There is another angle to the solar play, which I bet you haven't thought of. I have been arguing that companies like First Solar (FSLR) are great proxy for oil, as any price rise in crude raises the breakeven point that alternative power generators must meet to be competitive on a non subsidized basis (click here for "Solar Energy is Poised to Achieve Cost Parity").
I bet you didn't know that it is a currency play as well. First Solar's primary competitors are Chinese firms, like Suntech Power (STP) and Yingli Green Energy (YGE), whose costs are based in the Yuan. That was not a problem as long as the Yuan was fixed and the global recession caused polysilicon prices to collapse. Those days are now coming to a close. Any appreciation of the Chinese currency feeds directly into their overhead cost. Even just a 5% per year appreciation, the maximum rate which the Chinese government is thought to tolerate, could wipe out the razor thin margins these companies subsist on.
A cheap, long dated call on both oil and the Yuan? Given that I believe that we are in a long term bull market for both, I think you better be accumulating this company on dips. The upside surprises could be explosive.
By. Mad Hedge Fund Trader
John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.… More