Wild Swings In Solar Short Interest

Among the leading U.S. solar-related stocks,

,

and

saw the largest swings in

between the December 15 and December 31 settlement dates. Below is a quick look at how these three stocks have fared recently and what analysts expect from them. That is followed by a glance at short interest trends in other solar stocks.

As the year came to a close, the number of shares short in this maker of power conversion products plunged more than 18 percent to almost 1.18 million. That was a little more than 3 percent of the total float, and the lowest level of short interest since last March. Days to cover remained at more than three. During the period, the Colorado-based company announced it was

for its Solar Inverter business. Its market capitalization is near $945 million. Its price-to-earnings (P/E) ratio is lower than the industry average. Only three of the nine analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares, while five of them rate it at Hold. Also, the current share price has overrun their mean price target, so no upside potential is indicated until analysts boost their price objectives. The share price ended the two-week short interest period up more than 6 percent, and the 50-day and 200-day moving averages formed a golden cross in that time. The stock has outperformed competitor MKS Instruments and the broader markets while rising about 30 percent over the past six months.

Short interest in this Tempe, Arizona-based company dwindled more than 10 percent to its lowest level in at least a year. That 7.99 million shares short at the end of the year represents almost 11 percent of the float. At the current average daily volume, it would take more than three days to cover all short positions. Analysts are looking for a jump in revenue when First Solar next reports its quarterly results. The company has a market cap of more than $4 billion. Its operating margin is better than the industry average and its P/E ratio is less than the industry average. The consensus recommendation of the analysts polled is to hold First Solar shares, and that has been the case for at least three months. Yet, the analysts' mean price target, or where they expect the share price to go, is more than 29 percent higher than the current share price. But shares traded higher than that as recently as October. Though the share price climbed about 7 percent during the short interest period, since then it has continued the decline that began back in September. The stock underperformed Linear Technology and the broader markets over the past six months, but it narrowly outperformed Sharp in that time.

Short interest in this provider of solar energy systems to residential and commercial customers saw a gain of more than 10 percent to almost 20.58 million shares. That was the highest number of shares short in the past year and more than 36 percent of the float. The days to cover rose to more than eight. Earlier in December, this San Mateo, California-based company set a

to fund solar power projects through 2015. SolarCity has a market cap of almost $5 billion. Note that both the return on equity and the operating margin remain in negative territory. All but two of the 11 surveyed analysts recommended buying shares, with three of them rating the stock at Strong Buy. A move to the analysts' mean price target would be a whopping 41 percent gain for the shares. However, that consensus target is less than the 52-week high reached last February. Short sellers watched the share price rise more than 7 percent during the two-week period but then retreat more than 4 percent since, falling below the 50-day moving average. The stock underperformed the Nasdaq and the S&P 500 in the past six months, but it outperformed smaller competitor RGS Energy.

Short interest grew more modestly in SunEdison in late December, while RGS Energy and Vivint Solar saw little change in the number of shares short between the beginning and end of the two-week period. Furthermore, the number of U.S.-listed shares (or ADSs) sold short of foreign-based solar companies Canadian Solar, JA Solar Holdings, Hanwha SolarOne, Trina Solar and Yingli Green Energy grew in the period, while short interest in China Sunergy, JinkoSolar and ReneSola shrank.

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