by Shawn Kravetz
In the second quarter, solar stocks were impacted by broad energy sector declines on global macroeconomic concerns (most notably Greece and China). This negative sentiment has continued unabated into July exacerbating the disconnect between fundamentals and perceptions.
JA Solar (NYSE: JASO) epitomizes this dislocation.
We at Esplanade Capital Electron Partners (ECEP) owned JA Solar prior to June 5, believing the company to be worth ~30%+ more than the share price.
On June 5, JA Solar received a takeover offer from its Chairman/CEO and parent company at a 20% premium.
After a short-lived, modest rally, the shares have fallen to levels below where they were trading prior to the takeover offer.
We have added to this position, and while we continue to assess the deal and market risks, we remain confident that JASO will yield a 33% return in roughly six months when we expect the deal to close.
JA Solar represents but one example of our robust portfolio whose potential upside continues to grow as the dislocation between fundamentals and market perception expands.
Shawn Kravetz is President and Chief Investment Officer of Esplanade Capital LLC,
an investment management company he founded in 1999. The firm manages private investment partnerships including Esplanade Capital Electron Partners LP, launched in 2009, which intends to be the world’s premier private investment fund dedicated to public securities in solar energy and those sectors impacted by its emergence..