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Thursday, February 16, 2017

The Most-Hated Bear in Solar Isn’t Backing Down/Bloomberg

OK, who is right?  Should we be bearish or bullish on solar's prospects?  Or, should it matter to us at all?  What if we invest in solar systems that perform great, give us a good return and fix our costs?  What else matters?

Not much, as far as we are concerned.  Solar will survive and thrive if they do a great job, like any company or vertical.  Yes, they are subject to market swings, like the price of oil.  But it is because so many other sources of power are unpredictable and out of our control that we love fixing our energy future with renewables.  In addition, of course, to the environmental benefits and being part of the solution.

 Better others speculate while we make all clean energy work well on a very fundamental, economic basis.  Then we'll be in a great position to add storage, energy management systems and evolve into our own micro grids in which we will fully control our use of electricity.

  • Everybody hates me,’ says analyst Gordon Johnson in jest
  • Critics say he’s an ally of hedge funds and short-sellers

When Elon Musk’s SolarCity hosted stock analysts about a year ago to gush about its prospects in the solar industry, Gordon Johnson was nowhere to be found.
It seems that Johnson, a 36-year-old analyst at boutique advisory shop Axiom Capital Management Inc., wasn’t invited. This may not have been an oversight; it happens to him a lot.
“Everybody hates me,” says the New York-based analyst in jest, acknowledging his reputation as solar’s notorious bear, a soundbite-ready contrarian among a group of analysts generally bullish on the industry’s long-term prospects. “Companies don’t like me because I have sell ratings on their stocks.”
Turns out Johnson was right about solar-panel company SolarCity, bought by Tesla Inc. last year. And SunEdison Inc., the now-bankrupt clean-energy giant, before that. He also forecast troubles for SunPower Corp. years before. His bearishness sometimes gets him in trouble, as when he once stayed negative too long on First Solar Inc.
But given his generally good track record, “People are inclined to listen,’’ says Michael Morosi, an analyst at Avondale Partners LLC in Nashville. “He’s pretty much two-for-two the last two cycles.”
These days, Johnson has a sell rating on every stock he follows (including some steel companies), and he has a fresh reason -- Donald Trump. Johnson figures the president, a renewables critic during the campaign, may attempt to revoke federal subsidies for solar -- a minority opinion, to be sure. “It would be a big negative for renewables, particularly solar,” Johnson says. Tax reform would also hurt.

Solar Returns

Investors may share this view. The Bloomberg Global Large Solar Energy index has dropped about 5.6 percent since Trump was elected, compared with a 9.8 percent gain in the broader S&P 500 index.
A solar skeptic since his tenure at Lehman Brothers a decade ago, Johnson isn’t beloved among the companies he covers, not to mention other Wall Street solar analysts. Some observers view him merely as an ally of the hedge funds and other short-sellers that are his clients, and sometimes just lucky in playing what they call the solar-coaster.
“Research analysis is best done without a prevailing bias,” says Brad Meikle, an analyst at Craig-Hallum Capital Group LLC in San Francisco. “It’s pretty clear that Gordon’s got a pretty negative view of the clean-energy space.”
Johnson dismisses talk that he is, as he puts it, similar to a broken clock that gets it right twice a day. “There’s no luck in making a short call,” he says. While most companies ignore his questions, SolarCity is among the exceptions, even if it didn’t invite him to a conference. His bearishness certainly doesn’t diminish his standing where he works, he says.
“My boss doesn’t care about my negativity,’’ says Johnson, who says he has about 400 clients, mostly hedge funds. “He just cares that I make commission.”
A spokeswoman for SolarCity declined to comment.

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