This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

The Next Great Alternative Energy Short Is...

Stocks in this article: PPOAONEHEVGM

NEW YORK ( TheStreet) -- What does an analyst who was synonymous with the big solar stock short do for an encore? The answer is to find a way to short excessive excitement about the electric car market.

On Monday, Axiom Capital analyst Gordon Johnson, who had a long-time, very vocal and very profitable short on First Solar (FSLR), launched coverage of battery maker Polypore (PPO) at a sell. Polypore makes separators that are critical in regulating the flow of ions in batteries, including the lithium ion batteries now being developed for the electric car market.

There will be blood among suppliers of battery technology to the electric car market: analyst.

Shares of Polypore, which have risen 21% this year -- and up from a 52-week low -- were down 6% on Monday morning to $53.

Johnson initiated his sell rating on Polypore with a $26 price target, implying 54% downside from its opening price on Monday.

In the solar stock sector, the short argument relied on two ideas. First, that the sector was headed for massive oversupply and the market expectations for growth of sales were driving up multiples of stocks to excessive levels. Second, and when it came to First Solar specifically, the fact that key executives left the firm over a period of a few years and many insiders were selling shares suggested to First Solar shorts including hedge fund manager Jim Chanos that all was not right at the solar company.

Johnson's Polypore short relies on assumptions related to both of those solar short debate points. The analyst thinks that the electric car market growth assumptions on which Polypore's multiple is based exaggerates the opportunity relative to coming supply. The analyst also points to insider selling by Polypore executives.

Since January 2011, Johnson said he has noticed "a troubling trend among the executives at PPO."

  • CEO Robert B. Toth has sold 403,000 of his total 450,000 shares (i.e., 89%) for a profit of $24.5 million
  • CFO Lyn Amos has sold 52,000 of her total 64,000 shares (i.e., 81%) for a profit of $3.3 million
  • VP Pierre Hauswald has sold 84,000 of his total 84,000 shares (i.e., 100%) for a profit of $5 million
  • VP Mitchell Pulwer has sold 70,000 of his total 70,000 shares (i.e., 100%) for a profit of $3.8 million
  • VP Phillip Bryson has sold 46,600 of his total 54,000 shares (i.e., 86%) for a profit of $3.1 million
  • "Stated differently, in aggregate, PPO's top 5 executives have 'exited' 91% of their vested stock holdings since January 2011; forewarned is forearmed," Johnson wrote in his note.

    1 of 3

    Select the service that is right for you!

    COMPARE ALL SERVICES
    Action Alerts PLUS
    Try it NOW

    Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    • Weekly roundups
    TheStreet Quant Ratings
    Try it NOW
    Only $49.95/yr

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    • Upgrade/downgrade alerts
    Stocks Under $10
    Try it NOW

    David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    • Weekly roundups
    Dividend Stock Advisor
    Try it NOW

    Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Alerts when market news affect the portfolio
    • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
    Real Money Pro
    Try it NOW

    All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

    Product Features:
    • Real Money + Doug Kass Plus 15 more Wall Street Pros
    • Intraday commentary & news
    • Ultra-actionable trading ideas
    Options Profits
    Try it NOW

    Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

    Product Features:
    • 100+ monthly options trading ideas
    • Actionable options commentary & news
    • Real-time trading community
    • Options TV
    To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
    Submit an article to us!
    DOW 17,810.06 +91.06 0.51%
    S&P 500 2,063.50 +10.75 0.52%
    NASDAQ 4,712.97 +11.1030 0.24%

    Brokerage Partners

    Rates from Bankrate.com

    • Mortgage
    • Credit Cards
    • Auto

    Free Newsletters from TheStreet

    My Subscriptions:

    After the Bell

    Before the Bell

    Booyah! Newsletter

    Midday Bell

    TheStreet Top 10 Stories

    Winners & Losers

    Register for Newsletters
    Top Rated Stocks Top Rated Funds Top Rated ETFs