Sunday, October 27, 2013

Barron's: Suntech Is A "Dead Stock Walking"! $STP

From a Vito Racanelli piece in Saturday's Barron's,

"Share's of China's Suntech Power Holdings (STP), one of the biggest solar-panel makers in the world, were up 375% since March to $1.50 mid-week, before settling back to $1.35. That sharp rise suggests many investors are ignoring the rapid and fundamental deterioration in the outlook for the company.

Suntech is in deep trouble, to go by its latest press releases and filings with the Securities and Exchange Commission. If someone made a television show about these shares, it would be called 'Dead Stock Walking.'

[...] Two questions must be asked. Why is the stock rising when filings indicate there will probably be little or no value remaining for equity holders after the company's bankrupt Wuxi Suntech Power subsidiary is reorganized. And why do these American depositary shares continue to trade on the august New York Stock Exchange when Suntech last filed an annual report with the SEC for 2011?

[...] The litany of known issues makes a strong case that trading isn't advisable. In a reorganization, Suntech's shareholders—last in line after Chinese and American creditors—stand a good chance of being substantially diluted and possibly wiped out.

Why does the NYSE allow trading to continue after the company's inability to provide timely SEC reports? A spokeswoman for the NYSE declined further comment. Nor was Suntech forthcoming. When asked about the potential equity dilution, a company spokesman responded in an e-mail that 'We prefer not to speculate.'

We agree. Investors buying Suntech shares are playing musical chairs, and they will mostly likely be left out when the music's over.
Article is a must read! People should clip it out and mail it to the NYSE, SEC, and the company just to shame them.


MrGotham said...

The NYSE has apparently resorted to "fog a mirror" standards for listed companies that trade a lot of shares.
We'll find out this week if they have any shame.

Portlander said...

I suspect the brokerages are forcing buy-ins so that they can short to the retail short sellers being forced to cover.

Plus the brokerages make money on the borrow, so the longer they keep the stock trading the longer they are making money on the borrow.

I haven't looked at options volume, but there's probably good money being made there as well with every passing month another slug of puts expire worthless. Again, retail investors buy options, while the brokerages sell them.

Steve said...

One of the key tests for delisting is:
"An INTENT to file under any of the sections of the bankruptcy law has been announced"

Since STP doesn't INTEND to file anything ever again, they appear to have found a loophole to allow continued listing.

However, there are several other reasons why STP should be delisted immediately according to the NYSE manual:
"The failure of a company to make timely, adequate, and accurate disclosures of information to its shareholders and the investing public."
"Failure to observe good accounting practices in reporting of earnings and financial position."
"Inability to meet current debt obligations or to adequately finance operations."