research at HSBC Plc in
London, said in an interview. Clover forecast that global panel
demand will drop 50 percent in the first quarter of next year
from the previous three months.
Still, U.S. demand for photovoltaic panels may offset the
declines in Europe as falling panel prices allow utilities to
build industrial-scale solar generators, according to Shayle
Kann, an analyst at GTM Research in Boston. Kann forecasts U.S.
power companies will install 5,000 megawatts, or $8 billion, of
solar panels annually by 2015.
Investors have shorted 25 percent of the shares of Tempe,
Arizona-based First Solar, the world's biggest solar module
producer, and 22 percent of SunPower Corp., its rival based in
San Jose, California.
Goldman sold 17 percent of its holding in First Solar in
the third quarter and Deutsche sold 28 percent. Edgewood
Management LLC, Calamos Advisors LLC and Morgan Stanley & Co.
also cut their exposure to that stock, U.S. regulatory filings
show.
For Related News and Information:
To analyze short selling: SIA <GO>
Stories on short positions: NI SHI <GO>
Power markets: VOLT <GO>
News on global emissions data: EMIS <GO>
--With assistance from Christopher Martin in New York; Editors:
Todd White, Randall Hackley
To contact the reporter on this story:
Ben Sills in Madrid at +34-91-700-9603 or bsills@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at +44-20-7330-7862 or landberg@bloomberg.net
