Author: Brendan Ruchert-Dixon
Covestor models: Alpha Trapper and Beta Blocker
Disclosure: Short FSLR
In April, the market became more volatile and less clearly bullish, as investors grew more concerned about another possible slowdown in economic growth. The short ETF portion of my portfolio took this in stride, but my new investment in First Solar (FSLR) did not.
Since I began to buy into FSLR early last month in the low 20’s, the stock has continued its long slide. As I write this on the day after First Solar’s Q1 earnings report, FSLR is struggling to stay above $17.
The company reported very disappointing quarterly earnings and revenue with a large “one-time” restructuring charge, but (oddly) raised its guidance for the year. First Solar also announced it’s replacing both its CEO and CTO.
It appears that First Solar’s price from this point forward will depend on how much people believe in their raised guidance and the 5-year plan they put forward. I am not as fully optimistic as the management, but the fact remains that there is a huge gap between share price and book value. The two should converge at some point in the medium term, and while I believe some of the gap may be filled by a drop in book value, I’m confident that most should come from an increase in share price.
Meanwhile Asta Funding (ASFI) has been rising lately, back into the mid 8’s as I write this. The company is due for an earnings report soon, and I look forward to getting a first peek into how their new personal injury settlement business is performing. Asta’s book value is now above $12 per share, and I’m betting it will continue to rise, hopefully pulling the share price further upward as well as investors realize that management is both preserving and building value.
