Wednesday, December 19, 2012

Solar Stock Insanity Continues ($STP)

Read this WSJ article, "China to Promote Solar-Power Consolidation", and tell me if you think it's bullish:

"In a statement late Wednesday, the State Council, China's cabinet, said it would reform the industry, such as by encouraging mergers and acquisitions. The cabinet will reduce government support and ban local governments from supporting failing domestic solar companies, it said.

The State Council also said it would make good use of a 'bankruptcy mechanism,' suggesting that China would make it easier for companies to declare bankruptcy—a rarity in the solar industry, as well as in China as a whole."
This seems ultra-bearish for the struggling firms with upcoming debt maturities. Yet for some reason, naive equity investors have bid up all the solar stocks today. You can actually see some of the morons who are unaware that the bonds due in March yield over 600% tweeting about their purchases.

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