Hi everyone,
I want to start and say that I’m about to take a step back posting
here because we are getting into a period which I think is very
serious regarding investing with ASTI in particular and solar as a
whole. I have a lot of homework to do and the time for fooling around
is over.
Just to close one issue from last week. Evergreen solar posted good
results and I think this company would do much better than 95% of the
companies in the solar sector.
They have unique technology which would give them a sustainable
competitive advantage in the future. They are on schedule, ramping up
production and closing billions of dollars worth of deals.
What is going on in the solar sector reminds me of a stand-up I’ve
seen last January in Vegas. Jerry Seinfeld (in flesh) stood on the
stage and when someone asked him why did you almost stop performing?
He answered:
“At some point in your carrier, when you become too famous and when
you write what you consider a good material people don’t laugh like
they used to. They say, we don’t want jokes – we want magic!!!!” :)
Evergreen IS posting results. Good results. There is no magic. Just
hard work and if you get lucky then also luck :)
Evergreen needs to ramp-up production in order to generate money –
they will succeed doing so and will become a multy billion dollar
company in years to come.
But we’re not here to discuss ESLR, won’t we?
We’re here for ASTI. And here is my point in all this:
One could trade ASTI like all other solar stocks. I’m sure that when
playing it correctly, trading ASTI could make you nice gains over
time. BUT, but, but, but –
I think ASTI is different. Truth is I’ve started to understand that
only recently. Till that point I used to jump from one solar company
to the other. Making nice gains each time.
But during the last couple of months I’ve started to look at that
opportunity in a different way.
What is hidden in that opportunity could be illustrated in the words
of MEMC’s (WFR symbol) CEO last quarter. When asked why won’t he buy a
wafer manufacturer with some of the 1.6B the company has in cash,
instead of building it from scratch he said:
“WHY BUY A TECHNOLOGY WORTH 600M$ WHEN YOU CAN DO IT YOURSELF FOR ONLY
150?!!!!!!!!!
MEMC’s CEO has forgotten his own law!
In 2001 MEMC was on the break of going bankrupt. No one wanted to even
look at the company. 7 years later the company is worth ~11B with 1.6B
in cash and ~18B in contracts. The company back then was virtually for
sale. No body wanted to buy it and the CEO (looking back) is smiling
from ear to ear not understanding why?!
But he himself DID THE SAME MISTAKE 6 months ago.
When MEMC was in it’s highest of highs (~95 $ per share) and all the
market came crushing down, MEMC could have bought some of its
competitors. At least a part of the company. Now MEMC, which was much
luckier than a technology leader, has built its competitors with its
own hands. Now MEMC trades at 50% of it’d peak and LDK is closing the
gap fast. How those 1.6B (still in cash) would help the company now?
TEVA just bought BARR for 7.5B $ which represent a 65% premium to
current value.
Analysts says “too expensive”. I’ve heard the chairman of the board
today says:
“too expensive? Let’s speak again in a year" :)
The number of buyouts and bids that are happening these days in the
market with 50-100% premium is huge. A company like TEVA knows that
this is not an option to buy but a requirement in order to survive for
the long run!
There will always be someone who has better technology, better chance
and more capable then you are. The only way for you to win is to take
advantage of your size and the fact that you “were there first” and to
buy the competition off.
That is why Intel is buying any start up that only makes the noise of
having something interesting. 95% of those buyouts end up with a
failure but Intel HAS to take that chance, for every 1 out of those 20
impressive start-ups does succeed in the end and when they get too
big, YOU CANNOT BUY THEM ANYMORE!
Intel prefer to buy and later close 19 out of 20 companies just to get
this 1 that can kill her in 20 years – when it’s still small.
Exactly like that scene in that movie when this character who comes to
visit a friend’s family goes to the living room and see a boy playing
with a small plastic battery train. When the train gets near his foot
he suddenly crush it! The boy who’s stunned asks him “why did you do
that?” and the man answered:”you got to kill it when it’s still
small!” :)
YOUR CHOICS ARE HALF CHANCE – says the phrase but when regular people
take a small company and succeed they tend to think “I did it!” and
becoming a passing trend when luck runs out.
I don’t think Hydro is that kind of a company. I think they got it
right when almost everyone else got it wrong. I don’t see any
possibility of them not buying out ASTI exactly on June the 15, 2009.
(The first day they can bid for the remaining 65%).
If they won’t buy, then ASTI would get too big for almost anyone else
to buy.
I really don’t mind if Hydro would pass the opportunity for I think
ASTI could follow the footsteps of one First Solar in years to come,
but Hydro would not let that opportunity slips. Not because they are
doing us a favor, but because they have to survive and invent
themselves over again doing so. NOW IS THE TIME FOR COMPANIES TO BUY
EACH OTHER AND NEW PROMISSING TECHNOLOGIES. WHEN EVERY ONE ELSE ARE
SELLING! – just like TEVA did yesterday.
The only thing that distinguishes between the unbelievable to reality
is the fact it haven’t happened yet. When I bought ASTI the first time
it was a 17.5M $ company (stock traded back then at 2.5-3.5$) . I knew
it is 10 times cheaper than it should be in 1-2 years but couldn’t
accept the fact that it feels like I am the only one that thinks so!?
I sold at ~10 when the stock kept going till ASTI had a market cap of
~400M$. Let’s say the “real” price (taking out the manipulation) is
250M. So ASTI market cap did multiply by more than 10 in 10 months
time!!!!!!!!!!!!!!!!
I was right back then and I am right again here. I won’t be fooled.
ASTI is a 10 times cheaper at 250M than it should be in 1-2 years. I
know Hydro won’t let that happen and would bid for ~50-80 next June
(which gives ASTI a market cap of ~1.2B, meaning Hydro would have to
add another ~850M which looks right to me after the company just paid
a 1.9B dividend last quarter! they sure can tell shareholders that
those 850M would get right back to them in market cap of Hydro instead
of spending that kind of money in cash).
If Hydro would make the mistake and miss that (and they won’t) then
ASTI would be a much bigger company and I would gain even more!
If ASTI would fail certificate the products and meeting schedule then
the share would get hit but that would only postpone the inevitable.
The slightest chance I give ASTI to completely fail IS WORTH THE
RISK!!!
The former coach of the football club, Chelsea ones said:
“After 15 years I became a hit overnight” :)
First Solar didn’t brake into the world out of thin air. It is a
technology being developed since 1972!
ASTI is working on its technology since 1990. When it breaks into
people conscience we’ll know we worked hard to get there and the fact
we were not noticed doesn’t mean we weren’t around ALL THE TIME.
Punch line:
Nobody is competing directly with ASTI on the outer walls of a
commercial building.
Nobody in the solar sector can sells more walls like that than Hydro
can.
I actually drove to several industrial parks and looked around for
those aluminum/metal facades. You have to go and see for yourselves
the potential.
If Hydro would cover only 1% of those facades it sells per year (and
Hydro is only the forth or fifith seller in that area !!!) then that
would be all ASTI’s output for several years to come. No inventory, no
need for contracts or marketing – just manufacture and immediately
send.
Recommendation:
Ignore the idiot analysts – they know nothing.
Ignore the manipulators – they always end-up jumping off a bridge.
Ignore the shorts – they probably would make a quick back but
completely misses the point here.
Ignore the market mood – it changes quicker than you could say “Hydro
always buyout it’s strategic partners eventually”.
Invest as a strategy = look only at fundamentals. Buy when it’s cheap.
Sell when it gets expensive. Hold when it is executing its business
plan smoothly.
good luck.
Avital
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