- Shares fell most in 14 years Tuesday after hedge funds exited
- Deutsche Bank analyst maintaining buy rating on shares
SunEdison Inc., the worst-performing solar company this year, surged at the end of an up-and-down session after trading was briefly halted on the New York Stock Exchange due to high volatility. Then it slumped again.
The shares rose 7.6 percent to $3.25 at the close in New York. Less than 90 minutes earlier they were up as much as 19 percent, the biggest intraday increase in a year. After the close of regular trading it slipped to $2.89 at 4:45 p.m.
Trading was stopped at about 2:32 p.m. after high volatility triggered circuit breakers, under Security and Exchange Commission rules.
“It’s insane how volatile this stock has become,” Michael Morosi, an analyst at Avondale Partners LLC, said in an interview. He has the equivalent of a hold on the shares. “There’s no reason for these moves other than some people just love the drama and SunEdison’s been getting a lot of attention.”
SunEdison was the best-performer of 2014 on the Global Large Solar Energy index of 20 companies as the Maryland Heights, Missouri-based company undertook a global expansion strategy that has made it the world’s biggest renewable energy developer.
It’s now the index’s worst performer of the year, down 90 percent since mid-June, including a 34 percent plunge Tuesday that was the biggest in 14 years. Investors have questioned the company’s debt levels and its ability to pay for wind and solar projects it has planned on six continents, as well as more the $4 billion in acquisitions announced or completed.
At the same time, analysts have maintained a bullish outlook on the company, with 12 buy ratings, four holds and just one sell. That’s helping drive significant price swings, with the shares moving between positive and negative territory several times Wednesday. More than 152 million shares changed hands in the session, almost five times the three-month average.
Third Point, the hedge fund firm run by Daniel Loeb, sold its entire position in SunEdison in the third quarter, according to a regulatory filing Nov. 13. David Einhorn’s Greenlight Capital this week said it reduced its holding by 6.2 million shares, to 18.6 million shares and Lone Pine Capital also exited its position in SunEdison, almost 10 million shares.
The fund sales haven’t changed many minds on Wall Street. Vishal Shah, an analyst at Deutsche Bank AG, reiterated his buy rating in a research note Wednesday.
“We continue to believe liquidity concerns are overdone,” Shah said in the note. “The execution of pending transactions along with refinancing of margin loan could act as a positive catalyst for shares.”