SunEdison Stock Battles For Speculative Attention

  • SunEdison stock has collapsed since it announced acquisition of Vivent.
  • SunEdison has modified terms of that deal and gotten new debt.
  • Hedge fund manager David Tepper is suspicious of its deals, and SunEdison stock has become highly volatile.

SunEdison (NYSE:SUNE) has been a great story but a lousy investment.

It was built by CEO Ahmad Chatila , a former Cypress Semi (NASDAQ:CY) executive, from the shards of a failing maker of silicon panel components called MMEC. He turned it into both a maker of panels and a scaled project developer, with utility-scale projects as far away as India, adding a “yieldco” called Terraform Power (NASDAQ:TERP) that could take debt off the books and turn it into investment-grade paper.

Things started going haywire for SunEdison earlier this year after Chatila agreed to buy Vivint Solar (NYSE:VSLR), a residential solar company that had just gone public the previous October, for a price announced at $2.2 billion. This, along with the looming expiration of tax credits on solar installations expected at the end of 2016, sent SunEdison stock down sharply, and the company has lost nearly 80% of its market cap since July 17, with stock price falling from over $31/share to its current price of under $6.

The last month has been different. SunEdison stock bounced off a low of below $4 during December, spurred in part by a deal in Congress to extend the tax credits, and by Chatila’s modifying the terms of the Vivint merger, offering more stock and less cash. The new deal, detailed in the SunEdison’s SEC filings, is for $7.92 in cash and a convertible note said to be worth $3.11 in stock, with the deal said to close in the first quarter. (Vivint still sells at a 10% discount to that $11 price.)

Chatila has also announced a second lien financing of $650 million,  cash that is sorely needed to reduce a debt load approaching half the company’s $20 billion in assets. This has helped bring SunEdison stock support from Adage Capital Partners, which bought almost 5% of the equity over the weekend.

The skies are far from sunny, however. There remains enormous short interest, meaning many investors expect the stock to continue to fall hard, and hedge fund manager David Tepper, whose net worth of over $10 billion means he could buy-or-sell the company five times over, has become suspicious over SunEdison’s dealings with both Vivent and Terraform.

SunEdison has $11.7 billion in debt and plans to spend billions more, but Terraform’s ability to take on new projects is in serious doubt, as its books are starting to look more like some master limited partnerships in the oil patch that claim enormous yields but can’t sustain them with earnings.

All of this makes SunEdison what is called a battlefield stock, prone to enormous swings up-and-down. Just this month SunEdison stock gapped up by one-third on December 15, after the tax credits were extended, then plunged by one-third a week later after the Tepper unit started its inquiries.

If you like action, you can play SunEdison stock to rise or collapse. Volatility has its virtues. Investors, however, need to stay away from SunEdison stock until the situation becomes clearer and you can make a calm, rational decision.

Dana Blankenhorn Dana Blankenhorn   on Amigobulls :
Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
  • See Amigobulls' policy on anonymous authors who use a pseudonym
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

At Amigobulls, we prefer that our authors disclose their real names. However, due to a variety of reasons, author's may prefer otherwise. Recognizing the fact that the ideas conveyed carry greater significance, and to facilitate the dissemination of these ideas, we allow authors to use a pseudonym. However, we do collect the same of details from anonymous authors, as we do from others, like the author's real name and contact information. Of course, this information remains confidential with us, and is not displayed on the site.
Further, to protect the interests of our readers/viewers, anonymous authors are required to make the same set of disclosures as other authors. For more details, you can write to any of our in-house editors at

show more

Comments on this article and VSLR stock

Do share this awesome post