First Solar CEO Goes on Selling Spree

by StockJockey

Monday, June 02, 2008 - 10:36 am

Bulls in the solar space have crowned First Solar (FSLR-NASDAQ) the king, at least if you compare its valuation against its peers. The premium valuation and one-way ramp has not gone unnoticed by one insider, who has been peeling off shares steadily over the past few months:

Chief Executive Officer Michael Ahearn reduced his stake to 3.07 million shares as of May 16 from 6.1 million shares at the company's initial offering in November 2006. The latest disposals brought in $257 million since Feb. 19, according to company filings with the Securities and Exchange Commission. "That's a remarkable withdrawal for a CEO and I wouldn't want to see him sell off much more,'' said Robert Lutts, who manages more than $500 million as chief investment officer at Cabot Money Management, including 18,953 shares of First Solar...The CEO, who retains a 3.85 percent stake worth $822 million, declined through a spokeswoman, Barbara Kates-Garnick, to be interviewed. Bloomberg

Solar bulls are having their mettle tested in early trading. The Financial Times is questioning the near-term business prospects, suggesting that over capacity could lead to a shake out in the business:

The solar power business is bracing itself for a collapse in prices that could lead to a shake-out in one of the most promising areas of the renewable energy sector.

However, a price slump could hasten the take-up of the technology which would help boost the overall volume of future activity, even as margins fall, industry analysts and officials add.....That could prompt consolidation in the sector within the next six months, with smaller players falling prey to longer established companies. FT

And while the consolidation might strengthen the hand of the industry leaders, it could make for tricky trading in the near term.

First Solar fans are certain to spin the massive sales by their CEO, but the rabid speculation in the stocks have resulted in valuations that even hard core fans might be hard pressed to defend.

And while management teams have a good story to pitch, an old adage come to mind:

Watch what they do, not what they say

And while some of the smaller companies might fade away, the bigger firms should prosper:

“This is becoming a scale game,” said Steve Geiger, director of Masdar Solar, an Abu Dhabi company that last week announced plans for a $2bn, six-year investment in solar panel manufacturing facilities to try to leapfrog smaller players in the industry. Admitting that the Gulf emirate was “late to the [solar] game”, Mr Geiger said: “To have an effect, we have to go large scale and deploy some serious capital . . . We have to make this a gigawatt-capacity business.”

First Solar’s shareholders have had a bumpy ride thus far in 2008, with the stock basically back to where it started. No shortage of action, however, as the year to date chart illustrates

Wild ride!

Storm clouds on horizon for solar business
Financial Times

Squeeze is on as interest grows in solar sector
Financial Times
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