MARKET SELLS NEW ENERGY SHORT

Hedge Funds Short Clean Energy as Goldman Pares Stakes
Ben Sills, December 1, 2010 (Bloomberg News)

"Hedge funds increased short selling in U.S. renewable energy stocks to the highest level in a year, boosting bets against First Solar Inc. and Tesla Motors Inc. as government support for low-polluting technologies faltered.

"Seventeen percent of the freely traded shares of the 35 U.S. stocks in the WilderHill New Energy Index are sold short, compared with 16 percent in October and 15 percent in August…almost four times the 4.4 percent short ratio of the Standard & Poor’s 500 index…[S]hort sellers targeted makers of wind turbines, solar panels and electric cars whose sales also were undermined by cash-strapped European governments cutting subsidies. Goldman Sachs Group Inc. and BlackRock Group trimmed long positions in renewable-energy shares in the third quarter…"

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"President Barack Obama said he may be unable to reduce U.S. greenhouse-gas emissions after Republicans regained control of the House in Nov. 2 elections. Republicans say they will seek to roll back Environmental Protection Agency rules limiting carbon venting, ease curbs on coal mining and may try to block billions of dollars in federal subsidies for clean power…

"…Uncertainty over future subsidies already cut installation of new wind turbines in 2010…Zoltek Cos., a maker of carbon fiber for blades used in wind turbines, [thin film manufacturer First Solar] and American Superconductor Corp., whose converters connect those machines to power grids, were among the most-shorted stocks…"

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"The most-shorted stock was Tesla Motors, the California electric carmaker headed by Paypal Inc. founder Elon Musk, which gained about 60 percent this month after it sold a $30 million stake to Panasonic Corp…Investors had shorted 65 percent of Tesla’s free-float…By contrast, the most shorted stock in the S&P 500 was AutoNation Inc. Speculators had borrowed 34 percent of the free float…

"Solar panel makers are also suffering as European governments, struggling to contain the fallout from the financial rescue packages requested by Greece and Ireland, curb rates paid for power from photovoltaic panels…U.S. demand for photovoltaic panels may offset the declines in Europe as falling panel prices allow utilities to build industrial-scale solar generators, according to Shayle Kann, an analyst at GTM Research…Kann forecasts U.S. power companies will install 5,000 megawatts, or $8 billion, of solar panels annually by 2015…"